Why The Cost Of Auto Insurance Claims Are Increasing

With the increasing cost of living, auto claims and insurance are no exception. Nationally, insurance rates and claims are rising exponentially and are expected to continue to rise. Many Americans wonder about the reason behind the inflated prices of auto claims, and several factors affect the costs. We’ve done our research and gathered data to determine the reasoning factors, and this blog will tell you all about it. 

Three Factors of Increasing Claims Cost 

Riskier Driving Behavior 

The COVID pandemic showed a dip in auto loss costs because there was a significant decline in drivers on the road. The reduction in drivers resulted in fewer accidents and fewer claims. In return, insurance rates and claims cost decreased. 

Since restrictions have been lifted, there has been a surge in riskier driving habits including impaired driving, distracted driving, speeding, not wearing a seatbelt, etc. The increase in riskier driving patterns created an increase in car accident fatalities. In 2021, the National Highway Traffic Safety Administration (NHTSA) released an early study projecting a 10.5% increase in deaths by motor vehicle crashes from 2020. This study revealed that 2021 had a 16-year high in traffic fatalities. 

Increased Injury Severity

Auto insurance claims include physical damage to the vehicle or property and necessary medical treatments.  For the injuries that didn’t result in deaths, treating the injured person has become more costly. Medical costs have increased, and claim costs reflect the rising price of medical treatment. 

There are litigation cases and lawsuits that are associated with auto insurance claims. In recent years, there have been more legal cases and settlements over vehicle accidents. The price trends for legal issues and medical care are considered for claims costs. 

Supply Shortage

The COVID-19 pandemic disrupted the supply chain distribution and product demands. The nationwide shutdown caused a decrease in demand in several industries. With fewer people driving on the road daily, there was a decrease in the need for vehicle repairs and parts. Once COVID-19 regulations lightened, the demand began to increase, only to face a semiconductor chip shortage. 

The chip shortage idled the manufacturing process and the auto industry’s ability to keep up with demand. The supply chain disruption, chip shortage, and labor shortage created a domino effect on the prices for auto parts, then auto claims to vehicle insurance prices. All of the mentioned factors go hand in hand with the price hike. 

Factors Impacting Insurance Premiums

A rising cost in auto insurance claims produces a higher price for insurance premiums. Several components contribute to the cost of vehicle insurance premiums. Here are some of the significant factors that impact premium prices:

  • Tickets And Moving Violations
  • Comprehensive Claims
  • Accidents 
  • Driving Record and Insurance History
  • Additional Vehicles
  • Amount of Coverage
  • Location

Lower Costs With KF&B Insurance

KF&B Insurance specializes in transportation insurance and understands the concerns with the rising cost of living. We’re determined to offer our clients the best price for impeccable services. Contact us today to learn more about our affordable insurance options.