Wednesday, April 17, 2024

What’s causing car insurance prices to go up so fast?

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A lot has changed since Gerald Ford was president and Steve Jobs and Steve Wozniak started Apple. But one thing that hasn’t changed much is how fast car insurance prices are going up.

Car insurance rates went up by nearly 21% in the year ending in February, according to new data released on Tuesday. The last time rates went up that much in a year was 1976, except for January, which had the same increase rate.

The increase in car insurance rates alone made up half of the overall 3.2% inflation rate last month. This is a big problem for the Federal Reserve, which wants inflation to be around 2%, and it’s also tough for Americans dealing with high prices.

Several things are causing this.

Car repair costs are going up. It’s 6.7% more expensive to fix a car this year, although it’s not rising as fast as it has in recent years. The cost is higher because auto parts are pricier, and car mechanics are getting paid more due to labor shortages.

There are also more serious and more frequent car accidents happening. In 2022, there were around 7,000 more traffic deaths in the US compared to before the pandemic. Risky driving behaviors like speeding, texting while driving, and driving under the influence of drugs or alcohol are causing more accidents.

These accidents are not only more expensive to repair, but they also lead to more claims with lawyers involved, which costs insurance companies even more money.

But not all states are having the same issues. Car insurance rates are going up differently in each state because insurance companies base their prices on how much they’re losing in each state.

For example, in Nevada, car insurance rates went up by 38%, while in North Carolina, they only went up by 5.5%. This is because of different factors in each state’s insurance market.

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