Educating Car Buyers to Defuse Insurance Pricing Qualms

F&I managers and sales staff aware of shoppers’ misconceptions about rising auto insurance rates may overcome buying objections and save sales or lease opportunities.

As we previously reported, the JD Power 2022 US Auto Insurance Study notes serious collisions, higher used-car prices and rising repair costs have led auto insurers to raise rates. Those increases, which Forbes reports average 4.9% across the US, have surprised some shoppers and potentially squelched some auto sales.

“As we know, setting insurance rates is complicated,” insurance expert Michelle Megna, Forbes Advisor, tells Wards. “The cost of repairs and the cost of cars are now much higher than in the past. A fender-bender can result in thousands of dollars in repairs.”

The type of car, the buyer’s driving record and the mileage driven per year are among the factors considered. Many people don’t realize insurance providers also consider their credit scores, gender, education and other non-driving factors.

Some groups push back on those factors. In New Jersey, a number of groups are pushing to prohibit factors they say result in “racist auto insurance rate setting policies,” reports NJ101.5.

“The non-driving factors have always been a bit controversial,” Megna says. “Of course, insurance companies have found that non-driving factors do correlate with the number of claims filed.”

“There has been an uptick in legislators looking at insurance rates and trying to pass bills that would prevent car insurance companies from using certain rate criteria,” she says. “So that was why we decided to do the survey. And it looks like people are softening toward insurance companies using (non-driving) factors

“The average person probably doesn’t realize the factors that go into setting rates,” Megna says. “Setting rates is complicated. Some drivers see their rates increase and wonder why that happens when they drive the

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