Here’s why your car insurance is more expensive these days
Here’s why your car insurance is more expensive these days
If you want to get into the nitty gritty of the Consumer Price Index out this week — and we do — let’s direct our attention to the table of consumer expenditures listed out by the Bureau of Labor Statistics.
On the bottom of page 9, table one, we see that motor vehicle insurance in November was up a whopping 19.2% from last year. That’s insurance for passenger cars, trucks, SUVs and vans.
There are a bunch of reasons insurance prices have gone up. One is that during the pandemic, drivers got used to going fast. Back then, there were fewer cars on the road. And that habit stuck.
“Now they’re driving faster, and there’s more cars on the road,” said Jeff Rieder, who leads the insurance consultancy Ward Benchmarking.
Rieder said with cars going higher speeds, there are more severe accidents taking place now. That’s led to intense physical damage and sometimes lawsuits.
Another reason insurance is pricier? Crazy weather.
“Throughout the Midwest, there has been more frequent hail storms,” said Rieder.
Hail can damage a windshield, windows, create dents.
“And in many cases, it ends up that the vehicle is totaled, because the cost to repair the vehicle will be more than it will be to replace it,” said Rieder.
And who is in the cars when they’re on the roads also matters. The American population is now older.
And when an elderly person is in an accident, their medical bills are going to be higher, pointed out Rob Olson with the International Risk Management Institute, which provides research to the insurance industry.
“Because their bodies are — they’re not youthful, and it takes time, longer to recover, and more complications,” he said.
Even if a car’s only involved in a fender bender, that costs more these days, too. Because our fenders have gotten fancier.
“You have maybe a smart bumper, you have cameras in the windshield,” said Olson. “When you have an accident, you have to replace that high tech equipment. It’s much much more expensive.”
All this has resulted in sticker shock for consumers looking at their insurance premiums. Curtis Chambers, a financial counselor just outside Boston, said faced with higher costs, some people are considering alternatives to cars.
“I have a client I was talking to this week that was thinking of going from two cars to one, and maybe using motorized bikes or scooters,” said Chambers.
He said other people are looking into working from home more often, so they can tell their insurers, “Hey, we’re not driving as much.”
And maybe negotiate a lower price.
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