- US auto insurance prices hit a 50-year high, outpacing inflation.
- Higher premiums and deductibles are due to the climate crisis and the increased risk of accidents.
- Drivers should prioritize safety, research insurance policies and apply for discounts to save money.
US auto insurance rates hit a 50-year high, and drivers are paying the price.
Insurance is far outpacing the rate of inflation, with the US Bureau of Labor Statistics reporting that vehicle insurance costs were 20.3% higher in December 2023 than in December 2022. For drivers, that means more -high premiums and deductibles.
The rising rates are caused by several key factors, said Laura Longero, executive editor of insurance at marketing firm QuinStreet. Insurance companies are seeing more claims related to accidents, theft and the climate crisis.
“They all work together to create a situation where car insurance is much more expensive,” she said.
Many insurers cut rates at the start of the pandemic because less drivers were on the road, Longero said. As traffic has recovered, she said crashes have become more frequent and severe. Crash deaths hit a 16-year high in 2021, the U.S. Department of Transportation found, and preliminary data for 2023 showed crash rates remaining above 2020 reports.
There is also a 25% increase in vehicle theft between 2019 and 2022. What’s more, Supply chain costs to repair or replace vehicle parts from accidents or theft are expensive, Longero said.
In addition, the state drivers live in – and the local impact of the climate crisis – has a significant impact on auto insurance rates. Insurance companies are hesitant to insure drivers and homeowners in regions with frequent natural disasters, Longero said.
There were 131 U.S. weather events between 2010 and 2020 that exceeded $1 billion in damages, a 51 percent increase over the previous decade. Longero said that because of these rising climate risks, she expects rates to remain high.
To keep costs as low as possible, Longero recommends drivers travel safely and do their research.
Prioritize safety when behind the wheel
Safe driving is not only important for avoiding collisions, but it also saves drivers money. According to personal finance company NerdWallet, premiums for comprehensive auto insurance coverage nearly double if the driver is at fault in an accident.
Penalties for speeding, texting while driving, or driving while intoxicated will likely increase a driver’s insurance premiums.
Longero said she often uses an app that tracks her sudden stops, how many times she checks her phone and other data to demonstrate safe driving behavior to her insurer.
The type of vehicle a person drives also determines their insurance rates. Longero said insurance rates tend to be lower for larger vehicles, cars with many safety features and car brands that have high safety ratings. Family-friendly cars tend to cost less to insure, she said.
“Sedans are smaller and usually cost more to insure,” Longero said. “They are more likely to sustain more damage in an accident with a large truck or SUV.”
Research which car insurance plan is right for you
Longero suggests drivers get three to five updated insurance quotes each year.
Car insurance rates are higher for families with teenagers, with rates rising 70% to 150% after a person under 18 is added to a family car insurance policy.
Still, Longero said some insurance companies have lower rate options for married couples or vehicles with high safety ratings. Auto insurance can also be cheaper if drivers bundle their auto policy with homeowner’s, renter’s or life insurance.
Drivers can sometimes get a cheaper car insurance rate by switching insurers, Longero said. And some policy specifics vary by state.
“We always encourage people to check with their insurer to make sure they’re getting all the discounts they’re responsible for,” she said.
She also urged drivers to check that their car insurance policy included strong liability cover in case they were ever at fault in a “worst-case scenario” major crash.
Take advantage of insurers’ discounts
To get the most out of their policy, Longero said drivers should apply for discounts from the insurer. Keeping a clean accident or ticket record, staying loyal to a particular insurance company, and installing extra safety features in a car can help drivers save money.
Parents can lower costs for teen drivers by applying for “good student” discounts, she said, and some people can get professional discounts based on their job or frequency of commuting.
“If you’re working from home now and you’ve been commuting, maybe talk to your insurance company,” Longero said. “Typically, if you drive less than 10,000 miles a year, you can save quite a bit on your policy that way.”
Longero said drivers should also regularly take inventory of their insurance policy and drop coverage they no longer need.