How to Save Money on Car Insurance as Inflation Soars
- This year; inflation has affected every business and every individual in our country.
- The car insurance sector and the drivers are also affected by inflation and are finding ways to deal with it.
- There are multiple reasons behind increasing car insurance costs due to inflation.
- Also, there are different types of discounts available for drivers to get affordable car insurance.
Inflation is not a myth; it is a harsh reality of the 21st century. Every country, every state, every business, and every household is getting disturbed by inflation. The car insurance industry is also affected by inflation and the companies are increasing the policy rates rapidly.
Want to save money on car insurance as inflation increases? This blog is for you. RateForce has covered everything you need to know about inflation and its impact on car insurance policies for different drivers. Keep reading till the end to know some tried and tested ways to save money on car insurance as inflation rises.
Why Cost Of Car Insurance is Going Up?
Let’s start by understanding how inflation affects insurance rates for every driver in our country. Car insurance rates depend on the profile of the driver and some solid factors based on the geographic and economic conditions of the state. To understand how inflation is affecting the insurance costs; let’s have a look at the top factors that affect car insurance.
1. Repair Costs
Inflation has affected the repair cost for every vehicle and this is now affecting the car insurance cost. Every year the cost of car parts and labor is increasing and it, directly and indirectly, affects the cost of car repairs.
As per research by Lexocology; car repair rates have increased by 12% between 2020 to 2021. And the major factor for this is inflation as it is affecting the entire supply chain of the car repair section of any insurance company or individual garage.
2. Low Vehicle Inventory
We all know that the entire supply chain of vehicle inventory is connected. Due to inflation the cost of car parts and certain semiconductor chips has increased which is affecting the cost and budget of car manufacturers.
This as a result is affecting the inventory of vehicles all over the globe. Car manufacturers are not able to build and deliver vehicles on time which leads to a shortage of cars in the market leading to a higher cost of new cars.
Moreover; low vehicle inventory also leads to fewer rental cars available and higher rent costs. And most of the time car insurance companies pay for car rentals when a car is in repair hence they will have to pay more for rentals which leads to higher insurance premiums.
3. General Inflationary Pressures
Inflation affects every part of our life; like higher petrol/diesel costs, higher import/export taxes, higher labor costs, etc. So every component of car insurance is getting affected by inflation and the price of small components is also increasing. This ultimately adds up to overall higher car insurance rates for every driver.
4. Worker Shortages
Every industry is facing a shortage of manpower; which means more time required to complete the work which ultimately leads to higher overall costing. Let’s say a garage wants to import engine parts from Germany for luxury cars. But there is a shortage of workers in Germany so the entire cycle will get affected.
If there are only 100 workers available instead of 1000 then the production will be slow, packaging will be slow and transportation will be slow. And in some cases, workers are not available for the next few months. Now, this will lead to slow export; now the garage owner might have to pay extra money to get the parts quickly.
5. COVID-19 Cleaning Costs
There’s no doubt that COVID-19 has affected every business around the country. To keep the workers and businesses safe from the virus there are some strict guidelines that every business has to follow. This includes proper sanitization with alcoholic-based chemicals, wearing gloves and masks while working, etc.
This adds an extra cost to every business hence the business owners try to cover this cost by increasing the cost of their products or services.
6. Replacement Costs
Car insurance companies are finding it difficult to cope with the replacement cost of vehicles that are totaled. Because of low vehicle inventory and higher repair costs, the replacement of a car is almost impossible for car insurance companies. As a result; car insurance companies are trying to cover this loss from the insurance premium.
How to Save Money on your Car Insurance?
- Increase Your Deductible
By increasing your deductible you are taking responsibility for your accidents and repairs which means the chances of getting into an accident will be lower. As a result; your insurance company will provide you with lower insurance rates.
- Pay Off Your Auto Loan
If you have an auto loan on your car then you might have to pay a higher insurance rate. Plus the burden of paying EMI and insurance premiums can also be huge. Hence it is better to pay off your auto loan to get lower insurance rates.
- Use Mass Transit
If you have a good public transport facility in your city and in your area then you can try to use it. This will prove that you use your car rarely and will decrease the insurance rate on your policy.
- Reduce The Coverage
With time there are some car insurance coverages that are not beneficial for the car. Paying for these coverages will only increase the burden on your wallet. Hence it is better to reduce the coverage on your insurance policy.
- Improve Your Credit Score
Drivers with a poor credit score are considered less reliable when it comes to paying insurance premiums on time. As a result; if you have a poor credit score then try to improve it by paying all your bills on time and clearing your dues.
- Explore Safe Driving Discounts
If you are a safe driver with a clean driving record then your insurance company will provide you safe driving discounts which can have a huge impact on reducing your insurance cost.
- Bundle Your Insurance Policies
By combining different policies like homeowners insurance, renters insurance, and life insurance you can get into the list of loyal and reliable customers for a car insurance company.
- Compare Quotes
The best way to get affordable car insurance rates is by taking quotes from different insurance companies and comparing them. By comparing quotes you will get a clear idea of what other companies are charging for the same policy.
Want To Know More (FAQs)?
What is Inflation for the general public?
As per multiple economists; the price of consumer goods is rising day by day which is creating a burden on the budget of common people. This rise in the cost of consumer goods is known as inflation.
Can the inflation rate affect car insurance?
Yes, inflation rates are affecting car insurance policies for every driver. Drivers are paying more every year for the renewal of their policies.
Can I get lower car insurance rates during inflation?
Yes, there are different ways to save money on car insurance as inflation soars. By combining multiple car insurance discounts you can get lower insurance rates as compared to others.
Is inflation good for car insurance companies?
Inflation is bad for everyone; drivers, nondrivers, and even insurance companies. With the rising rate of repairs and car parts, it is difficult for insurers too to make much profit from policies.
Where I can get affordable insurance rates?
Check all the top car insurance companies in your area. Ask for a quotation from each and compare them. You will get a clear picture of which company is charging more and which company is charging less.
Can inflation be reversed in car insurance policies?
Theoretically yes, inflation can be reversed it is known as disinflation. But practically a lot of things and scenarios are connected with one another so the chances are almost zero.
Over To You!
Car insurance rates increased by 12% in 2021 and are expected to increase by an extra 5% in 2022 again due to inflation. We know that inflation is not in our direct control. But we can control how much we are paying for our car insurance policy. We are here to help you save money on car insurance as inflation increases. Our team of experts will prepare a list of all the top car insurance companies as per your profile.
- Read an article on Live Mint about the impact of inflation on the car insurance industry on 27th April 2022.
- Referred to a study by Lexology to understand how car repair costs are increasing on 27th April 2022.
- Read an article on Market Watch about the constant increase in car insurance rates because of inflation on 26th April 2022.
Editorial Guidelines: The above is meant as general information to help you understand the different aspects of auto insurance. This information does not refer to any specific auto insurance policy. Coverages and other features vary between insurers, vary by state, and are not available in all states. References to costs of coverages/repair, average or typical premiums, amounts of losses, deductibles, etc., are indicative and may not apply to your situation. We encourage you to speak to our insurance representative and to read your policy contract to fully understand your coverages.