Reasons for increasing auto insurance rates
The same issues plaguing the construction industry is weighing down the auto industry as well. Supply chain issues that have been prevalent since the COVID-19 pandemic have caused an enormous shortage of necessary auto parts and equipment, the costs of which have jumped over 22% between 2020 and 2022 and have only increased further in 2023. The overall cost of maintaining and repairing vehicles increased 18.4 % over the last two years – exacerbated by a growing shortage of car repair technicians. Mass disruptions in the supply chain have also led to a shortage of new and used cars, causing inventory to fail to meet consumer demand. As a result, the average price of new cars has risen 20% since 2020, while used car prices have skyrocketed an incredible 37%. Yet another factor in determining auto insurance rates is the cost of medical care, specifically the cost of paying out claims for medical expenses. While the number of injuries and fatalities from car accidents has somewhat declined from its peak in 2021, the overall cost of medical care in the U.S. increased a whopping 6.8% between 2020 and 2022, representing billions of dollars in new health care costs.