Like me, you’ve probably noticed that car insurance has increased substantially over the last year or so – my renewal came through a couple of weeks ago and had gone up by £8 a month, despite there being no difference to anything in the policy.
I’m actually canceling mine anyway as my Audi was stolen a couple of weeks ago and I’ve now replaced it with a 15 year old Ford Fiesta that costs around 60% less to insure but for those of you who are seeing the same increases that I would have seen then I feel for you.
Many experts claim that we should probably buckle in because the rates are going to continue growing with up to a 12% increase predicted again in 2023, around the rise that occurred last year.
I apologise that these are US$ figures but the research I found was by a US company and I couldn’t find a UK equivalent (point me in the right direction if you know of something though so I can update) but they give you a good idea of increases across the board….
If you take a look at the breakdown of the average cost of owning a car in the US based on research conducted by AAA, it can be seen that the average price is around $10,728. This breaks down to about $894 a month. So, if you take the time to do the math and multiply the average cost this year with the estimated 12% increase, you get an average cost of $12,015. This is a total cost of around $1,001 or more extra every year, depending upon the price of the car you purchase.
But why is this happening? Why are insurance rates continuing to rise? Let’s take a look at why you can
expect higher costs on your car insurance rates in 2023.
- Inflation – Inflation is rising throughout the nation, which means the cost of everything will go up, including car insurance. The market prices and values will be one of the main determining factors of your auto insurance, so it is not something that you can adjust.
- Shipping – One part of buying a new car that many people do not take the time to understand is the shipping costs. The amount it costs for fuel to transport the new cars to the lot has increased for a couple of reasons. One is that diesel prices have increased substantially, meaning it takes more money to get the vehicles to you. The other is the lack of people willing to drive makes it necessary for the companies to pay their drivers more money through salary or overtime.
- New Cars – EVs and self-driving technology are a thing of the future that has arrived today. People are jumping at the chance of having an electric vehicle rather than burning fuel in a combustion-driven car that pollutes the environment around them. The thing with these vehicles is that they cost a substantial amount more to repair or replace than your average Ford Capri or Chevy Impala. A rise in these costs will increase the premiums handed down to you. That is why it is so important to compare car insurance companies every time you plan to renew your policy to find the best offer.
- Repairs – New car repairs and replacements are not the only ones increasing. All the repairs that must go through a sanctioned shop are on the rise because they are also affected by inflation and market prices. Plus, the auto industry has been struck with issues hiring and keeping good workers, increasing the shop’s cost to fix your car. It is to be expected because no industry or niche has received a break over the last couple of years
What it all comes down to is that the price of everything is increasing, which you can see by walking through your local retail store. There is not much you can do about it except follow in the shoes of the rest of the nation and buy a used car that has already lost most of its deprecation values. Once you drive a new car off the lot, the value drops substantially, continuing for the first five years or so.
Your best bet is to buy an older vehicle in great shape with low miles on it. It will cost you less to buy, less to own, less for insurance, and much less to repair or replace. All these things are good news for car owners because everything else has gone up to the point of making it hard for most to even make a living.
The increase in auto insurance in 2023 may strike some people hard in the wallet, but since everything else in the nation also increases, including the living wage and the earned incomes, it should not be an issue that can not be dealt with. If your insurance raises too much, check around and find a less expensive policy that can still work for you. Never let yourself be stuck in the same old policy when you have tons of options available.
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