Reasons behind rising car insurance cost and ways to help manage them.
Everything seems to cost more lately, and auto insurance is no exception. According to Forbes Advisor, the cost of auto insurance went up more than 17% from July of 2022 to July of 2023. Here are some reasons why auto insurance cost is going up.
Some reasons for an auto insurance cost increase
During the global pandemic that started in 2020, federal and local governments enforced shelter-in-place and social distancing guidelines. We then saw fewer accidents and less expensive losses, due to less cars on the road, schools being virtual and many companies allowing their employees to work from home.
But now, a few years after the pandemic, roads are busy again, many people are working in-office and schools are back to in-person learning. This has resulted in an increase of car accidents and injuries, which has caused car insurance to rise.
Inflation
Cost of living increased in the U.S. by 3.4% in 2023. Even though it was not as high as the previous 2 years, it has been historically high compared to the last 15 years. This economic trend has affected the prices of many goods including groceries, gas, housing and cars. And because cars (both new and used) are now more expensive to get, repair and replace, it ends up affecting insurance.
Rising car repair costs
Supply chain disruption and labor issues that started during the pandemic and continue to this day, have impacted vehicle repair costs. This includes longer times to repair a car involved in an accident. As a result, there are additional costs associated with policyholders using a rental car longer while they wait for their car to be repaired.
Additionally, new technology, such as parking sensors, lane-departure warnings, and better battery technology, have added to the rising cost of repairs. While those smarter sensors and stronger devices can help improve safety, they are also more expensive to repair.
Increased accidents due to distracted driving
According to a State Farm® survey, 67% of drivers said reading or sending texts while driving is distracting/very distracting, and over 70% of drivers report watching a video or recording video (67%) to be distracting/very distracting. Even voice-activated car commands can divert cognitive abilities and attention. Rethink using the phone while driving, and avoid being tempted by other driving distractions. If you have a teen, talk with them about safe driving habits. NHTSA research has found that the risk of accidents in teens is 23 times more likely when they are texting and driving.
Weather catastrophes
The U.S. experienced many weather catastrophes during 2023, several of them causing at least $1 billion in losses. Among the weather catastrophes that our country encountered in 2023 were wildfires in Maui, Hawaii, historical floods in California and tropical cyclones. When severe weather strikes, it impacts the insurance industry and cost can be affected. For example, State Farm paid $12 billion in catastrophic claims during 2023, compared to $7 billion paid in catastrophic claims during 2022.
How to help with auto insurance costs:
Drive Safe & SaveTM puts you in control by leveraging driving data to customize your own personal discount.
Take advantage of other applicable discounts, such as Multiple Line Discount, Steer Clear® Safe Driver Discount for drivers under age 25 and the Good Student Discount.
Your policy choices impact your cost. Consider having a conversation with me to evaluate your current deductible and coverages to see if any changes are needed.
Hello, My name is Rebecca and I am the State Farm Agent in Sweet Home, Oregon.
I believe in doing insurance differently. In the years since I became a State Farm agent, my team members and I have focused on delivering real value to our customers. Value is all about the right coverage for each customer. It’s not chasing the lowest price; it’s making sure everyone who comes through our doors walks out knowing they’re properly covered. Helping people find that confidence—that’s why I love what I do.
The true value of an insurance plan designed specifically to you and your needs cannot be overstated. That’s what my team and I strive for. We start by getting to know you, determining what policies fit your unique situation, and then crafting a package that lets you feel ready for the road ahead. I also encourage every customer to meet with me every year or two to make sure their package still makes sense for their life. We’re focused on delivering quality service that’s personalized to each individual.
We love working with people across Oregon. We have customers from all parts of the state and locally from Linn, Lane and Marion County. As a resident of Brownsville, and native Oregonian I have lived here for most of my life, and it’s been an incredible place to call home. Outside the office, you can usually find me in my garden, at a local winery and definitely with my 2 German shepherds. (who you will find at the office most days) I love spending time in our community and getting to know people.
If you’re interested in a real insurance partner, let’s connect today. My office will help with auto insurance, home insurance, life insurance, condo insurance, business insurance, renters' insurance, health insurance, pet insurance and MUCH more. Stop by my office or call/text us for a quote and we look forward to welcoming you into our family!
