Why Are Car Insurance Rates Predicted To Increase In 2022

(Photo : Vlad Deep on Unsplash)

If you thought that buying a car was expensive, you have no idea how expensive it is to just operate it. One visit to the gas station and you'll see why people are preferring to take the bus instead of driving their cars. But even if you choose not to drive your car around, you still will have to pay for something else to just keep it; auto insurance. There's no denying that auto insurance rates have been rising in the past years and guess what, the same trend is going to continue in 2022. 

This makes you want to ask the question, why are car insurance rates predicted to increase in 2022? The world just saw an ugly episode of a pandemic. Auto insurance companies should be bringing down the cost of auto insurance. Then why is it not happening? This article will look into all the possible reasons for auto insurance rates going up, along with some ways you can bring down the cost and save some money. 

The Effects of Pandemic

The pandemic put the whole world to a stop. With everyone inside their houses, offices, schools, and factories, everything remained shut for an indefinite period. The roads were less populated, with occasional cars and ambulances. This meant that the number of accidents decreased, and so did the number of auto insurance claims. This led to a great profit for the auto insurance company.

But now the pandemic is fizzling out and more people are out on the roads than ever. In these almost three years of lockdown, so many people have learned to drive, got their driving license, and were just waiting for the pandemic to be over so they can take on the road.

This has created an opportunity for insurance companies to rake in more money before insurance claims start happening again. Though you can still find some of the best cheap car insurance providers in the market, expect higher-priced auto insurance from most of the companies. The pandemic will be the single biggest factor in the price increase, as you'll see from the other reasons.

Rise in Car Prices, Parts, and Services

The pandemic has impacted everything about this world, from the way we live, and commute, to how we do things. Every industry works because of an intricate and complex network of supply chains. You can get that coffee from your supermarket because of hundreds of different processes that happen behind the scenes. The pandemic affected all these processes. 

Due to the disruption of supply chains, manufacturers are finding it difficult to make cars, find raw materials, ship those cars to different places, and a lot more. This has resulted in an increase in car prices, the cost of spare parts and accessories, and even services.  

The cost of vehicles, spares, and repair services is directly related to the cost of auto insurance. This is one of the factors why auto insurance rates will see a rise in prices this year. 

Driving is Getting More Dangerous

Data released by USDOT showed that there has been a massive increase in the number of road accident deaths in the first half of 2021, the highest jump since 2006. The same goes for road accidents. Statistics never lie and insurance companies are always listening to what they say. Driving is getting more dangerous and every vehicle on the road now has a higher risk of getting in an accident. The United States Transportation Secretary Pete Buttigieg described this hike in accidents as a "crisis". 

Insurance companies are risk management companies. If they think the risks of getting an insurance claim are high, they will charge more to offset the price of a possible insurance claim. And since we are dealing with a road accident "crisis", these words and stats are not very confidence-inspiring for auto insurance companies. 

More Cars on the Road 

The hiatus of people buying new cars for almost three years is finally ending. With the imminent end of the pandemic, people are ready to buy more. Not just cars, but everything else. All the industries have seen a boom in sales. While this is great for the industries and economy, it is quite the opposite for the roads. 

With the increase in the number of vehicles, the probability of accidents also increases. Add that to the increased number of new drivers who are statistically more likely to be in an accident and make a claim, and you have a recipe for increased auto insurance rates. 

How to Manage the Prices

No matter what you try, you cannot undo what the pandemic has done to the world and the auto insurance industry. However, if you want to save some money, there are many tried and tested practices that will help you save some money and counter the rising costs of auto insurance. 

Keep deductibles high: Deductibles are the amount you have to pay in an auto insurance claim before the company pays the rest. The general rule is that; the higher the deductible, the lower the premium costs and vice versa. But do note that in case of an accident, you'll have to pay more from your pocket if your deductibles are high. 

Compare insurance rates: Don't be stuck with one insurance company. Always be on the lookout for better auto insurance policies that cost less and give better coverage.

Ask for discounts: Many people don't know this but you can get great discounts if you ask. Most insurance companies have year-round discounts such as veteran's discounts, good student discounts, and many more. So don't hesitate to ask your insurance agent and save some money.