Auto Premiums May Increase By 12% In 2023
Insureds may spend $1,846 on average next year for auto coverage, or 12% more, according to an analysis from Insurify.com.
They blame this price jump on increased insurance payouts due to a number of factors, including inflation, trends in traffic infractions, and a rise in accidents and risky driving practices since the Covid pandemic started. The rising cost of vehicle repair and replacement is also a factor,
While the average annual rate for auto insurance in 2019 was $1,400, it increased to $1,648 in 2022, a 17.7% rise.
The cost of buying an auto has also seen a sudden rise. According to a survey from TheZebra.com, new car prices rose by an average of 3% per year in the ten years before the COVID-19 pandemic, but following a 5% increase between 2019 and 2020, prices jumped 17.2% between 2020 and 2021. The average new car price in 2019 was $36,824, with an increase to almost $47,000 by the end of 2021.
Similar trends have been observed in used automobile prices, which increased from $19,863 in 2019 to $28,205 in 2021.
The rising expenses of car ownership have also been attributed to problems in the supply chain. Rising car demand resulted in a shortfall of semiconductor chips, forcing thousands of vehicles to stay idle while they wait for chips. Due to the limited customer options, expenses have increased in many vehicle lots. According to U.S. News and World Report, the chip shortage may last until 2023 or 2024, depending on whether the demand for new cars declines.
There are several causes for the shortage, but the COVID-19 pandemic is the main one. Automakers shut down operations and momentarily halted car manufacturing during the pandemic’s start. Lockdowns, virtual work environments, and schooling all contributed to a rise in demand for other devices.
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