When drivers’ wallets are squeezed by inflation and rising costs, more drivers are driving without auto insurance. According to recent statistics from J.D. Power, the proportion of households with at least one uninsured car climbed from 5.3% in the second half of 2022 to 5.7% in the first half of 2023.
The hike follows an “unprecedented rate” of auto insurance premium growth of 7.9% in 2022 and 5.9% in the first half of this year, according to the report. Add to that the ongoing high inflation that Americans are bearing with regard to basic costs.
According to the most recent inflation figures released this week, the price of auto insurance increased by 2.4% from July and by more than 19% over the course of the year in August. That was significantly higher than the month’s overall inflation rate.
The cost of premiums has increased to reflect the rising claims costs for replacing and repairing damaged vehicles, providing medical care, and other costs.
And as many Americans prepare to begin paying back their student loans starting next month, more may think about skipping vehicle insurance to save money.
According to a recent New York Life survey, more than a quarter of Americans with student loan debt are unsure of how they will be able to repay their debt in October.
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Auto Insurance Industry Challenges
While a further quarter report having sufficient funds in their budgets to fulfill the payments, 23% of those reported having to cut other spending to make it work.
According to J.D. Power, 12 states saw a 30% or more increase in the percentage of uninsured drivers compared to the second half of 2022. Other regions also saw higher percentages of uninsured drivers.
Since the increased premiums haven’t yet been sufficient to cover the expenses of claims, additional hikes may be forthcoming.
According to the J.D. Power analysis, the car industry had a 12% increase in claims and other expenditures in 2022 compared to 2021, marking the second year in a row that there was a deficit.
Similar to this, the Insurance Information Institute (Triple-I) informed NPR this week that, for every $1 in premiums they collected, vehicle insurers had to pay out in claims last year.
This year, it has decreased to $1.09, although it is still higher than the amount of premiums collected.
J.D. Power advises drivers who are having trouble paying increased rates to get in touch with their insurer to discuss a lower rate and inquire about discounts, particularly if they have a spotless driving record. Customers should compare prices and work with independent agents to discover the best deals.
Considering that there are more uninsured motorists on the road, individuals who have insurance should also think about raising their uninsured/underinsured policy, which pays out to drivers in the event that an uninsured, underinsured, or hit-and-run driver is to blame for an accident.
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Source:Yahoo!
