The Consumer Price Index rose 7% between December 2020 and December 2021, which is the largest 12-month gain since June 1982, according to the Labor Department. The price of new and used vehicles rose even more, with new car and truck prices rising by 11.8% while used car and truck prices were up 37.3%, according to the Anderson Economic Group.
What happens to insurance when the cost of a vehicle goes up?
When the cost of vehicles goes up, the cost of insurance will not be far behind. 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.
How do car insurance companies set prices?
From a driver’s perspective, understanding how car insurance companies set prices can be puzzling. Auto insurance companies use multiple pricing factors to determine your risk, meaning how likely it will be that you’ll file a car insurance claim. The lower your perceived risk, the better your car insurance rates.
Do all car insurance companies weigh pricing factors the same?
Not all insurance companies weigh pricing factors the same. A car insurance quote you get at one company might be significantly cheaper at a different company for the exact same coverage. Here’s the main factors in the pricing formulas: Your driving record includes your history of moving traffic violations and at-fault accidents.