This article is reprinted by permission from NerdWallet. Drivers across the country have seen car insurance rates climb by 5%, 10% or even 20% in 2023. How high will rates go? What’s causing such a steep increase? And lastly, is there anything you can actually do to lower your rate?
Inflation is driving up car insurance rates Everything has gotten more expensive since 2021. Gas prices passed $4 per gallon for the first time in 15 years and peaked at more than $5 per gallon. Food prices climbed 11.4% in 2022 compared to 2021. And auto insurance rates have increased 17.1% over the past year, according to the U.S. Bureau of Labor Statistics’ consumer price index. Part of that increase is because cars have become more advanced, with features like backup cameras and anti-lock brakes. And more advanced cars mean more expensive car repairs: Vehicle repair costs were up almost 20% this May compared to the previous year, according to the consumer price index. The average cost of a used car is 44% higher than it was five years ago, according to a 2023 Edmunds used vehicle report, and new car prices are up as well. More expensive vehicles, combined with higher repair costs, mean insurance claims are more expensive too, which affects insurance premiums. A survey from J.D. Power showed that 31% of auto insurance customers saw their rate increase over the past year. And as you might expect, customer satisfaction numbers dropped 12 points year over year — the biggest decline in the survey in 20 years. “It seems so much worse because it is much worse than we’ve seen in a long time,” says Douglas Heller, director of insurance at the Consumer Federation o …
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