A recent study from Pew Research reveals goods and services that have seen the highest price increases since 2020.
Car insurance makes the top 10 list of highest price increases since 2020. From 2020 to 2024, car insurance costs have jumped 47.3% while motor vehicle repair services rose 47.5%.
Unfortunately, the rise in auto insurance isn’t showing a slowdown.
According to a Bankrate report, the average cost for full coverage in 2024 is $2,543. This is a 26% increase from 2023.
Greg McBride, chief financial analyst for Bankrate, stated “Auto insurance rates have been rising at a breakneck pace, And though the pace of increases will eventually slow, that doesn’t mean premiums are coming down. The insurance market is very competitive — lots of commercials — so shop around and compare coverage to see if you can get a better deal elsewhere. If you have a healthy savings cushion, see if increasing your deductible can reduce your premiums..”
The 5 states with the highest average insurance premium include:
- Florida has an average annual premium of $3,945
- New York has an average annual premium of $3,840
- Louisiana has an average annual premium of $3,618
- Nevada has an average annual premium of $3,549
- Michigan has an average annual premium of $3,356
More important is how much of a persons income is spent on auto insurance. Bankrate analyzed the average median incomes from across the country and compared that with the auto insurance averages.
Below are the states where families spend the largest portion of their income on car insurance. The percentages reflect what percentage of the income is being spent on insurance on average.
- Louisiana households spend 5.69% of their income on car insurance
- Florida households spend 4.83% of their income on car insurance
- Michigan households spend 6.53% of their income on car insurance
- Nevada households spend 4.91% of their income on car insurance
- New York households spend 5.01% of their income on car insurance
Massachusetts takes top honors for having the lowest percentage. Households in MA pay just 1.76% of their income on car insurance.
The 5 states that had the largest price increases since 2020 are Florida, Missouri, Michigan, Colorado and Nevada.
The states with the smallest car insurance increases since 2020 include Washington, North Carolina, Minnesota, Wyoming and Ohio.
There are also a few states that might see a 50% or more hike in car insurance rates.
Car insurance pricing factors
There are many factors that affect pricing. Some you have control of – others you do not. For example, some states have specific car insurance requirements which directly impact cost. States that have denser populations or extreme weather may have higher pricing.
But there are also factors you can control. Keeping a clean driving record is the largest factor in keeping costs down. Avoid drinking and driving, speeding, or being aggressive on the road. Other considerations include model of car, life events, and credit score.
With a clean driving record the average premium is $2,543. Get a speeding ticket, that can jump to $3,066. Add a DUI and you can see your premium skyrocket to $4,790.
Your credit score can impact your insurance premium. A driver with excellent credit and a clean driving record might pay $2,203. But if they have poor credit, that premium can go up to $4,338. New York proves to be the least forgiving in this situation. They have drivers with poor credit paying an estimated $8K a year.
The vehicle you decide to drive plays a big part in the cost. That Corvette is going to cost you quite a bit more than a Toyota Prius for example. Insurance companies will also increase pricing on cars that are involved in more accidents.
Whether you are married or single can affect pricing too. And if you have a teen in the house who will be driving soon, be prepared. That will significantly raise your premiums.
An average household premium of $2,543 could go as high as $5,421 when a teen is added to the policy.
Rates are still rising
Factors like weather, electric vehicles, and a desire for companies to increase profits are all reasons for rising rates to continue.
Damage from wildfires, floods, hurricanes and more are causing an increase in claims. These extreme weather conditions are growing and wreaking havoc on profitably.
Some insurance companies are not only increasing rates, others are just not renewing policies of those in high risk situations.
The impact weather has on accidents is also a concern. Road safety becomes more prominent of an issue during weather events. As more accidents occur due to these weather issues, we can expect to see continued price increases in insurance.
Electric vehicles also play a part in the pricing increases. While demand for EVs lessened in 2023, it is still expected to grow in the future. Consumers still have some doubts and concerns about EVs, but many expect education and improvements to remove those doubts.
It has been said that costs to insure electric vehicles is higher than combustion-engines. This is due to the high costs and limited supplies of the specialized parts electric cars need for repairs. This issue should resolve itself in a few years when EVs are more mainstream.
The best thing consumers can do right now, is shop around. Look at sources like banks and credit unions. Consider packaging all of your insurance with one agency to get a package discount.
Whatever you do, do not drive without insurance. It is estimated that 13-14% of all drivers are uninsured. Letting a lapse in insurance happen can be much more costly in the future.
