Supply Chain Issues Are Trickling Into Insurance Costs
Supply chain issues are driving up the cost of vehicle repairs. How will that affect your insurance premiums?
Written by Andrew Kidd
Reviewed by Kathleen Flear
Finding affordable
car insurance
shouldn’t be a pain, but the hits keep coming two years into the COVID-19 pandemic
.KY3
reports that car chip shortages and material shortages are driving up the cost of vehicle repairs. This means insurance companies are paying more for claims—meaning they have to adjust their rates down the road to increase premiums to compensate.Why we’re feeling this now in the car insurance industry
With the pandemic in a wind-down (read: more people returning to their non-remote jobs), many insurance companies are adjusting back to pre-COVID rates.
Previously, insurance companies were offering COVID-19 relief to insured drivers because their vehicles were used to weigh down the pavement in their driveyoutuways and not much else during stay-at-home periods.
Any insurance rate increase during the pandemic was likely offset by the savings afforded in eliminating the daily commute to work. For example, the average Florida commuter spends the cost of a Disney vacation to commute to work each year—which is no small sum.
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Supply chain shortages affect many products
It’s well-documented that the pandemic has disrupted the global supply chain, which is the path a product takes from where they’re manufactured or developed to their final destination. This scarcity has affected everything from graphics cards to exercise equipment to breakfast cereal.
This also affects automakers, which can suffer work stoppages if a supplier is unable to provide a key component for a vehicle. One recent example is Ford, which has regularly idled its assembly plants since supply chain issues have arisen, according to
Ford Authority
.When can we expect to catch a break?
Not anytime soon, unfortunately. KY3 also reports that with inflation affecting everything from gas to groceries, it’s inevitable that vehicle insurance will see a hike as well. Supply chain issues have to resolve before consumers will see any appreciable decrease in insurance premiums.
What that means for the average consumer is that their insurance rate may be increasing even if they didn’t buy a new vehicle—or use their current vehicle that much—during that time.
https://twitter.com/DanPriceSeattle/status/1496553947145781249
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