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A combination of factors including inflation, rising interest rates, and fluctuating gas prices, made life difficult for drivers in 2022. The added strain of increased auto insurance prices only added to the financial pressure.
The main factors behind the increase were more people driving and cars being more expensive to repair. The company predicts that the average annual rate will go up another 7% to $1,895 this year, but they may not stop there. It could be several years before prices fully stabilize.
A recent survey from the insurance comparison website Insurify found that nearly half (47%) of US drivers saw their car insurance costs increase in 2022. Experts believe that insurance companies will continue to raise rates across the country.
According to a recent Yahoo article, auto insurance rates are expected to rise 8.4% in 2023 in the US, and this trend will likely follow in Hong Kong.
While the continued rise of inflation may cause auto insurance rates to go up, there are steps you can take to reduce the impact on your monthly budget.
1. Shopping around for coverage and comparing quotes.
If you haven’t recently reviewed your car insurance options, you may be overpaying for your coverage. Gone are the days of a tedious comparison process – modern technology has streamlined the process of obtaining quotes from various providers. Make sure you understand the value of your car and the cost of repairs or replacement when considering the amount of coverage you need to buy.
2. Keep your driving record clean.
Safe driving can also help lower your rates, as can having a claims-free or violation-free driving record.
As reported by Insurify, a single infraction on your driving record could cause a surge in your auto insurance premium, with an average increase of 34%.
Many insurance providers offer discounts to drivers who maintain a clean driving history and pose minimal risks on the road. If you have prior driving incidents, you can regain your insurer’s trust and improve your chances of getting a discount by taking an accredited vehicle safety or defensive driving course.
3. Increasing your deductible.
When purchasing car insurance, you must agree to a deductible, which is a specified sum you must pay from your own pocket before your insurance company starts covering the costs of a claim.
By increasing your deductible, you have the opportunity to significantly reduce your monthly insurance bill. Keep in mind, however, that you must have enough funds readily available to pay the full deductible if you need to file a claim in the future.
4. Consider using a pay-as-you-go insurance plan.
Usage-based insurance or pay-as-you-go insurance allows you to pay for the driving you actually do rather than the assumptions made by your insurance company.
To facilitate this type of coverage, the insurance company will either provide a plug-in device or a mobile app to monitor your driving habits, including the frequency and distance of your trips, your driving patterns, and your driving style.
You may be eligible for a discount from your insurance company if the data gathered reflects safe and responsible driving habits, such as infrequent and short trips focused on following traffic laws.
However, this system operates in both directions. Engaging in risky driving behaviors, such as driving long distances or frequently braking hard, can result in penalties from your insurance company.
If you need help finding the best auto insurance cover that fits your budget, we can help. Village Insurance Direct specializes in sourcing personal and business insurance for expats in Hong Kong.