The cost of auto insurance in the US is exploding. Since the beginning of the year, premiums have risen by about 15 percent. By the end of the year, this increase is expected to rise to around 22 percent as insurers struggle with increasing underwriting losses.
According to Insurify, the average annual premium for full coverage insurance is expected to rise from $2,329 to about $2,469. This alarming increase continues a trend from last year, which was marked by significant increases related to record underwriting losses totaling $33.1 billion.
The rising costs can be attributed to several factors, including more claims due to severe weather, inflationary pressures affecting new car prices, and rising repair costs. In particular, repair costs have increased significantly for vehicles with advanced driver assistance systems (ADAS) and electric vehicles (EVs).
From 2019 to 2023, the number of weather events causing billions in damage, the report found, has increased by 56%. Hailstorms in particular have been financially burdensome, with average damage amounts as low as $5,000, and some storms have caused damage amounts exceeding $130 million.
Repairs on modern vehicles have become extremely complicated and expensive, leading to higher insurance premiums. Vehicles with ADAS features contribute to approximately 37.6% higher repair costs, while for electric vehicles, the average repair cost increases by nearly 46.9% compared to gasoline-powered vehicles, with typical repairs costing about $6,700.
Repair times have also increased, especially for electric vehicles. Repairs typically take about 5.8 days longer than for conventional vehicles. This combination of rising repair costs and longer vehicle downtime has a significant impact on overall insurance costs.
The situation varies greatly from state to state. In six states, annual car insurance premiums exceed the $3,000 mark. In states such as Florida, Louisiana, Maryland, Nevada, New York and South Carolina, premiums are at least 15% higher than the national average.
On the other hand, New Hampshire has the lowest insurance premiums in the country, averaging around $1,000. This large difference underscores the importance of location in the cost of insurance.
A closer look at the data reveals significant regional differences. The leaders here are states such as Minnesota, with premium increases of over 55%. After Minnesota, Missouri, North Carolina, Illinois and California reported increases of between 45% and 51%.
Factors exacerbated by these changes include rising auto theft rates. In particular, states like California, Illinois and Missouri are among those with the highest rates of auto theft, contributing to a sharp increase in insurance premiums.
The increase in costs has made auto insurance more unaffordable for many consumers. Insurance companies are under pressure to make up for their underwriting losses and must drastically adjust their premiums according to the business environment in which they find themselves.
For customers, this means they need to carefully consider options to find affordable coverage without sacrificing necessary protection. Some people may find it beneficial to purchase multiple policies or shop with multiple insurers to determine potential savings.
With premiums falling and the economy continuing to be unpredictable, many people are rethinking their auto insurance needs. It’s important that consumers stay informed about their options and potential cost-saving methods.
Insurance experts recommend staying proactive by comparing quotes from different providers, looking for discounts and reevaluating individual coverage levels. These steps can help reduce the financial burden of rising premiums.
As the auto insurance market adapts to changes, consumers should not hesitate to seek help or resources. Engaging experts or using online comparison tools can help with better decision-making in the face of these rising costs.
In summary, with these significant changes in the marketplace, awareness and proactive action will be critical for consumers trying to navigate the evolving auto insurance environment. The rising costs aren’t just numbers on paper; they impact real life and finances across the United States.
