U.S. auto insurance rates rising disproportionately

If you think your car Insurance rates have skyrocketed in recent years, and you’re right. The Consumer Price Index (CPI) shows that the cost of car insurance has risen 51% over the past three years, six times faster than the overall inflation rate.

What makes auto insurance prices rise the most in the CPI? This is blamed on the lingering effects of the coronavirus pandemic and an increase in reckless behavior on America’s roads. Speeding occurs more frequently and at higher speeds than normal, and drunk driving surges, leading to a surge in crash severity, all of which result in auto insurance companies receiving more catastrophic vehicle and injury claims. In addition, shortages of materials, parts and labor caused by the pandemic have led to unprecedented increases in repair costs claimed by customers. These two factors have combined to cause car insurance rates to skyrocket, with no relief in sight.

Top drivers and car collectors being overcharged

In addition to major increases in insurance rates affecting everyday drivers, collectors of classic, antique and custom cars are among the groups hardest hit by rising insurance costs. Meanwhile, agents and brokers serving this community are working to control rates for their clients.

These collectors face a double inequality: Not only are they statistically less likely to be involved in an accident or file a claim, but standard car insurance companies typically don’t offer comparable savings to owners who drive their vintage vehicles less than 5,000 miles per year. Low insurance premiums – compared to other vehicles with average mileage of 12,000+ miles.

In effect, car collectors and elite drivers have been quietly subsidizing the catastrophic losses suffered by insurance companies.

For classic car owners, it might be worth it to “take apart and save”

Drivers have been persuaded that bundling multiple insurance products, such as auto and home, can lower rates, but these bundling practices often leave collector car owners with gaps in their coverage.

“Of the more than 40 million collector cars in the United States, the majority are insured by a standard auto insurance generalist. This can be a costly decision because typical standard insurance plans do not cover the specific needs of these vehicles or their owners. coverage,” said Richard Hutchinson, CEO of Dallas-based OpenRoad Insurance. “Our message to car collectors and agents or brokers who serve this community is: consider splitting up and saving for a more appropriate and comprehensive policy.”

Collectors still pay more for less coverage

Not only are car collectors likely to pay more than they should due to their reduced risk profile, but the insurance they purchase may simply not be enough. This unfortunate fact is only discovered when they actually need to make a claim.

Even for minor repairs, a standard car insurance plan does not guarantee that it will cover original parts or that its network of approved body shops will have the expertise required to repair such a vehicle. These gaps in coverage and claims handling practices can put the authenticity and value of a vehicle at risk.

“Many collector car owners don’t realize that their standard car insurance is based on depreciated market value,” said Justin Moreno, chief marketing and communications officer at OpenRoad. “This may be suitable for daily driving, but not for classic cars or trucks. Coverage for these vehicles needs to take into account their true replacement cost and determine market value based on their condition and the investment of the owner. We offer this service as well as experts Claims processing and many other protections better suited to the needs of the collector car community.”

Market demand leads entrepreneurs to embark on the “road to openness”

Launched last summer, OpenRoad’s program is built by an experienced team of collector car and insurance industry experts. Recognizing that the market was ripe for more options, the team set out to develop a plan to address the disparity currently faced by collector car owners and the insurance agents and brokers who serve this community. Not only do their insurance plans include specialty coverage tailored to the unique needs of classic and modern collector car owners, but their pricing model also takes into account the reduced frequency of accidents typically associated with collector cars, resulting in lower insurance rates for owners.

OpenRoad has been rolling out auto insurance plans across the United States, rapidly expanding coverage to 16 states, and plans to be in 30 states by the summer of 2025. The brand has also attracted significant interest from insurance agencies and brokerage firms, with more than 1,000 new partners signing up over the past few months, eager to offer customers another option.