Car Insurance Premiums Hit Record Highs
As Americans contend with higher costs for food and housing, they are being hit with another large and often unexpected price hike: car insurance premiums.
In 2022, car insurers reported record underwriting losses of $33.1 billion and responded by increasing premiums by an average of 24 percent in 2023. Insurers blamed a number of factors including general inflation, the increased cost of vehicle repairs, higher prices for new cars, repair delays due to supply chain disruptions, as well as an increase in car accidents. Underwriting losses, which are the excess of claims paid over premiums received, decreased significantly in 2023 to $17 billion, the report stated.
Many of the factors that are driving up rates are beyond the control of car owners, but driving habits are not.
"Right now, we're seeing some of the highest car insurance premiums that we've ever seen, so it's important for people to control what they can," Shannon Martin, an insurance analyst at Bankrate and a licensed insurance agent, told The Epoch Times.
"For the most part, you can control your driving record by being attentive on the road. Don't look at your phone, reduce speeding, and don't partake in drinking and driving."
Bankrate, which tracks premium data monthly, found that the average premium increase for drivers of one at-fault car accident as of September is 44 percent; the rate increase for a speeding ticket is 22 percent; and the rate increase for driving-under-the-influence (DUI) is 92 percent, Martin said.
"It's almost like people forgot the rules for a little bit, and it increased the amount of accidents," Martin said. "We are seeing that rate start to come down, but it's not going back to pre-pandemic levels."
Based on her experience as an insurance underwriter, Martin has advice for parents, including having a heart-to-heart with teens even before they get a license.
"Talk to your child about safe driving. Be a good example and have a plan in place," she said. "Are they going to help you pay for the insurance? Can they understand how much a speeding ticket might cost and how much that might increase your rate? Will they help you pay for that increase?
"Another thing I know parents would do is they would buy their child a brand new car with all the safety features, which is great," she said. "But those safety features don't outweigh the cost of having a car with collision coverage."
New cars, if financed, must include collision coverage (damage to your car) in addition to liability insurance (damage to others), and collision is usually the most expensive component of the insurance package. Better to have your teens drive a safe, used vehicle and forego the collision coverage, which can add thousands of dollars to your premiums, Martin said.
