Over the last two years, the onset of the pandemic have had a significant impact on the automobile industry. During the height of the pandemic, with driving significantly reduced, the accidents incurred and claims raised were also fewer. However, with the relaxation of regulations, the automobile industry has made a strong comeback. More drivers are getting back on the road, but any accidents that occur now cost more in car insurance due to inflation, supply chain disruptions, and changing driving habits.
Why are car insurance rates increasing?
Inflation is defined as a rise in prices, the rate at which purchasing power declines over time. The cost per inflation, which is used to measure inflation and track its rate of change over time, is used to calculate the cost of food, housing, and even car insurance. One of the major factors behind the rise in car insurance prices today is Inflation.
Vehicles today are much more complex than they used to be, which adds to the overall cost of ownership. Even a small accident can cost thousands of rupees worth of damage. Unfortunately, car insurance prices are not the only thing that has risen, even healthcare cost is on the rise. So, when someone is injured in a car accident, the resulting medical costs are also higher.
Changing driving habits
The world saw an unprecedented reduction in driving levels since the start of the COVID-19 pandemic in early 2020. Many households stopped traveling for work, school, or any other activities. The streets were quieter, and there were fewer accidents. As a result, car insurance prices were on the lower end. However,2022 saw a return to pre-pandemic driving patterns resulting in an increase in insurance claims due to a rise in accidents.
Supply chain disruptions
The last few years and inflation have had a significant impact on the auto industry. With fewer people on the road, there was a decrease in the need for vehicle parts. However, with a return to normal levels of driving, there is an increase in demand for parts, with a decrease in supply. Vehicle parts are more expensive, so the overall repair cost is higher leading to a rise in car insurance prices.
Another factor impacting the auto industry is the labour shortage that has made skilled workers hard to find. When fewer people do a given job, a pay rise may be offered as an incentive for the additional work they perform. As a result, a shortage of labour may contribute to the rise in care insurance prices, in order to compensate for the higher claims expenses and cost of various back end processes related to insurance going up.
You may be inclined to lower your insurance coverage in order to save money, but insurance professionals advise against doing so. Car insurance is intended to protect your finances in the aftermath of an accident, and lowering your coverage may lead to increased out-of-pocket expenses. In today’s economy, with prices on the rise, having an insurance policy in place is crucial to ensure that you do not lose your hard-earned money when faced with accidental damages. Chola MS provides you a variety of options and you can be assured of transparency in your pricing and plan details. Ensure you are well informed of all your options and what goes into the pricing of your car insurance premium before you make a decision.