Car Insurance Is More Expensive, But 'A Few Million People' May Still Be Lacking, Says Expert

Thanks to inflation, you're likely paying more for almost everything nowadays, and car insurance is no exception. According to data from S&P Global Market Intelligence, insurers have raised rates by an average of 8.3% so far this year, and the cost to consumers is likely to continue to rise, analysts at Bankrate said.

For insurers, those price increases make sense: the ever-higher cost of paying claims means insurers need to collect more from their customers to keep going. But for the drivers, that means paying a higher premium for the same coverage.

Depending on your policy, it can be a big deal, says Cate Deventer, insurance writer and editor at Bankrate. "Rising costs mean that your coverage may not be as far along as it used to be," he says. "Several million people may be underinsured."

Here's why insurance experts say you may not have enough coverage, and why it's worth checking your current policy to make sure you don't have to pay yourself in the event of an accident.

Why your auto policy may not provide enough coverage

The first step to making sure you have adequate coverage is to understand how your current policy works. "People buy policies and pay bills every month without checking what they actually have," Deventer said.

Your policy may include comprehensive and collision coverage, which covers various types of damage to your vehicle, as well as other coverage that pays for your medical bills in case of an accident.

However, the main scope for concern is the scope of responsibility, says Deventer. If you are found guilty in an accident, this includes damage to property or other vehicles, as well as medical expenses for other drivers and any lawsuits you may face.

In case of an accident, your insurance will pay up to the maximum amount specified in your policy. If the damage exceeds the amount your insurance company will pay, you could end up in financial trouble.

The costs associated with car accident insurance claims are on the rise. The price of auto parts, for example, has risen 13.4% in the past year, according to the Federal Reserve Bank of St. Petersburg. Louis.

The car itself is also getting more complicated, Deventer said. "An accident that used to only damage bumpers can now damage cameras or sensors."

Then there are the medical bills. In 2020, car insurers paid an average of $20,235 for bodily injury claims from car accidents, according to the Insurance Information Institute. But in the past 12 months, health care prices have risen 5.6%, according to the Bureau of Labor Statistics.

That is a problem, especially if you have the state's minimum auto coverage. Some states only require that your policy cover $15,000 or $20,000 in medical expenses per person in case of an accident, and Florida residents are not required to purchase medical liability coverage at all.

This means even the average medical claim can be thousands more than your policy covers, and a very expensive accident can be a severe financial burden.

You don't have to pay much more for better coverage

If your premiums have gone up, you probably won't be eager to pay more to make sure you have enough coverage. Fortunately, doing so can be relatively inexpensive.

On average, an auto policy with minimum state liability coverage will cost about $135 per month, according to Bankrate. Increase your scope of responsibility to a $model 50.000/100.000/50.000 (meaning $50,000 per person for medical expenses, up to a total of $100,000 per accident, and $50,000 for property damage), and you'll pay an average of $142-an increase of $7 per month.

While some insurers may let you reset your coverage through their websites or mobile apps, others may ask that you talk to an agent, which is a great idea anyway, Deventer said. "They will be able to understand your needs specifically," he says.

If you find that it will be expensive to upgrade your coverage, start by asking your agent about general discounts that may apply to you, such as discounts for safe drivers or paperless accounts. You may also find stronger coverage at better rates by switching to another insurance company.

"It's more important than ever to find the rates and policies that work best for you," says Pat Howard, managing editor and licensed property and casualty insurance expert at Policygenius. "It's best to consult an independent agent who is impartial and can find you the best rates."

If you're considering continuing to pay lower premiums and coverage that may ultimately be insufficient in case of an accident, remember

that your policy is there to protect you from potential financial disaster.

"Paying more isn't fun, but it's a very important time to do it," Deventer said. "Insurance is designed to protect your finances. If you have an accident, your financial health will be protected."

Given this situation, it is important to understand how to increase your coverage without significantly swelling your budget. Here are some steps you can take to make sure you have enough coverage:

Check your policy: Start by checking your current car insurance policy. Find out what coverage you have and how much you are paying. Understand the details so you know what you need.

Discuss with an agent: talk to your insurance agent. They can provide advice on how you can improve coverage according to your needs. They can also provide information about discounts you may be getting.

Review scope of responsibility: as a special concern, review your scope of responsibility. Make sure that you have a sufficient amount of coverage to protect you in case of an expensive claim.

Consider company turnover: if you feel that your premiums are too high, consider looking for another insurance company that may offer better rates. Insurance shopping can help you find more affordable deals.

Take advantage of discounts: maximize the discounts available. Many insurance companies offer discounts to safe drivers, owners of vehicles equipped with security features, or who use paperless accounts.

Don't compromise coverage: while you want to save money, don't compromise the coverage you need. Protecting yourself and your assets is a top priority.

Talk to an independent agent: if you want to get a broader view of the insurance options available, consult an independent insurance agent. They can help you evaluate different options from different companies.

When you invest in adequate insurance coverage, you protect yourself from unexpected financial risks. Keep in mind that while paying more premiums may feel unprofitable, it is an important investment to protect your future and your financial security on your road trip.

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