Why Are Your Auto Rates Going Up?

You may be wondering why your (and everyone else’s) auto rates are skyrocketing. While there are many factors, here are four main reasons.

Higher Medical Costs

From 2020 to 2022, medical care costs n the aftermath of an accident rose 12 percent.

More Fatal Car Accidents

The death toll rose 10.5 percent between 2020 and 2021, the highest increase in the National Highway Traffic Safety Administration (NHTSA) report’s history. The average cost of a fatal accident in 2020 was $1.75 million, compared to an average cost of a disabling accident which was $101,000.

Technology

As cars get more technologically advanced, parts are more expensive to repair and replace. The average vehicle now has about 1,500 semiconductor chips; electric vehicles have nearly double that. The chips account for 45 percent of a vehicle’s cost.

Cost of Parts

Between January 2020 and January 2023, the consumer price index (CPI) for all things auto rose. The cost of auto parts alone increased by 32%, while most insurance prices stayed the same. Rate increases are attempting to bridge that gap.

Sources: Grinnell Mutual, National Safety Council, NHSTA, Claims Journal, NOAA