Inflation is a reality of life, and it has a significant impact on the cost of living. Unfortunately, auto insurance is no exception. As inflation rises, so does the cost of auto insurance. In this article, we’ll take a closer look at how inflation affects auto insurance and what you can do to protect yourself from its effects. 

What is Inflation and How Is It Affecting Auto Insurance? 

Inflation is a sustained increase in the general price level of goods and services in an economy. It’s caused by a number of factors, including changes in the money supply, supply and demand, and economic growth. Inflation can have a significant impact on the cost of living, and auto insurance is no exception. As inflation rises,  naturally so do auto insurance rates. 

Inflation and Auto Insurance: The Facts 

The impact of inflation on auto insurance is undeniable. With the overall cost of living on the rise, auto insurance premiums quickly follow suit. The Insurance Information Institute found that in 2016, the average premium for a single-car policy across the nation was $841. That figure has since risen to $1,196 in 2019, an increase of 42%. With the current exponential monetary supply increase and current inflationary economy, these numbers are expected to only grow larger over the next few years.   

How Inflation Affects Auto Insurance Rates 

 Inflation can have a devastating impact on auto insurance rates. Insurance companies use a variety of factors to determine rates, including the age of the driver, the type of car, the driver’s driving record, and the location of the vehicle. A large chunk of these rate factors are directly affected by inflation. As the cost of living rises, so do the cost of car repairs and the cost of medical care. This, in turn, raises the cost of auto insurance.  

What Can You Do to Protect Yourself From the Effects of Inflation on Auto Insurance? 

Fortunately, there are a few steps you can take to protect yourself from the effects of inflation on auto insurance. First, shop around for the best rate. Different insurance companies offer different rates, so it pays to compare. An experienced independent agent will have access to a number of carriers and will be able to do a comparison for you without having to spend days or weeks going to each insurance company individually 

Additionally, raising your deductible can help lower your premiums. Of course, you should never raise your deductible to a level that would make it difficult to pay. 

You can also look into discounts. Many insurance companies offer discounts for good drivers, good students, and other factors. Finally, make sure to keep your car in good condition. Regular maintenance and repairs can help keep your vehicle running smoothly and have the potential to, directly and indirectly, reduce the cost of your insurance bill. 

Understanding Auto Insurance and Its Components 

In order to get the best auto insurance rate, it’s important to understand how auto insurance works. Auto insurance typically consists of several components, including liability coverage, personal injury protection, collision coverage, and comprehensive coverage. Each of these components pays for different types of damages and losses. 

Liability coverage pays for damages and injuries that you cause to other people and their property. Personal injury protection pays for medical expenses and lost wages for the driver and passengers in the event of an accident. Collision coverage pays for damage to the insured vehicle, and comprehensive coverage pays for damage to the insured vehicle caused by events other than a collision, such as theft, vandalism, or hail. 

Car Insurance Comparison: What to Look For 

 When comparing auto insurance rates, there are several factors to consider. First, make sure to look at the cost of coverage. While it’s important to get the best rate, it’s also important that you are not sacrificing your protection level and you are obtaining the coverages you need. Additionally, make sure to compare the deductibles and discounts offered by different companies. Finally, make sure to ask questions to your independent agent about the carriers. Ask about the claims experience, if they offer 24-hour customer service, and how is their technology. Anything that will affect how you interact with the company is just as important if not more than the rate itself.  

Ask yourself,  what is the point of a cheap rate if it is a terrible carrier to work with when you need them?  

Other Types of Vehicle Insurance and How They Are Affected by Inflation 

In addition to auto insurance, there are a few other types of vehicle insurance that are affected by inflation. If you own a motorcycle or RV, for example, you may need to purchase specialty insurance for those vehicles. Motorcycle and RV insurance rates are also affected by inflation, just like auto insurance.  

Auto Insurance and Inflation: Final Thoughts 

With inflation proving to have a major impact on the cost of auto insurance, there are steps you can take to protect yourself. Shopping around, raising your deductible, looking into discounts, and keeping your car in good condition can all help to reduce your premiums in one way or another. Call The Staples Agency today to optimize your auto Insurance rate and to obtain the best rate for your vehicles. Our auto insurance specialist will be able to walk you through the process and answer any additional questions you may have.