While everything seems to be increasing in price these days, car insurance premiums are rising at a shocking pace.

Rates are up almost 21 percent since last year, according to the latest Consumer Price Index data, and the 3.2 percent inflation rate in February owes half a percentage point to car insurance alone. As a result, many Americans are finding themselves struggling with some of the highest prices they’ve had to face in decades. So why are these rates increasing so drastically?

Increased accidents

Distractions like phone calls, mobile work meetings, and voice-activated car commands can negatively impact cognitive ability and attention. A recent survey found that 64 percent of drivers reported checking their phone while driving. Such distractions lead to increased accidents and collisions, in turn causing higher insurance rates. With more accidents comes more claims, causing insurance companies to have to increase their rates to offset the costs.

Rising car repair costs

With the increase in car accidents comes an increase in repairs. And according to CPI data, the cost to repair a car is up 6.7 percent for the year. Although it is promising that this growth rate is slower compared to recent years, it is still much higher than prepandemic levels. Many cars also come with smarter sensors now, which promote safety but, naturally, are more costly to fix.

Supply chain issues

Supply chains have also taken a hit (no pun intended), affecting the overall purchase price for vehicles and, in turn, the cost of your car insurance. Anytime there is a disruption in the supply chain, like in 2020 and 2021, this will have a trickle-down effect to the rising of car costs, repairs, and ultimately your auto insurance. To see the proof, just consider the current average purchase price for a car—$47,218, an increase of 30 percent since January 2019. With higher price tags comes higher potential payouts by insurers in case of claims—leaving your wallet feeling a bit lighter.

Inclement weather

When severe weather strikes, as it has done frequently in the past few years, it will also impact insurance premiums. Many insurance companies reported millions of dollars paid in catastrophic claims last year alone, compared to almost half that in 2022. Of course, this can vary greatly state by state since not all areas experience the sameweather. The Northeast, for instance, may face severe snowstorms in winter, while the South often contends with tropical storms. In general, though, the recent increase of inclement weather has driven cost increases for insurers, and experts predict that this trend will only continue.

Despite these factors, the type of auto insurance coverage you select may ultimately have the biggest impact on cost. So don’t be afraid to shop around! Take charge by comparing quotes from several different providers to find the best coverage and price that fits your needs. For expert guidance, reach out to a trusted insurance agent, who can help you get the most out of your policy.