If you’ve recently gotten a more expensive car insurance bill, you’re not alone.
Auto insurance costs were up about 15 percent in March from a year earlier, significantly higher than the latest reading on overall inflation of 5 percent. The average annual premium is about $2,000, according to the personal finance website Bankrate.
And car insurance prices are expected to continue rising. This week, the chief executive of the insurer Progressive said in a shareholder letter that the company planned to be “aggressive with raising rates over the remainder of the year.” Allstate said it expected to pursue additional increases in 2023 “to improve auto insurance profitability.”
Higher costs for repairs, including for both auto parts and labor, along with higher costs for car rentals as a dearth of workers leads to longer repair times, all contribute to costlier claims and higher premiums, industry analysts say. “Everything associated with repairing is going up,” said Stephen Crewdson, a senior director of insurance business intelligence at consumer research company J.D. Power.
As the pandemic has ebbed, more drivers have returned to the roads, whether for work or leisure travel, increasing the risk of accidents, said Robert Passmore, department vice president of personal lines with the American Property Casualty Insurance Association, an industry group. Bad habits acquired during the pandemic, like driving at faster speeds, have lingered, he added.