What drives up car insurance prices?

MINNEAPOLIS — As inflation decreases, the cost of owning a car continues to rise.

New figures published on Wednesday show prices of all items rose by around 3% year-on-year last month. But car insurance prices rose by as much as 20%.

Any good news about inflation is quickly tempered when you ask people about their car insurance. Premiums cause sticker shock for drivers who renew their coverage

“I thought this was too much, so I talked to my company and started looking for ways to reduce their risk and increase mine,” said Edina resident William Kittleson.

Aaron Cocking, president of the Insurance Federation of Minnesota, says the rate increases we’re seeing now are the result of the impact of inflation over the past two years, which hit everything auto insurance covers: parts, labor and even medical bills associated with collisions. are covered.

“These were costs that were not included in the insurance rates. Now that insurers have paid for these losses at those higher numbers, they have gone through the process, been factored into the rates and have been approved. That is why consumers are now seeing these costs at higher rates,” Cocking said.

The cost of covering and replacing cars was also more expensive for insurers as car thefts reached new records in some cities.

“If more cars are stolen than the insurers expected or took into account, like we have those higher rates, that will all have to be compensated for in the form of higher premiums,” Cocking said.

Experts say there are some ways you can save:

• If you work from home, you may qualify for a low mileage discount
• Bundling car and home insurance policies can lead to a better rate
• Car owners should examine their policy to see if they can drop any parts of it, such as car rental insurance or towing insurance

Despite the price pressure, Cocking says it’s important to remember that not having insurance is not only illegal, but it can also leave you in a deep financial hole.

“Just because you don’t have insurance doesn’t mean they won’t be compensated by you,” he said. “They can come after your future income, they can come after the assets that you have. Insurance is really a way to protect you and your assets.”