Two years after issuing billions of dollars in rebates and rebates during the pandemic, auto insurers are now raising premiums for their customers.

Subsidiaries of Progressive Corp. received approval for 38 rate increases in 10 states in November, while regulators in 13 states approved 20 rate increases by Allstate, according to S&P Global Market Intelligence. GEICO subsidiaries got 12 rate hikes in six states approved in the same month.

The 10 most notable increases recorded by S&P Global Market Intelligence were between 3% and 12%. Additionally, insurance comparison site The Zebra said nationwide car insurance rates rose 3% from a year ago, with 38 states seeing increases.

The reasons for these increases are manifold.

“The intersection of an improving economy, increased dangerous driving behavior, rising injury and vehicle costs, increased litigation, severe supply and demand imbalances , as well as global COVID-19 shipping challenges are combining to create significant upward pressure on auto insurance prices,” said David Snyder, vice president of Policy Research and the international division of the American Property Casualty Insurance Association, in a press release at the end of December.

At the intersection of State Hill Road and Woodland Road in Wyomissing, Pennsylvania on Jan. 24, 2022. (Photo by Ben Hasty/MediaNews Group/Reading Eagle via Getty Images)

Increase in the number of road deaths

About 20,160 people died in car crashes in the first half of 2021, up 18.4% from 2020, according to a report from the National Highway Traffic Safety Administration. The report showed road traffic in the first half of 2021 increased by around 13%, as did the fatality rate – up 1.34 fatalities per 100 million vehicle-kilometres traveled (VMT) from 1.28 fatalities for 100 million VMT in 2020.

“We’ve seen faster driving on less congested roads amid COVID,” said Marty Ellingsworth, executive general manager of JD Power. “It’s always there and present.”

Bad weather

The changing weather conditions bring more storms and sometimes to areas that did not have extreme weather conditions before. The Zebra said that while there were fewer hurricanes in 2021, severe winter storms in 2021 “caused a record $15 billion in insured losses, compared to $1 billion in 2020, almost entirely in due to two storms in February”.

Where you live will be a big factor in the percentage increase you can expect from your car insurance provider. For those who live in areas prone to natural disasters or in high-traffic urban areas, the increase will likely be higher.

Car insurance rates rise after pandemic discounts

Credit: Zebra’s “State of Auto Insurance 2022”

Supply issues

The demand for new cars has increased significantly during the pandemic. Unfortunately, supply chain issues have caused huge delays in buying a new car. This delay has increased the prices of used cars and the cost of insuring them. According to the United States Bureau of Labor Statistics, in 2021 new car prices increased by 11.8% and used car prices increased by 37.3%.

“Used car prices have skyrocketed over the past twelve months, making headlines that used cars are worth more than a similar new car model,” Ellington said. “This reversal of depreciation – normally cars get cheaper as they age – will first directly affect insurance claims and claimants, and then, indirectly, likely price increases.”

Theft Auto

A rise in auto and auto parts theft also contributed to higher insurance rates, according to the APCIA. Car theft for spare parts is on the rise, with converter theft claims rising nearly 293% nationwide between mid-2020 and mid-2021, APCIA said.

Despite an increase in rates, drivers can still find car insurance deals by shopping around and looking for discounts.

“Be on the lookout for better deals,” Ellingsworth said. “2022 could well be the year of finding value in insurance.”

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FJ More

Ronda is a senior personal finance reporter for Yahoo Money and an attorney with experience in law, insurance, education and government. Follow her on Twitter @writesronda

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