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- American car insurance rates have reached a 50-year high, outpacing inflation.
- Higher premiums and deductibles are driven by the climate crisis and increased accident risk.
- Drivers should prioritize safety, research insurance policies, and apply for discounts to save money.
American car insurance rates have hit a 50-year high, and drivers are paying the price.
Insurance has far outpaced 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, this means higher premiums and deductibles.
Rising rates are caused by a few key factors, said Laura Longero, executive editor of insurance at the marketing firm QuinStreet. Insurance companies are seeing more claims related to crashes, thefts, and the climate crisis.
"All of these work together to create a situation where car insurance is a lot more expensive," she said.
Many insurers lowered rates at the beginning of the pandemic because fewer drivers were on the road, Longero said. As traffic has returned, she said crashes have become more frequent and severe. Crash fatalities hit a 16-year high in 2021, the US Department of Transportation found, and preliminary 2023 data suggests that crash rates have remained above 2020 reports.
There was also a 25% increase in vehicle thefts between 2019 to 2022. What's more, the supply chain costs to repair or replace vehicle parts from accidents or theft is expensive, Longero said.
Additionally, the state drivers live in — and the local impact of the climate crisis — has a significant effect on car insurance rates. Insurance companies are hesitant to insure drivers and homeowners in regions with frequent natural disasters, Longero said.
There were 131 climate events in the US between 2010 and 2020 that exceeded $1 billion in damages, a 51% increase from the previous decade. Longero said because of these growing climate risks, she expects rates to stay high.
To keep costs as low as possible, Longero recommends drivers travel safely and do their research.
Prioritize safety when behind the wheel
Not only is safe driving important to avoid collisions, it also saves drivers money. According to personal finance company NerdWallet, full coverage car insurance premiums nearly double if a driver is at fault for a crash.
Tickets for speeding, texting while driving, or driving under the influence are likely to raise a driver's insurance premiums.
Longero said she often uses an app that tracks her harsh braking, 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 prices. Longero said insurance rates are generally lower for bigger vehicles, cars with lots of safety features, and car brands that have high safety ratings. Family-friendly cars typically cost less to insure, she said.
"Sedans are smaller and they typically cost more to insure," Longero said. "They are more likely to sustain greater damage in an accident with a big truck or SUV."
Research which car insurance plan is right for you
Longero suggests that drivers get three-to-five updated insurance quotes every year.
Car insurance rates are higher for families with teenagers, with rates going up 70% to 150% once someone under 18 is added to a family car insurance policy.
Still, Longero said some insurance companies have lower price options for married couples or vehicles with a high safety rating. Car insurance might also be cheaper if drivers bundle their auto policy with their homeowner, renter, 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 qualify for," she said.
She also urged drivers to check that their car insurance policy includes strong liability insurance, in case they were ever at fault for a "worst case scenario" major accident.
Take advantage of insurer discounts
To make the most of their policy, Longero said drivers should apply for insurer discounts. Keeping a clean accident or ticket record, staying loyal to a specific insurance company, and installing extra safety features in a car can help drivers save money.
Parents can lower costs for teenage drivers by applying for "good student" discounts, she said, and some people can get professional discounts based on their job or commute frequency.
"If you work from home now and used to commute, maybe talk to your insurance company," Longero said. "Typically if you're driving less than 10,000 miles a year, you can save a little bit on your policy that way."
Longero said drivers should also regularly take inventory of their insurance policy and drop coverage that they no longer need.