Why Are Auto Insurance Costs Going Up?

 In Auto Insurance, Insurance Advice, Insurance Information

If you’ve shopped for car insurance lately, you may have noticed auto insurance costs are on the rise. While the cost of auto parts has an impact, there are other key factors behind this steady increase in car insurance premiums. Understanding the reasons for climbing auto insurance costs can help you make informed decisions about your coverage.

At American Advantage – IFS, our goal is to educate on insurance so you can adequately protect what matters most. In this blog post, we’ll break down the major reasons why your next auto policy may cost more than before.

Repair Expenses Are Skyrocketing

While we enjoy all the benefits and conveniences that come along with today’s high-tech cars, such as complex sensors, cameras, infotainment systems, and other advanced components, these aspects simply cost much more to fix after collisions and accidents. Replacing damaged parts can really add up. With high-performance plastics and paint, even auto body work is significantly pricier now. Although the cost of parts contributes to higher auto insurance costs, the overall rise in repair expenses is a primary driver pushing these rates upward.

Labor, Inflation, and Litigation Lead to Rate Hikes

Auto insurance costs are also more expensive due to other factors, including:

  1. Labor. On top of pricier replacements, basic repairs take more time and skilled labor on modern vehicles. As a result, this increased labor cost gets directly passed on to insurance providers and then to policyholders through rate increases.
  2. Inflation. The pressure on rates continues to build as inflation is at an all-time high over the past 40 years.
  3. Litigation. Insurers are forced to counterbalance costs by raising premiums due to increased claim payouts from out-of-control litigation and exorbitant jury awards.

More Reckless Driving Equals Higher Auto Insurance Costs

Aggressive, distracted, unsafe, and intoxicated drivers have led accident rates to spike sharply. From excessive speeding to failure to obey traffic laws to driving under the influence and disregard for public safety, more crashes and injuries are happening on the road. Insurance companies are adjusting rates to account for this escalation in claims stemming from reckless driving habits and an increase in severe injuries and deaths because of it.

Don’t Sacrifice Your Coverage Because of Higher Auto Insurance Costs

While climbing premiums are understandably frustrating, sacrificing your coverage is not the answer. It’s important to maintain adequate insurance policy limits, especially for liability protection in case an at-fault accident occurs. Insufficient coverage could leave you financially devastated.

At American Advantage – IFS, our licensed agents will take the time to explain policy options tailored to fit your unique needs and budget. We offer auto insurance along with homeowners, business, and specialty policies. Contact us today to make sure you and your assets are well protected.

Yes, costs are rising, but the right auto insurance remains extremely valuable. Reach out to American Advantage – IFS anytime to discuss your changing coverage needs. We’re here to help you navigate these increases while securing the protection you deserve.

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