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DETROIT – Skyrocketing auto insurance costs helped contribute to inflation accelerating at a faster-than-expected pace in March and are adding to the ever more expensive costs for U.S. vehicle owners.
On a monthly basis, car insurance prices as part of the consumer price index rose by 2.6%, the year-over-year increase to 22.2%, according to data released Wednesday. The CPI index is a key inflation gauge and is a broad measure of goods and service costs across the economy.
Auto insurance costs have been on the rise for some time, growing every month as part of the CPI since December 2021. Since then, costs have increased by 45.8%, according to U.S. Bureau of Labor Statistics. However, auto insurance remains a small portion of the CPI, with a 2.85% weighting.
The uptick comes on top of historically high prices for new and used vehicles since the coronavirus pandemic. It’s also become increasingly more expensive to repair vehicles due to supply chain shortages, mechanic wage increases and additional technologies in vehicles such as microprocessors, cameras and other sensors — all of which contribute to higher vehicle and insurance costs.
“There’s not a single factor, but I think the biggest factor is a combination of new cars and more expensive, so if you total your car the replacement cost is really high and a fender bender is very expensive right now,” said Sean Tucker, senior editor at vehicle valuation and automotive research company Kelley Blue Book. “The technology in the cars, it’s a very specific problem.”
Instead of having to replace a plastic or steel bumper on many vehicles, a simple fender bender can now damage cameras, proximity sensors and varying other technologies used for newer safety features and tools such as cruise control, parking and emergency braking.
“Premiums have been on the rise because the cost of what goes into auto insurance has been rising,” David Sampson, CEO and president of the American Property…
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