Why is my auto insurance rate rising?
We've been getting asked a lot about unexplained increases in automobile policies from our clients, colleagues, neighbors, and friends. Frustrated, we thought we'd provide some insight into the price increases some are seeing right now.
Firstly, your auto insurance premium most likely dropped in 2020.
Thanks to stay-at-home orders, there were fewer vehicles on the road, which meant fewer accidents and fewer claims. In fact, some insurance companies, including USAA, even refunded a percentage of their members' premiums. The premium base in May 2020 was greatly impacted by all the refunds. As the amount of driving consumers fell, auto insurers refunded $14 billion in premiums last year, according to the Insurance Information Institute. Rates actually continued to stagnate, or even decline, through the first quarter of 2021. However, the consumer price index data showed the auto insurance index up 16.9% in May, following a 6.4% rise in April — the first increases since March 2020. Auto insurers are facing a number of challenges as the economy reopens. Workers are returning to offices and vaccinations are prompting many people to take summer vacations. Government data from March, the most current statistics available, show driving up 19%. The result of people returning to pre-Covid driving levels means the rate of car accidents will rise.
If this year’s trend follows last year, the accidents may also be more severe. Though the number of driving hours plummeted by 13% last year, fatalities climbed 7%, according to the National Highway Transportation Safety Administration. Experts blame a higher incidence of speeding, impaired driving and distracted driving for the increase. Many drivers are out of practice, especially at parking or navigating through traffic.
More accidents mean more claims — and those claims are expected to be more expensive for insurers to pay because repair costs are rising.
The CPI data has shown month after month of gains for auto repairs. The 2.8% increase in May was a bit slower than in the pace of prior months. (Repair costs climbed 3.5% in April and March, 3.1% in February and 3.5% in January.) And wait times are also longer thanks to chip shortages, supply chain disruptions, and a labor crunch.
Still, not all insurers are raising rates. “It’s still a good environment for consumers who are purchasing auto insurance,” Greenspan of the Wells Fargo analysis team said.
The Best Cars for Dogs in 2021
Before I had dogs, I could have never imagined a pet impacting the car-buying process. Now I find myself thinking about how my vehicle could be better suited to them, whether we’re headed cross-country or simply taking a drive to the dog park.
Of course, I wouldn’t buy a new car just for my dog. However, there are certain things I will look for when it’s time for my family to start car shopping again. These features not only make traveling with pets easier but also ensure that our four-legged family members are as comfortable in the car as they are at home. The top-rated car criteria were leather interior, roomy backseat and/or cargo, ground clearance, and rear climate control.
Volvo V60: Best for Convenience
Flat-folding seats: 🚫
Large cargo area: ✅
Low vehicle loading height: ✅
Rear lift gate: ✅ Foot-activated open and close
Pet-friendly seat material: ✅ Leather is standard
Tesla Model Y: Best for Tech Features
Flat-folding seats: ✅
Large cargo area: ✅
Low vehicle loading height: ✅
Rear lift gate: ✅ Powered
Pet-friendly seat material: ✅ Durable, faux (vegan) leather comes standard
Subaru Crosstrek: Best for Off-Path Adventures
Flat-folding seats: ✅
Large cargo area: ✅ Cargo area is only 20.8 cubic feet unless you fold the rear seats down (then, it’s 55.3 cubic feet)
Low vehicle loading height: ✅
Rear lift gate: ✅ Not powered
Pet-friendly seat material:🚫 Cloth is standard on most models, but leather is optional
Reach out to our team if you have any questions about how we can help you insure your car and your pet!
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Wondering what your auto policy covers and if your properly covered in case of an accident? Call us at 512-447-7773, email us at info@timeinsurance.com or reach out to your dedicated agent.
