Car insurance rates 'aren't skyrocketing' despite 4% annual inflation: report
It may be possible to cut costs by shopping around for car insurance quotes
Record-high price inflation has resulted in car insurance rate increases over the past year, but average rates are actually about the same as they were before the pandemic. (iStock)
With inflation surging at the fastest pace in 40 years, consumers are feeling the pressure of higher prices behind the wheel.
Motor vehicle insurance premiums rose 4% annually in January, which is slightly lower than the overall inflation rate of 7.5%, per the Consumer Price Index (CPI). And while some drivers may have noticed their car insurance rates climbing steadily over the past year, premiums are about the same as they were before the COVID-19 pandemic began.
"Auto insurance premiums aren’t 'skyrocketing' — they have returned to pre-pandemic levels after $14 billion was returned to policyholders in anticipation of fewer accidents," according to the Insurance Information Institute (Triple-I).
Although car insurance premiums haven't yet surpassed pre-pandemic rates, they're expected to rise further in the coming months. In fact, one recent report estimates that premiums are projected to rise at an annual rate of 5% in 2022, which may cause drivers to look for ways to cut costs.
If you're searching for cheaper car insurance in 2022, one solution is to shop around for rate quotes from auto insurance companies. You can compare car insurance policies on Credible for free.
COMPARING CAR INSURANCE QUOTES CAN SAVE YOU HUNDREDS OF DOLLARS PER YEAR
Car insurance premiums are rising as pandemic subsides
Car insurance rates plummeted in spring 2020 as many employees started working remotely and put less mileage on their vehicles, data from the Bureau of Labor Statistics (BLS) shows, but this was an abnormality. As Americans begin to resume their typical driving habits, insurance premiums are returning to pre-pandemic levels.
The cost of auto insurance is being driven higher by a number of factors besides the waning pandemic. Of concern, the frequency and severity of collisions have risen abruptly in the past year, Triple-I reports. Additionally, supply chain issues have made the cost of replacement parts like new paint and bumpers more expensive.
"Any business needs to make a reasonable profit to survive," according to Triple-I. "Personal auto insurance currently is barely a profitable line for the industry, and the factors outlined above will continue to put pressure on insurers to raise rates to ensure the coverage is appropriately priced."
If you've been impacted by rising car insurance costs, it may be possible to save money by switching to a new auto insurer. You can visit Credible to shop around for free rate quotes, so you can find the best policy for your financial situation.
HERE'S WHY DRIVERS SHOULD GET COMPREHENSIVE CAR INSURANCE COVERAGE
3 ways to find cheap car insurance
With auto insurance premiums expected to continue rising into 2022, some drivers may be looking for ways to cut costs. Here are a few tips for saving money on car insurance, according to Triple-I:
- Shop around. Rates vary from one insurer to the next, so it's recommended to get at least three quotes from different insurance companies. You can get free auto insurance quotes on Credible.
- Bundle policies. Bundling your auto and homeowners insurance policies through the same insurer can save you up to 30% on your premiums, Young Alfred estimates.
- Seek out discounts. Motorists who drive less may qualify for low mileage discounts. Some insurance carriers offer discounts for having a good driving history or taking driver's education courses.
- Build your credit. Having a good credit history may help you lock in lower auto insurance rates. You can check your credit score and enroll in free credit monitoring services on Credible.
- Raise the deductible. A policy with a higher deductible will come with lower annual premiums. However, you'll have to pay more out of pocket if you're involved in a collision.
The amount of car insurance coverage you need may vary depending on your driving needs and your financial situation. You can learn more about auto insurance by visiting Credible.
DRIVERS IN THIS STATE WILL RECEIVE A $400 CAR INSURANCE REFUND CHECK
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