Auto Insurance Premium Increases in Colorado
One of the biggest questions we have been getting is, “Why is my rate going up?” Many people don’t understand why their rate is changing when they have had no claims, tickets, or accidents since their last renewal. We understand the frustration and our goal is to help make sense of this. Many factors are affecting rates in Colorado such as rising parts costs, labor shortages, supply chain issues, and more severe accidents. Colorado is also leading the nation in auto theft per capita. In addition, Colorado is #2 in hail claims and #3 in wildfire claims on automobiles.
The cost to repair vehicles has increased due to the cost of parts and shortage of labor. We are seeing more cars get totaled due to the cost to repair being higher than what the vehicle is worth. In Colorado, if the cost to repair is 80% or more than the vehicle’s worth, it will be totaled. There have also been more severe accidents in the last couple of years. In fact, fatalities have increased 14% from January 2020 to January 2022. The supply chain issues are affecting the number of new cars available to be purchased, which in turn has caused a shortage of used cars as well. From January 2020 to January 2022, inventory of vehicles has dropped 87%. Due to the supply and demand, the cost of both new and used cars has increased significantly. New car prices are up 14%, while used car prices have jumped 55%. Colorado is one of the least profitable states for insurance companies due to auto theft, hail claims, and wildfire claims. Insurance companies have had to pay out more than normal in Colorado which leads them to increase their rates. We at BIG Insurance Group are passionate about doing everything we can to make your insurance affordable.