Why are My Auto Insurance Rates Increasing?
Updated: Feb 7
If you're currently paying for car insurance, it's likely that you've noticed your premiums rising.
According to the National Association of Insurance Commissioners' annual survey of insurers in all 50 states. The average annual auto insurance premium is now around $1,220 per year — that's close to $100 more than what drivers paid just five years ago.
Why are rates going up?
Three main reasons: claims have significantly increased due to weather events leading to higher payouts, increased frequency of car crashes; and inflation. The rising cost of repairs at auto body/repair shops has drastically played a factor from parts, materials, storage (due to delay/lack of parts) and labor costs.
Auto insurance rates are expected to increase by 8.4% in 2023.
You've probably heard the news: Car insurance rates are expected to increase by 8.4% across the U.S. in 2023, the largest rate increase in six years, according to the report from Yahoo News, insurance rates are expected to increase by 8.4% in 2023. The average cost of auto insurance is expected to be $1,526 per year for a single adult driver with no accidents or violations on their record.
What Does This Mean for You?
Well, you can either pay more each month or contact your agent to assist you in finding ways to lower your premiums. If your rates drastically increase at your renewal and you have a broker/agency, then having them look at other insurance providers for you would be vital. If you have a captive agent who isn’t appointed with other insurance companies then personally Shopping for quotes with other insurance providers would be highly advised.
The cost of insurance is partly determined by the likelihood of a claim and how much damage it would cause if it happened. As you know, weather events like floods and hurricanes are known for their ability to destroy roads, bridges and buildings—and even knock out power or cause fuel shortages. These types of events can make it hard for drivers to get their car fixed after an accident. When insurance companies look at how likely your vehicle will be damaged during a specific type of event (like a hurricane) they use historical data on past storms to predict future losses from similar occurrences.
If you live in an area prone to these kinds of disasters, ask your agent about adding special coverage if needed (such as flood insurance).
Your Premium Increases Faster Than Inflation.
You might be wondering, “What does this mean?” It means that the cost of auto insurance is increasing faster than other things (such as gas prices), which are usually tied to inflation. Inflation is when prices for goods and services increase over time. For example, let's say you purchased a home in the 1980s, the median home price was of $47,200 and in 2023 the median home price is of $385,000 – that’s an increase of about 715%
Big Cities are Also Being Impacted with Even higher Rate Increases
The reasons for these rate increases are numerous, but they've got nothing directly to do with the weather (though it may play a part). America's biggest cities have some of the highest collision claim rates because there are so many drivers sharing a finite amount of road space and opportunities for accidents. If you live in one of those cities which include San Francisco, New York City, Los Angeles and Chicago then you're paying more than your friends who live out in suburbia or on farmlands far away from civilization.
We can’t say for sure what will happen with auto insurance rates in 2023, but we do know that they are likely to rise. If you’re worried about this, you may want to consider adjusting your deductible, as increasing your deductible would lower your premium. Review your declaration page and if there is coverage that is unnecessary to you then having it removed or decreased would be recommended. Finally, the most important thing one can do in these unprecedented times is keeping your record clean. If there was to be a time where its crucial for you to be more attentive on the road and avoid accidents or acquiring traffic violations, now is that time.