The price of car insurance has risen 36% since January 2020, according to an analysis by ABC News of data released by the Bureau of Labor Statistics.
Just last year, the price of car insurance increased by more than 20%, BLS data shows.
The increase is directly related to the rise in vehicle prices, analysts told ABC News.
If the car is more expensive, the coverage becomes more expensive, as high prices have made it costlier for insurers to provide replacement vehicles after a serious accident.
As a result of the high price of new cars, there has been an increase in demand for car repairs. The prices of car repairs rose 7% last year, a rate more than double the overall inflation rate during that period, BLS data showed.
The increased demand for car repairs has led to a shortage of workers and parts, raising the costs for repair shops and the prices charged to insurers.
The result is that the average cost of car insurance in the United States today is about $2,500 per year, according to the personal finance website Bankrate. In 2021, the average cost was about $1,700, according to Bankrate data reviewed by ABC News.
The good news is that the pace of increases is expected to slow down in the coming months, analysts believe.
After recovering from the car shortage during the pandemic, the automotive industry has accumulated an excess of new vehicles, which should slow down the increases in new car prices. This will ease costs for insurers at least for now.
Do you know why ‘for now’?
The broader adoption of electric vehicles promises to complicate the future of insurance prices, as these cars, although built with fewer parts, each of which is relatively more expensive to replace or repair compared to the components of a combustion vehicle.
Source: ABC