The Pandemic Drove Up Car Insurance Rates - And They Aren't Coming Down Anytime Soon (2024)

Reading Time: 3 minutes

TL;DR:

• Car accident frequency and severity increased during COVID, raising claims costs
• Modern cars with extra technologies cost much more to repair
• Medical care expenses continue climbing, leading to higher injury claim payouts
• Less traffic enforcement data during COVID caused insurers to increase rates
• Car insurance rates may start leveling off if inflation keeps cooling slowly

Have you cringed looking at your latest car insurance bill? You’re not alone. While the overall inflation rate has cooled to 3.4%, car insurance premiums have shot up nearly 21% over the last 12 months.

Ouch! What gives? Why is the cost of auto insurance still rising when it seems like price increases are slowing in other areas of the economy?

The insurance companies haven’t exactly been transparent. But according to industry insiders and experts, there are several key reasons that explain this frustrating trend. Here’s why car insurance rates are still skyrocketing.

We’re Driving Like Maniacs Now

Remember early COVID lockdowns when the roads were nearly empty? Many drivers used that as an excuse to start speeding like crazy, chatting on the phone, and generally engaging in high risk behaviors.

Telemetrics data aggregator Cambridge Mobile Telematics saw huge jumps in distracted driving as COVID dragged on. Unfortunately, our bad driving habits continued after the pandemic lockdowns were lifted and the insurance companies noticed.

These increasingly dangerous driving habits have directly led to more frequent and costlier car accident claims for insurers to cover. And they’re passing those excess expenses to consumers by increasing car insurance rates.

Car Touchscreens Are Very Dangerous

In one of the dumbest moves in modern history, car manufacturers decided to replace physical buttons and knobs with car touchscreens. Instead of being able to adjust the radio or climate controls using a physical knob (and not looking), drivers now have to navigate complicated touchscreen interfaces. Just turning on the air conditioner on your car touchscreen requires as much attention as playing game of Bejeweled. How incredibly stupid is that!

A 2022 study comparing how long it takes to perform common tasks in cars with and without touch screens had some very sobering results. It took drivers sometimes over 45 seconds to perform common tasks, like changing a radio station, using a touch screen. In comparison, a car with a physical knob, took just a brief moment.

Just imagine the irony here. Police can give you a distracted driving ticket for using your phone while driving, but your car touchscreen is at least twice as complicated to use compared to your phone.

Car Repairs Now Cost a Fortune

New cars are loaded with new technology. Backup cameras, lane departure sensors, blind spot monitoring systems – these innovative features all make repairs pricier when accidents happen. Even headlights have microchips now and can cost up to $4,000 to replace, each!

“Today’s cars are equipped with advanced technology and expensive parts, including sensors and cameras, which drive up repair bills significantly when damaged,” explained Gregg Barrett, CEO of insurance software provider Waterstreet Company.

A front end collision that cost $3,206 on average to fix in 2019 now runs over $3,700. And that’s if basic features like airbags aren’t compromised. New cars crammed with sensors and cameras can quickly end up being five-figure repair jobs.

Medical Costs Keep Going Up Too

Don’t forget what happens when people get injured from car accidents. We’re talking big medical bills that car insurance policies must cover.

As US healthcare expenses continue their seemingly unstoppable rise, the insurance companies face spiraling costs on the medical claims side as well. These fast-growing payouts for treatment inevitably filter back to consumers through those painfully inflated premiums.

Traffic Enforcement Slowed to a Crawl

Remember how police traffic enforcement practically ground to a halt in many jurisdictions during COVID staffing crunches? Turns out that created a whole separate issue that helped spike insurance rates.

See, insurance risk assessment relies heavily on driving violation data that law enforcement provides. But with fewer cops available to hand out speeding tickets and moving violations, the insurers lacked the information that they needed to accurately price policies.

The end result? Broad car insurance rate hikes to offset the uncertainty.

Rising Car Insurance Rates: When Will It End?

Here’s a glimmer of hope if your insurance bill causes chest pains every time it arrives. Industry experts project rates should stabilize soon rather than continuing their ridiculous rise.

Why? Inflation has cooled somewhat rather than accelerating exponentially like during the height of COVID-related supply chain woes. With their own costs leveling off, insurance companies can finally catch up without endless double-digit price hikes.

The next time your insurance bill arrives, remember – it wasn’t just random corporate greed behind these dramatically increasing car insurance rates. Hopefully surging car insurance costs will end soon. But in the meantime, make sure you compare rates thoroughly and maintain a squeaky clean driving record!