Rising Cost of Auto Insurance: How Paint Price Increases Hurt

Auto insurance premiums have been on the rise, leaving many drivers wondering why their rates keep climbing. Especially those who haven’t received a ticket, had an accident or filed any claim. Let’s break down the key factors contributing to these increases: rising prices of automotive paint, higher minimum wages, and overall inflation.

infographic showing rising cost of auto insurance premium from may 2023 to may 2024 to the premium from may 2024 to may 2025 at a 9.7% increase
rising cost of auto insurance premium from may 2023 to may 2024 to the premium from may 2024 to may 2025 at a 9.7% increase

Paint Prices: A Splash of Expense

One major factor driving up auto insurance costs is the skyrocketing price of automotive paint. Over the past few years, the cost of high-quality automotive paint has significantly increased. Since Covid, many of these major corporate paint companies have had 1-4 price increases a year. Those increases range from 2.5% to over 10% (PPG had an increase of 10% effective Jan 1, 2020). This rise is due to a combination of supply chain disruptions, increased demand, and higher raw material costs. High-quality paint is crucial for repair shops to match factory finishes, which ensures vehicles maintain their value and look as good as new after an accident. However, these higher costs inevitably get passed down to consumers through increased repair bills and, consequently, higher insurance premiums .

ppg 2024 price increase memo

This is just the latest increase, PPG had

  • 10% hike in 2020
  • 2 separate price hikes in 2021
  • 12% in 2022
  • 5.9% in 2023
  • 5% in 2024

Just on these increases alone, PPG DCU2021 a $650 clear coat (last component of your paint job) in 2019 is now $900+. That’s an $243 increase in only 5 years. Equating to 37% higher than 2019 costs. Are you making 37% more than you were in 2019?

Minimum Wage Hikes: A Necessary but Costly Adjustment

The push for higher minimum wages is another element impacting auto insurance rates. While increasing the minimum wage is essential for improving workers’ livelihoods, it also raises operational costs for businesses, including auto collision repair shops. Labor is one of the most significant expenses for these businesses, and as wages rise, so do the costs of repairs. Insurance companies, in turn, adjust premiums to cover these increased expenses. While fair wages are crucial for a healthy economy, they do contribute to the rising cost of auto insurance .

Inflation: The Silent Driver

Inflation is the broader economic factor influencing the cost of virtually everything, including auto insurance. As inflation rises, the cost of goods and services, from auto parts to administrative expenses, increases. The automotive industry is not immune to these pressures. Higher costs of materials, shipping, and general overhead all play a part in pushing insurance premiums upward. Inflation affects the value of money, and as everything becomes more expensive, insurance companies adjust their rates to ensure they can cover future claims adequately .

The Bottom Line

The rising cost of auto insurance is a multifaceted issue influenced by the increasing prices of automotive paint, higher minimum wages, and inflation. While these factors are necessary for various reasons—such as maintaining quality, ensuring fair pay, and adjusting to economic conditions—they contribute to the overall increase in insurance premiums. For drivers, it’s essential to stay informed about these changes and understand that the rising costs reflect broader economic trends and industry-specific challenges. By recognizing these factors, we can better appreciate the complexities behind our insurance bills and the efforts required to maintain quality and fairness in the auto repair and insurance industries.


Sources:

  1. PPG Industries. (2023). “The Impact of Raw Material Costs on Automotive Paint Prices.” PPG Industries Report.
  2. Automotive News. (2022). “Supply Chain Issues Drive Up Paint Prices.” Automotive News Article.
  3. National Employment Law Project. (2023). “The Effects of Minimum Wage Increases on Small Businesses.” NELP Report.
  4. Collision Repair Education Foundation. (2022). “The Economic Impact of Wage Increases in the Auto Repair Industry.” CREF Report.
  5. Bureau of Labor Statistics. (2023). “Consumer Price Index and Inflation Trends.” BLS Data.
  6. Insurance Information Institute. (2022). “How Inflation Affects Insurance Costs.” III Report.
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