Auto insurance costs continue to soar, with the average annual premium for safe drivers nearly $2,000. Root Insurance CEO Alex Timm joins Wealth! to discuss the factors driving these higher insurance costs.

Timm highlights that insurance premiums have increased by over 20% year over year, making it "a top-five customer expense." He attributes the cost pressures to several factors, including increased parts costs, technologically advanced vehicles, and a shortage of labor. Timm notes that "there's a huge amount of demand in the system" for insurance companies but a limited supply, fueling the upward cost trends.

Regarding electric vehicle and self-driving car trends, Timm emphasizes the need for consumers to adapt to driving these vehicles. He explains that it takes time to learn how to operate such advanced cars, potentially leading to changes in driving behavior, which could contribute to higher premiums due to "underlying risks."

To combat rising insurance costs, Timm advises consumers to shop around for insurance premiums and avoid the "loyalty penalty" to ensure they get the best possible price.

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This post was written by Angel Smith