Car insurance rates are surging as Americans struggle to pay for basic necessities and ongoing debt.

Car insurance rates are surging as Americans struggle to pay for basic necessities and ongoing debt.

The newest Consumer Price Index shows car insurance spiked 20 percent year over year. The surge in pricing occurred after years of gradual price inflation, with earlier reports finding the rates grew by 36 percent since 2020.

That’s at the same time debt is soaring for many Americans. While Americans hold around 1.75 trillion in student debt loans alone, they also have $1.05 trillion in credit card balances not paid off.

  • MicroWave@lemmy.worldOPEnglish
    0·
    9 months ago

    The article lists several factors:

    Because car prices in general have skyrocketed, more Americans are keeping their current cars for longer. This means costly repairs can become more likely, and the car insurers have adjusted their rates accordingly.

    In the last year, car repair prices also climbed 7 percent, outpacing inflation by more than double.

    A supply chain slowdown and ongoing labor shortages have also pushed the insurance industry to implement price hikes on customers, insuranceQuotes.com analyst Michael Giusti said.

    “None of that even mentions the higher medical costs they have to pay after accidents,” Giusti said. “Today’s higher premiums are just a reflection of those higher costs.”

    The sudden rise of electric vehicle purchases also carried some of the blame, since EVs are more expensive to purchase and repair, Henn said.

    • 0110010001100010@lemmy.world
      0·
      9 months ago

      Because car prices in general have skyrocketed, more Americans are keeping their current cars for longer. This means costly repairs can become more likely, and the car insurers have adjusted their rates accordingly.

      This makes zero sense as insurance doesn’t cover vehicle maintenance/repairs.

    • ShepherdPie@midwest.social
      0·
      9 months ago

      I don’t understand how more costly repairs translate to higher insurance premiums. The insurance companies aren’t paying to replace your engine.

      Also their $2500 average yearly premium is insane. I’m in my 30s with two cars and two drivers insured, including comprehensive and the highest coverage progressive offers, and a 100 mile round trip commute, and it’s only $1400 a year.

      • Pogogunner@kbin.social
        0·
        9 months ago

        Your insurance might not be paying for your engine, but if you hit someone else, the liability policy will cover the car you hit engine

        • ShepherdPie@midwest.social
          0·
          9 months ago

          That goes along with more expensive cars. They’re referring to people who’ve kept their car longer than average and have expensive maintenance items. If someone crashes into a 15 year old car hard enough, they’re just going to total it out. For less severe collisions, they’ll restore the car to what it was before the crash, not what it was when new.