Why you need to buy your car insurance again this year

No matter what you’re paying for your car insurance, now is a great time to look for cheaper coverage.

Because right now? Because the auto insurance industry is currently under immense pressure to increase rates, you want to get the best possible price before that happens.

In this article, I will discuss various factors affecting the auto insurance industry and why higher rates may be on the way for customers. Money expert Clark Howard says you may see a rate hike even if your driving record is spotless.

Why you need to buy your car insurance again this year 41 Clark Quote Icon“I want you to be aware and be aware… that [car insurers] they are feeling price pressure and may not be willing to absorb it,” says Clark. “You could be facing huge premium increases when you haven’t done anything, no accidents, no fines, nothing.”

Why auto insurers feel pressure to raise rates

The auto insurance industry is being negatively affected by several factors right now, including the following:

  • A bloated used car market
  • More expensive car repair costs
  • More fatal traffic accidents

Let’s take a look at each of these factors in more detail.

Higher Priced Used Vehicles

I have written extensively about how used vehicles have skyrocketed in recent times. The effect of the COVID-19 pandemic on the economy, especially the supply of semiconductor chips used to make cars, has led to record prices on both new and used vehicles.

Prices are so out of control right now that Clark has advised those in need of a car to buy an older, cheaper vehicle just to buy some time and wait to buy the car they really want when prices stabilize.

This is when car prices are expected to drop.

higher repair costs

Clark notes that unusual market conditions have resulted in car repairs costing more for everyone, including insurance companies.

Why you need to buy your car insurance again this year 41 Clark Quote Icon“When a car is destroyed in an accident, what the insurer has to pay is much, much higher now due to the dramatic increase in the value of used vehicles,” says Clark.

“They are having trouble finding affordable repairs,” adds Clark, “and everything is very expensive right now.”

More fatal traffic accidents

Fatal accidents are on the rise in the United States according to the latest report from the National Highway Traffic Safety Administration.

The report says that approximately 31,720 people were killed in car accidents during the first nine months of 2021: a 12% increase over the same period in 2020.

Clark says auto insurers are likely to pass the expense of those claims onto the consumer, which is bad news for our wallets.

So, with repairs more expensive than normal and the car market expensive, “plus the increase in accidents because, well, we’re driving like fools,” Clark says, “all of this is combining to put severe pressure on insurers.” Of automobiles. And I know they’re not the kind of people you’re going to cry a river over.”

Case in point: Allstate

As an example of a company bent on raising prices, Clark points to Allstate, which is the second largest publicly traded insurer.

in a Press release On its fourth quarter 2021 earnings, the company said, “Allstate is taking comprehensive steps to improve profitability, including rate increases, expense reductions and claims loss cost management actions.”

Why you need to buy your car insurance again this year 41 Clark Quote Icon“I want you to know that when your claim comes up, even when you haven’t had any claims or penalties, you could see very, very large increases in your Allstate premiums,” says Clark. “And I’m not saying Allstate is the only one that could do this.”

What You Can Do to Fight a Potential Increase in Auto Insurance Rates

Even if you’ve recently been in an accident or received a ticket, you may be able to get a lower car insurance rate by shopping around. If you don’t have them, your chances are even better.

“This year is going to be a very important year for you to buy your car insurance again,” says Clark. “If you get notice of a massive increase and your record is clean, other insurers are likely interested in you, and buying your coverage from someone else could make a big difference.”

Here’s how to shop for new auto insurance.

1. Make a list of car insurance companies

Including the company you’re already with, write a list of the insurance companies you want to shop with.

A great resource is our guide to the best and worst auto insurance companies.

2. Get quotes and compare them

You can use an online broker (be careful though, my experience is that you can get spam calls for a day or so from different companies).

You could also choose The zebra or compare.comwebsites that allow you to compare insurance prices.

After shopping for insurance on both sites, Theo of the Clark team says, “I’ve come to the conclusion that, as with Compare.com, Zebra is probably best used to get a general idea of ​​the price of generic coverage, not to personalize it. your perfect policy. Read Theo’s review of The Zebra here.

Are you a member of AAA, AARP or any other organization? Take a look at the rates and companies they offer as well.

It doesn’t matter if you’re getting quotes for just liability insurance or for comprehensive and collision insurance, be sure to compare the same coverages across all companies. These are the differences between comprehensive/collision insurance and civil liability.

3. Don’t forget to ask about discounts

To lower your rate even further, don’t forget to ask about discounts, which you may qualify for based on where you work, your age, and your military status.

For example, Geico offers a discount up to 15% for veterans. Here’s more information on car insurance discounts.

4. Choose based on more than just price

While price should be an important factor, you should also consider the reputation of the insurance company.

“Sometimes it’s better to pay a little more to be with a quality insurer that will be there when things go wrong,” says Clark.

If you don’t have personal experience, ask your friends and family who they have auto insurance with.

You can also go online to read reviews of insurance companies on sites like trustpilot and the Better Business Office. Pay close attention to what customers say about how the company handles claims.

Here are some other ways to lower your car insurance.

final thoughts

Not all auto insurers may decide to raise rates in the near future, but you’ll probably find it to your advantage to shop around for rates, especially if you haven’t in a while.

“This is a circumstance where you can find a big difference in price for the same coverage for the same driver with different insurers, even more than normal,” says Clark.

More car insurance resources from Clark.com: