Your car insurance rates will likely increase in 2023 — even if you haven’t filed a claim in the last cycle.
Nationally, vehicle insurance increased by 13.4% between 2021 and 2022.1
So what gives? The drivers of these insurance hikes are twofold: a marked increase in the cost of vehicles and an elevated rate of vehicle collisions. We’ll dive into how escalating costs translate into more expensive insurance, along with strategies to keep your insurance costs under control.
First, consider the basic economic model of insurance. Insurance companies set rates based on the statistical risk factors of individual drivers. They also draw on historical data of what it costs to repair or replace a vehicle involved in an accident.
In these past two years, the price to replace a vehicle has ballooned.
Also, vehicle maintenance and repair costs are 11.7% higher in November 2022, compared to November 2021.1
The pandemic kicked off an unexpected hike in reckless driving — motorists traveling at higher speeds and taking more risks on the highways. Traffic fatalities in Minnesota rose 8% between 2019 and 2020.4
Bottom line, vehicle collisions have become more numerous and cost more to cover today than two, three or five years ago, which can mean higher rates for all customers.
This means those who got a new vehicle in the past year will get a double whammy, elevated rates coupled with the cost of upgrading vehicles. If you stuck to your older ride, then you may not be feeling the sticker shock nearly as much.
Each insurance company follows its own formula for calculating auto insurance. These are the most common factors that help insurers calculate your potential for getting into a collision. Knowing what influences your rates can help you find ways to lower your costs.
While some aspects of auto insurance pricing are beyond your control, these strategies can help you catch a break on your next bill.
An at-fault collision or moving violation can impact your insurance rates for 3-5 years. Be sure and drive carefully on those icy Minnesota mornings and keep an eye on your speed.
Better yet, work with an independent insurance agency, because they’ll do the comparison shopping for you. Because they work independently of any specific agency, they’re an objective source of guidance on how much coverage you need to protect your assets.
Read: Insurance for grownups: Why an independent agent is the upgrade you didn't know you needed
Maintaining a credit score of 670 and higher often results in more affordable auto insurance rates. Research shows a correlation between credit score and the potential of being in a vehicle collision. In addition to all that good driver behavior, be sure you’re practicing good credit hygiene by paying your bills on time and being intentional about opening and closing lines of credit.
Read: How can I improve my credit score?
As long as you have adequate savings to cover it, going for a higher deductible is a quick and effective way to save on your insurance bill.
It’s always wise to make sure you’re not paying for more insurance than you need. Cut the car rental coverage if you can get by without it. That said, don’t slash coverage limits to save money. If you cause an accident, you could be on the hook for anything above and beyond maximum payout on your collision policy.
Some auto insurers provide good grade discounts for the high school or college student in your life, so encourage your student to keep up the good work. Also, in Minnesota, drivers age 55 and older can get a three-year discount on insurance premiums by completing an eight-hour defensive driving class. Find upcoming sessions near you by checking in with the Minnesota Safety Council and the AARP.
Set up a meeting with one of our helpful agents on the insurance team at Minnwest Insurance Agency. We’re located in hometowns throughout Minnesota and southeastern South Dakota. As independent agents, we can compare rates from numerous insurance companies, so you can get the best coverage at the best value for yourself and your family.
Call or meet with an independent insurance agent at Minnwest Bank today!
Minnwest Insurance Agency, Inc is an affiliate of Minnwest Bank. Products offered through Minnwest Insurance Agency, Inc are: Not a deposit | Not FDIC insured | Not insured by any federal government agency | Not guaranteed by the bank or an affiliate of the bank | May go down in value (if applicable)