SPRINGFIELD — The rising cost of buying and repairing cars is making it more expensive to insure them, both here in western Massachusetts and around the country.
“We’ve been seeing this as a trend now for a couple years now,” said Chris Rivers, senior vice president of Phillips Insurance Agency in Chicopee.
He said customers are coming in vexed by price hikes of 10% or 15%, despite not having any claims or any moving violations spoiling a clean driving record.
In order to register or drive a vehicle in Massachusetts, motorists must at least purchase the required minimum coverage. The website bankrate.com estimates the average cost of car insurance in Massachusetts as $429 a year for minimum coverage and $1,262 for full coverage.
When reached for comment, industry giant GEICO passed questions on to the industry trade group the American Property Casualty Insurance Association. Robert Passmore, vice president of personal lines, said costs are going up because of everything from manufacturing backlogs to a lack of trained body-shop technicians and the increasing complexity of new cars that comes with features like “smart” windshields.
Passmore authored a study in June exploring factors behind increases in insurance cost.
The cost of goods and services required to settle auto insurance claims rose by 16.9% in June 2023 over June 2022.
“The cost of the claims is always going to be the primary driver of what we pay for auto insurance,” he said.
The average cost of a premium is up 15%, he said.
And replacing a car on an insurance claim is also more expensive, he said.
The Associated Press reported that the average cost of a new car is now just more than $48,000, a 25% increase from pre-pandemic prices.
Rivers said that price increase filtered down to used cars. He said he has customers with cars four years old with 100,000 miles on them able to sell the car back to the dealership for what they paid brand new.
Passmore said drivers are also responsible for the increase.
“People picked up a lot of bad habits auto-safety wise. A lot more speeding, a lot more distracted driving. A lot more impaired driving,” he said.
He added that crash injury data shows that fewer drivers are using seat belts. That’s a problem the U.S. The Department of Transportation wants to solve by requiring more seat belt warnings in new vehicles.
“That’s a battle we thought we’d won,” he said.
What’s a driver to do?
Passmore said the best advice is to shop around with different carriers. Many consumers just renew with the same insurer out of force of habit. Also, he said to consider changing to a higher deductible or going without collision coverage on an older vehicle if there is no loan on it.
Rivers said drivers should do all they can to avoid claims. He tells commercial customers to install GPS units on their vehicles to monitor drivers’ safety habits and to only hire safe drivers.
One Beacon Hill, there is a proposed bill that could, if passed, make car insurance costs less linked to the customer’s zip code. State Sen. Pavel Payano, D- Lawrence, introduced the bill earlier this year aiming to keep communities of color in urban areas from paying higher rates.
The bill had a hearing in front of the financial services committee in May.
