How the chip shortage & supply chain issues could affect your auto insurance – WFMYNews2.com
Repairs are more expensive. Parts are hard to find. Together, this can add up to higher premiums.
GREENSBORO, N.C. — “If there’s ever been a time to be more careful, now is the time. Stop looking at your phone, slow down, hands at ten and two like your driver’s ed teacher taught you,” said Christopher Cook of Alliance Insurance Services.
There’s no good time to get into a car accident, but now with a chip shortage and a global supply chain issue, your auto insurance could be affected in ways you never thought about.
For example, the cost of repairs is up. The fix rate speed is down. That trickles down to more days your insurance pays for a rental car for you. In the end, premiums go up to cover all the extra costs.
Add in this situation. An insurance adjuster normally deems a car a total loss if the cost to repair the car exceeds 70% of the value of the car. With the increase in repair costs and parts, the chip and shortage situation sets up for more cars to be totaled.
“When the cost of a bumper goes from $500 to $800, all of a sudden we’re pushing up against that 70% threshold and we’re going to see more cars deemed a total loss because of repair costs than we would have in the past years,” said Cook.
Before you start thinking about what new car you would buy, remember, there’s that chip shortage and the supply shortage driving up the cost of new and used cars.
This is why Cook’s first words were, be more careful. What else can you do? Keep up on your maintenance, brakes, fluids, tires, so a safety issue doesn’t cause an accident.
If you bought a car within the last 2 years, you can consider adding Purchase Price Guarantee Coverage. According to Auto-Owners Insurance, this policy ensures you’ll be compensated for the higher price if you have to purchase another car.