Florida drivers already pay some of the highest car insurance rates in the nation, and those rates are likely to go up in the near future. Why? Because insurance companies’ claims costs are skyrocketing, and strange though it may seem, supply chain and other pandemic-driven causes are contributing.
Shortages and supply chain issues
Because of pandemic-fueled, industry-wide shortages of raw materials and parts to build vehicles (including semi-conductor chips), there are fewer new vehicles in showrooms. This has caused the cost of both new and used vehicles to rise. Insurance companies use the value of the vehicle when calculating rates for comprehensive and collision coverage. They also use vehicle value to determine how much to pay out when a vehicle has been in a crash and is declared a total loss. Since both new and used car prices are going up, so are premiums and claim payments.
Claims costs are also rising because the cost of parts has gone up, and it’s taking longer to repair damaged vehicles because of shortages of both car parts and qualified auto mechanics. At least one of our companies has reported that they have had to total out vehicles because they can’t find parts to repair them.
And one more thing—when it takes longer to repair a damaged vehicle, the cost of a replacement rental car also goes up since the client needs the rental car for a longer time.
What you can do
Unfortunately, you can’t do much about supply chain issues. But the best thing you can do is minimize your risk of an accident or moving violation (which will also raise your auto insurance premiums) by driving defensively. Don’t drive distracted or while impaired, obey speed limits, and wear your seat belt. And be sure to check in with a Lakewood Financial agent to help you shop for the best car insurance rate for your situation. Lakewood Financial is a local, independent insurance agency, and we partner with many quality insurance companies. Please call 941-747-4600 if you’d like a no-obligation quote, or click here to contact us online.
Lakewood Financial has been serving the needs of Bradenton, Sarasota, Lakewood Ranch and surrounding communities since 2003.