There is no getting away from the fact that owning a car of any type in 2022 has become increasingly expensive—and it's not expected to get cheaper anytime soon. With the increasing cost of insurance, inflated gas prices and supply-chain issues leading to rising costs for cars, auto replacement parts and labor, the personal auto insurance market is on a bumpy road. 

It is during these times that independent agents can play their best role—that of trusted advisor— offering knowledge, advice and tips on how to get the best coverage for the best price.

As consumers become more price sensitive, here are five strategies agents can use to assist clients during this period of increasing rates:

1) Communicate with clients. “During hard markets, it's critical for agents to communicate proactively," says Brook McGuire, product strategy lead, Safeco Insurance. “Consumers are expecting higher premiums, but within the context of other price increases. If the price of milk goes up 20%, the impact is small, but that same increase on insurance premiums is hundreds of dollars."

“Before their renewals arrive, helping your customers understand how their premiums will be impacted can lessen the sticker shock and desire to shop," McGuire says. “Break their increase down into a monthly amount—$600 a year sounds like a lot, but $50 a month sounds more like one dinner out."

2) Discuss different ways to save. Maximize discounts and cross-sell opportunities with clients. “Agents should make sure clients are getting all of the discounts they qualify for, such as multiline, paperless and paid in full," says Theresa Breunig-Silbernagel, head of personal lines and transformation, Main Street America Insurance.

With access to multiple carriers, agents can “help their customers get the most robust level of coverage for the best price, ensuring they are financially protected from losses," says Mark Friedlander, director, corporate communications, Insurance Information Institute (Triple-I). “This includes helping insureds shop their coverage by obtaining quotes from multiple carriers and ensuring they are taking advantage of all available discounts from their insurer to reduce the impacts of escalating premiums."

Also, “while not popular, increasing deductibles as high as clients are willing to accept is a reasonable tactic," Friedlander says.

3) Decide whether to bundle. Another savings option is bundling home and auto insurance, which has often been a good way to save money in the past and may still be a good option for some consumers. Although, “customers can obtain a homeowners policy from one carrier and an auto policy from another for potentially a lower combined price than bundling," Breunig-Silbernagel says. 

“Bundling still gives benefits that may outweigh a slightly lower price: multi-line discount, single bill pay for all policies, a single company website or app to access insurance documents, a single carrier to handle all claims—these are benefits worth considering," she adds.

4) Offer usage-based insurance programs. Such programs “allow consumers to match their insurance premium to how much or how safe they drive," says Beth Riczko, president, property-casualty personal lines, Nationwide. With many telematics programs, “if you have a newer model car with connected capabilities and you opt in for data sharing, you can get an instant discount based on your driving record."

“Any way to accelerate the savings from telematics is a great way to engage the customer and get them interested in this type of insurance," Riczko adds.

5) Provide your best advice. Facing increasing financial pressures, clients may look to cut costs and reduce premiums by cutting coverages. In certain instances, “consumers drop coverage altogether, and the implications can be considerable," McGuire says.

Examples include eliminating uninsured/underinsured motorist coverage, which could have disastrous consequences if they're hit by an uninsured or underinsured driver; or eliminating physical damage coverage—comprehensive or collision—which means they're on their own to repair or replace the vehicle if it's stolen, destroyed or damaged.

While “raising deductibles is a good solution to manage costs, customers should contemplate the financial impact of the higher deductible," McGuire says. “Could they absorb the cost if they had a claim? What about two claims with the higher deductible?"

By taking the time to explain what is happening in the market and the coverage options clients have open to them, agents can find the most cost-effective coverage for each client. “With an estimated 300,000 vehicles damaged by Hurricane Ian, this is a good reminder for agents to inform their clients that comprehensive is an essential coverage that protects your vehicle from flooding, falling trees, collapsing structures and other storm hazards," Friedlander says.

Olivia Overman is IA content editor.