Why the Cost of Auto Insurance is Surging
Do you feel like you’re paying a lot more for your auto insurance?
You are, and it’s not just because of inflation.
According to the Bureau of Labor Statistics, car insurance premiums increased by 22% between March 2023 and March 2024, the most significant YoY increase for the category since 1976. The national average cost of car insurance is $193/month for full coverage and $54/month for minimum coverage, per Bankrate.
Several factors are driving the surge in auto insurance prices:
- Average car prices for new vehicles are $49,000 as of Feb. 2024, which is 29% higher than the average pre-pandemic price of $38,000 in Feb. 2020, per Cars.com
- The increased sophistication and technology in cars for driver assistance technology (e.g., emergency braking, automated parking, blind-spot monitoring, etc.) require more expensive parts, take longer to fix, and are subject to higher labor costs
- From 2019-2023, claim severity for bodily injury and property damage increased by 35%, and collision claim severity jumped by 40%, per LexisNexis Risk Solutions
There seems to be no end in sight.
Insurance companies filed for rate increases with state regulators through the end of 2023 and the start of 2024. They are also threatening to leave states if they can’t charge higher premiums, employing the same tactics of home insurance providers. California drivers are already reporting increased difficulty in finding coverage.
Insurance – only there for you when you don’t need it.
