Record price inflation has driven auto insurance rates higher over the past year, but average rates are actually about the same as before the pandemic. (iStock)
As inflation rises at the fastest pace in 40 years, consumers are feeling the pressure of higher prices driving them.
Auto insurance premiums rose 4% annually in January, slightly below the headline inflation rate of 7.5%, according to the consumer price index (CPI). And while some drivers may have noticed that their auto insurance premiums have steadily increased over the past year, premiums are about the same as before the COVID-19 pandemic began.
“Auto insurance premiums aren’t ‘skyrocketing’ – they’ve 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 have not yet surpassed pre-pandemic rates, they are expected to increase further in the coming months. In reality, a recent report estimates that premiums are expected to increase at an annual rate of 5% in 2022, which could encourage drivers to look for ways to reduce their costs.
If you are looking for cheaper car insurance in 2022, one solution is to seek quotes from car insurance companies. You can compare auto insurance policies on Credible for free.
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Car insurance premiums rise as pandemic subsides
Auto insurance rates plummeted in the spring of 2020 as many employees began to work remotely and drive fewer miles on their vehicles, data from the Bureau of Labor Statistics (BLS) shows, but it was an anomaly. As Americans begin to return to their usual driving habits, insurance premiums are returning to pre-pandemic levels.
The cost of car insurance is increased by a number of factors in addition to the waning pandemic. Worryingly, the frequency and severity of collisions have increased sharply over the past year, reports Triple-I. Additionally, supply chain issues made the cost of replacement parts like new paint and bumpers more expensive.
“Any business must make a reasonable profit to survive,” according to Triple-I. “Personal auto insurance is currently barely a profitable line for the industry, and the factors outlined above will continue to pressure insurers to raise rates to ensure coverage is at a appropriate price.”
If you’ve been hit by rising auto insurance costs, it may be possible to save money by switching to a new auto insurer. You can visit Credible to search for free quotes to find the best policy for your financial situation.
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3 ways to find cheap car insurance
With auto insurance premiums expected to continue rising through 2022, some drivers may be looking for ways to cut costs. Here are some tips to save money on car insurance, according to Triple-I:
- Compare the prices. Rates vary from insurer to insurer, so it is recommended that you get at least three quotes from different insurance companies. You can get free auto insurance quotes on Credible.
- Group policies. Bundling your auto and home insurance policies with the same insurer can save you up to 30% on your premiums, Young Alfred estimates.
- Look for discounts. Drivers who drive less can qualify for low mileage discounts. Some insurance companies offer discounts if you have a good driving history or take driving lessons.
- Build your credit. Having a good credit history can help you get lower car insurance rates. You can check your credit score and sign up for free credit monitoring services on Credible.
- Increase the deductible. A policy with a higher deductible will result in lower annual premiums. However, you will have to pay more out of pocket if you are involved in a collision.
The amount of auto insurance coverage you need can vary depending on your driving needs and financial situation. You can learn more about auto insurance by visiting Credible.
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