Why are auto insurance rates
increasing?
Car
insurance rates are calculated based on a number of underlying factors.
Individually, your age (in all states except Hawaii and Massachusetts), gender
(in most states), driving history, vehicle type and coverage choices impact
your premium. Additionally, broader factors also impact rates, such as if
states pass revised insurance laws, the likelihood of claims occurring in
certain areas or if vehicle repair costs increase.
Perhaps the
biggest driver of higher 2022 car insurance premiums is the same thing that is
driving up costs across the board — inflation. Between May 2021 and May 2022,
the Consumer Price Index (CPI) rose 8.6%. This means that, on average, we are
spending 8.6% more than we were a year ago for the same goods and services.
While auto insurance is certainly not the most drastic increase — fuel, energy
commodities and airline fares take the top spots — the increase still has the
potential to further strain consumers’ wallets.
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