There’s no doubt the rising costs of food and fuel have recently captured your attention, primarily because you buy both just about every week. The threat of inflation — which has been nearly dormant in the U.S. for the past few years — is bubbling at the surface. Auto insurance is also on the rise. The higher cost is not quite so obvious because you confront that bill maybe once or twice each year. But premium sticker shock — however moderate — may soon be coming your way.
Let’s examine why.
Clearly, the pandemic kept people home. Auto travel to work, school, shopping, entertainment and family visits stopped dead in its tracks. So much so, in fact, that auto insurers refunded drivers $14 billion in premiums in 2020, according to the Insurance Information Institute.
But as the economy — and life as we knew it — reopens, there’s a considerable ripple effect impacting insurance rates.
First, roadways are under siege as families return to work and school and take summer vacations that don’t include flights. More congestion means more accidents, and more accidents mean more insurance claims. Additionally, in just the past few months, the National Highway Transportation Safety Administration is reporting a spike in fatalities due to higher incidences of speeding, impaired driving and distracted driving.
Second, the cost of cars, SUVs and light trucks is soaring and, according to CNN Business, dealerships and wholesalers are not about to tap the brakes anytime soon. New vehicle prices, for example, are up 12% from this period a year ago — and the increase jumps to 20%for preowned models. As strong sales and limited inventories feed the price boom, that makes it more expensive to insure vehicles against rising repair and replacement costs.
Third, in a word, technology. Today’s vehicles are packed with advanced technology that makes your car or SUV smarter and safer than ever. But even though these incredible safety features monitor the road, keep you in your lane, warn you of nearby cars, watch your back, automatically brake, lessen impacts and help avoid collisions, these sensor-driven components can be wildly expensive to repair or replace.
In May of this year, those factors all contributed to consumer price index data reflecting a 16.9% increase in auto insurance among the nation’s largest carriers. Add that increase to a surge in consumer demand, a shortage of labor and materials and the aforementioned leap in prices for food and fuel, and U.S. inflation is at its highest level in more than a decade.
But no reason to despair. As fluid as auto insurance rates can be, Montgomery agents are dedicated to bringing local drivers the best possible value for their insurance dollar.
When we work with you to create your new or renewed policy, your Montgomery agent will examine your vehicle profile, driving history, deductible choices and many more factors before building the insurance coverage you need for the peace of mind you deserve. To learn more, call us today at 610-565-8280.
From the start of your relationship with a Montgomery agent, your insurance strategy is always monitored, always evaluated for efficiency and always subject to a cost-effective adjustment when needed. It’s why our clients — our friends and neighbors in the Delaware Valley — have invested their trust and faith in us for more than 75 years.
Here are five cybersecurity threats and how to keep your data and personal information safe.
If you are trying to evaluate an insurance provider for your business, here are 5 types of business insurance to consider.
Check out these 8 tips on how to best implement disability accommodation policies in your small business