How Inflation Impacts Auto Insurance Rates

Julie Akin • August 3, 2022

Insurance are rising due to inflation

Cars are driving down a highway with wind turbines in the background.

Factors impacting the auto insurance industry

Nearly 50% of repair shops state they are “frequently” having disruptions in getting the parts they need to service vehicles. The global automotive repair and maintenance market is expected to grow 11.4% and that is in conjunction with inflation and labor shortages.1  Learn more about how car insurance is impacted by inflation and other factors:

Inflation

Prices have increased on everything, including cars. As new car prices soar (6.8% in 2021) drivers are keeping their used cars longer. Used cars need more repairs, which increases the need for additional parts. This unexpected increase in demand has caused car parts to increase about 12%.Additionally, labor shortages have pushed labor costs to all-time highs.

Labor shortage

Many industries have experienced labor shortages, and the auto repair sector is no different. This can be attributed to retirements or career changes that were brought on by the Covid-19 pandemic. It takes time to find and train replacement mechanics, which increases repair timelines.

Severity of accidents

Roads were less crowded as many employees started working from home. However, emptier roads led to some drivers speeding more which caused the severity of accidents to increase. There
were 10.5% more fatal accidents in 2021 compared to 2020.

How to save on car insurance

Rates are rising but that doesn't mean a better rate isn't available for you.  Let Budget Insurance & Tucson Insurance Solutions assist you in finding the best insurance quote to fit your needs!  Get a quote and start saving today.

 

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