Over the past few years, many drivers have noticed a rise in their car insurance rates. But what’s causing these increases? Fazza Insurance breaks down the key factors affecting the cost of your coverage:

Rising Vehicle Repair and Replacement Costs:

Between November 2013 and November 2023, the cost of repairing new and used vehicles surged by 49.8%, far exceeding the overall inflation rate increase of 31.7%, according to the U.S. Bureau of Labor Statistics. Higher prices for parts and labor are driving up repair expenses, leading to increased insurance rates across the board.

Risky Driving Habits:

More drivers are engaging in dangerous behaviors such as distracted driving, speeding, and driving under the influence. These risky actions contribute to higher accident rates and insurance claims. In 2022 alone, the National Highway Traffic Safety Administration reported 3,308 deaths due to distracted driving. Additionally, from 2022 to 2023, major and minor speeding violations increased by 10% and 16%, respectively, according to the U.S. Auto Insurance Trends Report by LexisNexis.

Increase in Claim Severity and Legal Representation:

When accidents occur today, the damage tends to be more severe due to the unsafe driving habits mentioned earlier. According to LexisNexis, over 25% of collision claims in 2023 resulted in total losses. Additionally, more policyholders are seeking legal representation when filing claims, which increases costs for insurance providers and ultimately affects premiums.

New Insurance Risks from Electric Vehicles (EVs):

As electric vehicles become more popular, they are introducing new challenges for the insurance industry. Some driver-assist and braking technologies have led to more accidents and claims. Additionally, quieter EV models can increase the risk of pedestrian and cyclist collisions. Plus, due to their complex systems, EVs often have higher repair costs than traditional gas-powered cars.