And how switching your home insurance to Mutual Assurance may help offset the added expense.
According to a recent report by Value Penguin, Virginia drivers have seen the 10th-highest increase in auto insurance rates for 2023.
Nationwide, personal auto insurance rates will grow around 8%-9% this coming year, which will be the biggest increase in car insurance costs since 2017. The average annual cost for full coverage car insurance is projected to reach $1,780 in 2023.
Virginia personal auto insurance rates are forecasted to increase 12.6% with an annual cost of $1,416, still below the national average, but a hit to wallets nonetheless.
What's Causing The Increases
A number of factors are affecting auto insurance rates for 2023. Some are understandable, but others may need a little more explanation.
Higher driving rates. As more drivers return to work in offices, more drivers will be on the road, increasing the chances of collisions.
More severe accidents. As it turns out, drivers have become more aggressive since the pandemic, and increasing speeds as well as more daring lane changes and tailgating are leading to accidents that cause greater damage to cars and more severe injuries to drivers and passengers.
Inflation’s impact on vehicle repairs and medical costs. The 6.1% inflation rate for 2022 and the 3.1% forecasted inflation rate for 2023 mean everything will be more expensive this year. Labor, parts, medicines, ER visits, physical therapy, microchips - you name it. Auto insurers must pass along these added costs to their consumers.
The increased frequency of wildfires and hurricanes. While the TSR (Tropical Storm Risk) extended range forecast for North Atlantic hurricane activity in 2023 anticipates a season with below-norm activity (specifically 15% below the 1991-2020 30-year norm), other natural disasters such as wildfires, storm surges, Derechos, tornadoes, and wind event risks are predicted to remain the same. While a wildfire may not be as likely in Virginia, a bad fire on the West Coast still impacts national insurers' bottom lines, which means rates everywhere need to rise to cover additional claims.
Lower Car Inventory. New car production is increasing but is not expected to return to normal levels until the end of the year. Used car prices have increased as demand has increased, making replacement parts more sought after and pricier. Repairing cars instead of replacing them puts a premium on skilled mechanics' and auto body shops' time as well.
Why Are Virginia's Rates Increasing More Than Other States
A U.S. News study shows that Virginia's auto insurance rates have been some of the lowest in the nation for the past decade. There are several reasons why some states (and areas within states) have higher or lower auto insurance premiums than others. Legal requirements, traffic congestion, economic conditions, weather, average driver age, average vehicle age, and provider competition are some of the top factors that lead to different rates.
Insurance experts have noted that inflation is impacting the rates in Virginia markets more than any other single variable. As inflation is projected to stabilize toward the end of 2023 through 2025, larger increases in auto insurance coverage are not anticipated.
For a more detailed look at auto insurance rates in Virginia, click here.
What Can You Do To Offset An Increase in Your Auto Policy?
One of the smartest moves you can make to ensure you have the right coverage at the best price is to shop around. According to a survey by Jerry Insurance LLC, 63% of consumers did not shop around their auto insurance premiums in 2022, and that trend is expected to continue in 2023.
Another, less desirable, option is to reduce your coverage. Around 25% of American drivers in the same survey said higher auto insurance premiums moved them to buy less coverage than they wanted in 2022.
Half of Gen Z and 31% of millennial policyholders surveyed reported sacrificing coverage in an effort to get a lower auto insurance payment during the past year.
Unbundling is another option for drivers willing to look into alternative coverage. One of the smartest financial moves may be looking at Mutual Assurance for homeowners insurance and auto insurance from another provider. The savings generated over the years with a Mutual policy would easily cover the increased costs of auto insurance - likely with some left over.
To learn more about Mutual insurance, click here.
Sources: ALM Property Casualty, US News & World Report