Perfect storm of price hikes means higher auto insurance premiums [The Herald Bulletin, Anderson, Ind.]

Mar. 25—ANDERSON — Sky-high gas prices aren't the only reason it's getting more expensive than ever to drive a car.

As manufacturers, repair shops and other industry stakeholders deal with rising prices for parts and labor, those costs have, in many cases, made their way to consumers' premium notices.

"We're seeing inflation affect the cost of everything, and insurance is one of them," said Rod Griffin, senior director of consumer education and advocacy at Experian, a major credit reporting company.

"When you look at things like the cost of replacement parts, things like low inventory — demand is high but supply is low — all of those things affect the cost of replacement that insurance companies have to pass on to the consumer."

According to research by Bankrate, an independent publisher and comparison service, the average U.S. driver can expect to pay $1,655 this year for full coverage auto insurance. Some industry surveys indicate insurers may hike rates from 6% to 10% to mitigate costs related to the pandemic, supply chain disruptions and other factors.

Those increases are, at least in part, being driven by inflation, which according to Moody's Analytics had the average American household shelling out an additional $276 a month overall for goods and services in February.

In examining factors that could be tied to auto insurance premium hikes, experts point out that there have been across-the-board cost increases for nearly everything that goes into manufacturing and maintaining a vehicle.

"Just go back five years ago, and you'll see, cars are more expensive now," said Rick Davidson, an independent insurance agent in Alexandria. "It's incredibly more expensive, if you purchased something in 2015, 2016, just to go out and replace that vehicle now."

Davidson said in addition to difficulty obtaining the necessary parts, many repair shops are struggling to keep qualified technicians on staff, with competitive wages in other sectors luring some workers away from the profession altogether.

Also, he noted, incentives and discounts that many companies applied to clients' accounts during the height of the pandemic — when businesses closed and many workers began working remotely — have run out. Even so, he hasn't seen many drastic premium increases in his business.

"It'd make my job really tough if I were having to justify a 15, 20% (rate) hike every six months."

Besides shopping around and comparing rates, there are steps consumers can take to insulate themselves from the worst of the increases.

Experian's Griffin said in addition to considering scaling back coverage, consumers should take note of insurance company-offered programs that provide rebates or reduced premiums.

For example, he said, programs that require monitoring devices to be attached to vehicles can provide significant discounts — if customers are willing to let their driving habits be tracked.

"If you're not rocketing away from stop signs and not speeding, that can help you save some money."

Other discounts can be realized by encouraging student drivers to keep their grades up, he added.

Also, more insurers are considering credit scores when setting premiums, so in some instances, motorists can reduce their rates over time by enrolling regular household expenses like utility and phone bills — and even streaming service fees — to auto-pay accounts.

In addition to paying the credit card bill on time, those positive markers can accumulate and translate into savings, Griffin said.

"You can proactively add that positive information, and that could help improve your scores, which could lead to reduced rates as well," he said. "You want to use the tools at your disposal to do everything you can."

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