Car insurance inflation rate

Insurers must cover the cost to repair or replace a vehicle, and if their costs to do that increase dramatically, they are going to pass that cost on to policyholders. And it’s not just vehicle prices that have been hit by inflation, healthcare costs have risen as well.

The major reasons car insurance rates are rising are inflation, increase in the cost of parts, labor shortages and change in driving habits during the pandemics. As pandemic has changed the driving habits, NHTSA reported a 18.4% increase in fatal crashes during the first six months of 2021, which is the highest percentage increase ever.

According to the U.S. Bureau of Labor Statistics, prices for motor vehicle insurance were 6,241.48% higher in 2021 versus 1935 (a $31,207.40 difference in value). Between 1935 and 2021: Car insurance experienced an average inflation rate of 4.94% per year . This rate of change indicates significant inflation.