2022 Outlook For Car Insurance Buyers – Forbes Advisor – Forbes
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Car insurance rates are expected to rise in 2022, due in part to risky driving and costly claims. That, along with the fallout from inflation and supply-chain disruptions, means comparison shopping for a good rate is more important than ever.
The good news is that the cost of auto insurance electric vehicles is poised to decrease and industry watchers say usage-based insurance may provide some savings for good drivers.
Here’s more on the trends auto insurance buyers can expect to see in 2022.
Unsafe Driving Contributes to Car Insurance Rate Hikes
An uptick in speeding since the pandemic, record-breaking numbers of fatal crashes and increasing claims costs are likely to mean higher overall car insurance rates in 2022.
Arity, a mobility data analytics company owned by Allstate, found that time spent at speeds over 80 mph on trips is around 10% higher than pre-pandemic levels. Arity data also shows that nearly one out of every 20 miles driven is at speeds over 80 mph.
This lead-foot mentality is likely a factor in the spike in traffic deaths over the last year. The National Highway Traffic Safety Administration (NHTSA) found an 18.4% increase in fatal crashes in the first six months of 2021 compared to the same period in 2020. This was the highest percentage increase the NHTSA had on record.
Auto accidents at high speeds are much more catastrophic, leading to bigger insurance claim payouts. And claims usually cause drivers’ rates to rise as car insurance companies pass their increased costs on to customers in the form of higher rates—even customers who didn’t make any claims.
Related: How much do insurance rates go up after an accident?
Arity notes that “many drivers will pay more in 2022 as insurance companies begin to increase rates to cover 20-year increases in claims costs, partially due to an increase in driving mileage, and due to riskier driving since the pandemic that increases the severity of accidents.”
Inflation Adds to Rate Increases
Inflation can also push up car insurance rates. Richard Attanasio, senior director at A.M. Best, observes that “inflation trends and supply chain constraints could continue to pressure rates, so insurance premiums rise.”
The average cost for auto parts—for items ranging from airbags to bumpers—rose by 6% in 2021, the largest increase since 1997, according to a study by CCC Intelligent Solutions.
Drivers looking for relief from inflation’s effect on car insurance may be more likely to shop around and secure a low rate. Policies run for six to 12 months, so if car insurance rate hikes come during that time, your rate is already locked in until the end of your policy term.
Doug Heller, insurance expert for the Consumer Federation of America (CFA), recommends that “people shop around for auto insurance right away before more rate hikes take effect. Even if consumers are in the middle of their policy term, it is worth comparing prices to see if there are some savings they can lock in.”
Gap Insurance Can Bridge High Vehicle Values
New vehicles are exceptionally costly right now due to lack of inventory from supply chain issues and the computer chip shortage. The costs for totaled car claims is skyrocketing because of the higher new and used car valuations, inflation and supply chain issues, says Keith Daly, president of …….