It's no secret that global supply chains have been under pressure since 2020 because of the COVID-19 pandemic. While many manufacturers have since bounced back, the automotive industry continues to see the effects. As a result, new vehicles and specific car parts aren't as readily available as they used to be, which can present issues for drivers and insurers alike when it's time to make a car insurance claim.
Why is the manufacturing of new cars and car parts so delayed?
While the onset of the pandemic led to temporary automotive plant closures in early 2020, other factors continue to contribute to ongoing supply chain issues in the auto industry today. One of those factors is a global shortage of semiconductor chips.
A semiconductor chip, also known as a microchip, plays an important role in many modern vehicles. New models of cars and trucks are equipped with infotainment systems and safety features that simply can't function without semiconductor chips. Pandemic-related auto plant closures and an increase in demand for electronics that contain semiconductor chips, among other issues, have contributed to shortages of this essential item. As a result of the semiconductor chip shortage, vehicle manufacturers are unable to release new vehicles to dealerships quickly enough to keep up with demand.
The auto parts and repair industries are facing challenges, too. The price of steel and other materials has spiked during the pandemic, delays in transportation has led to a shortage of parts, and many workplaces are still dealing with workforce shortages. As a result of these challenges, vehicle parts aren't coming in as quickly as they used to, they're much more expensive, and auto shops may not always have the manpower they need to complete prompt repairs.
How could supply chain issues affect me when making a car insurance claim?
If you have to make a car insurance claim, you could feel the effects of these supply chain disruptions in a variety of ways:
- If your insurer determines your car is a write-off, finding a replacement vehicle will be a challenge, as there aren't as many new cars available to drive off the lot. Many dealers have to place orders to have new vehicles shipped in.
- If you're being reimbursed for the actual cash value of your current vehicle and you're looking to upgrade to a brand new vehicle of a similar make and model, you may experience sticker shock when shopping for a new car. Due to a lack of availability and an increase in cost for materials like steel, the price of new cars has increased significantly over the past two years.
- If your car simply needs to be repaired, you might discover that it will be at the repair shop for a while — instead of a week, your car could be out of commission for a month or more, depending on when the required parts come in. (If your car is still safe to be driven but requires a part that is unavailable, you could keep your car until the repair shop receives the part and can book you an appointment to have the repair completed.)
If you are covered for transportation replacement under your car insurance policy, you'll be covered for the cost of a rental while you're stuck without your vehicle. However, most car insurance policies have a limit on how many days you can keep a rental. Reach out to your licensed car insurance broker to find out how many days of rental car coverage are included in your policy and what will happen if you're stuck without your vehicle for longer than your coverage allows.
How can I avoid having to make a car insurance claim?
Now more than ever, it's important to keep safety in mind on the road — not only to protect yourself, but also to avoid ending up in a situation that leaves your car damaged and in need of repair or replacement.
Learn how you can stay safe on the road to minimize your chances of an accident:
If you've recently been involved in a collision and have questions about the claims process or how you might be affected by supply chain issues, reach out to your licensed broker. If you don't already have a broker, find a broker near you today.
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