Is Auto Insurance Becoming More Expensive?

Chip shortages, supply chain dynamics, and political upheavals have all contributed to an increase in prices for a variety of goods; vehicles are no exception. According to a JP Morgan report, the average cost of a car for an American is over $45,000, with car prices rising by over 4.5% annually. 

Chris Gonzalez, the CEO of Gonzalez Insurance, outlined in a recent LinkedIn post how many experts expect car prices to fall this year. However, he contends that “buying and owning a car may end up being just as expensive or even more so than used to be the case.” He sheds light on the fact that, in 2023, drivers in the US are spending about 3% of their incomes on auto insurance. 

Not only this, but the associated costs of owning a car—such as labor, repair costs, and hospitalization in case of accidents—have a negative impact on the idea of owning a car in the US, particularly in urban areas like New York.

Let us examine the reasons why auto insurance rates have increased and how they can be reduced to bearable limits with added benefits and value addition.

Reasons Behind Rising Premiums

Inflation and Economy

As mentioned, one effect of upcoming inflation and economic change is the increase in the cost of cars. People struggle to maintain their vehicles while simultaneously paying for expensive labor and damage repairs. According to a report, these costs have been evident in some states like Orlando and Phoenix, where premiums rose to over 22% and 17%, respectively.

Increased Thefts and Accidents

In one of our most recent reports, we discussed the 400% increase in catalytic converter theft cases since 2019. The rise in traffic accidents, particularly in big cities like New York, is another factor for increased premiums in certain locations. As claims have increased and insurance companies are attempting to incur losses, these increased thefts and accidents have opened the door for a rise in premiums.

However, you might still require a coverage-rich insurance plan. Here is why:

To Avoid Any Financial Losses

If you do not have auto insurance, you are solely responsible for any damage to the car, whether fixing damage from an accident or replacing car parts because they were stolen. Auto insurance is crucial to avoid any significant financial losses brought on by soaring inflation and service costs.

To Avoid Any Lawsuit

Oftentimes, reckless or inexperienced driving can cause harm to another person. This may result in significant legal actions and insurance claims that require you to settle the claims. Additionally, purchasing auto insurance is a liability in some US states. As a result, US citizens must have proper and comprehensive auto insurance to avoid any lawsuits or legal action.

Currently, the price of auto insurance premiums varies by state and also depends on a number of different factors. Monthly auto insurance premiums are influenced by numerous variables, including driving history, age, gender, coverage level, vehicle type, deductible, credit score, etc. There are, however, ways to lower your auto insurance costs or find better deals for greater coverage.

Here is how you can save or get better coverage on your auto coverage

Get a Customized Policy

A customized policy is undoubtedly a great way to increase the value of your coverage for the same premium cost. When you purchase one of these policies, a committed insurance officer assists you in valuing your asset and analyzing other relevant factors, thus, recommending a policy that offers adequate coverage and benefits.

Clubbing in Add-on

Add-ons are an excellent way to improve and increase security. For instance, a lawsuit could be brought up if a minor were driving your car and their inexperienced driving caused injury to someone or property damage. Most people purchase umbrella insurance to protect themselves from any harm that might result from such unintentional scenarios.

Drive Safely to Have a Good Credit Score

One of the main strategies to get a low auto insurance premium is to improve your credit score. Insurance companies frequently conduct background checks, and those who have been charged with reckless driving must pay more for car insurance. Due to the higher likelihood of providing claims to such drivers, insurance companies charge higher amounts. Thus, safe driving can easily assist you in reducing your overall premium costs.

Need a personalized quote for auto insurance? Let us help. At Gonzalez Insurance, we’re aware of the market dynamics and provide the best value-added policy to the customer. Contact us to learn more about how to reduce your auto insurance cost while maintaining complete security.