ICYMI, auto insurance rates have gone up…way up. According to a recent report from The Zebra, an insurance comparison site, drivers paid an average of $1,841 to insure their vehicles in 2023. That’s 5% more than they did the year prior and follows a 15% hike that took place between 2022 and 2023. For many drivers wanting to get the best car insurance for the money, it’s a frustrating situation.
Where will rates go from here? And what else can drivers do to cut costs? For answers to these questions–and expert insight into why we’re seeing these rate spikes in the first place–read on.
Why Car Insurance Rates Are Going Up…And Up…And Up
First and foremost, it’s important to note your car insurance rate will typically increase year over year, even if you’ve been an accident-free driver. “Insurance companies have to account for claim payouts they’ve made throughout the year and the general costs of operating a business, like any business does,” explains Beth Swanson from The Zebra. “If a company has had an extraordinary amount of claims during a particular year, rates will be adjusted to help offset this.”
More recently though, there have been some unique factors at play that are driving (no pun intended) costs. To understand them, we need to look back at the pandemic, says Greg Smolan, Vice President of Insurance Operations at AAA Northeast. Smolan says it was post 2020 that drivers developed a lot of bad habits, including less seatbelt use and speeding. From there, it’s been a ripple effect, with those behaviors leading to more frequent and severe accidents, which ultimately hurt the bottom lines of insurers.
There’s also repair costs that have gone up alongside virtually everything else in our economy, due to supply chain issues, labor shortages and better technology in vehicles. “That fender-bender isn’t a couple hundred bucks anymore,” explains Smolan. “That fender bender now has cameras and sensors and everything else in it, and is a couple thousand dollars.”
Smolan says increases in theft as well as catastrophic weather — everything from flooding to high winds — which have become more frequent in recent years, have also resulted in more claims.
So, Where Do Car Insurance Rates Go From Here?
The uptick in costs has left insurers with essentially one option…raise rates. “We talk to hundreds of people a day who are getting renewals and know their rates are going up,” notes Smolan. “There are reasons behind it. It’s not insurance companies just looking for profit. 2022 and 2023 have been two of the most unprofitable years the insurance industry has had.”
So where do we go from here? “Based on historical data, we’ll probably continue to see rates increase this year,” notes Swanson. “How much rates increase, though, is yet to be determined. Because economic factors impact insurance rates and business expenses for companies, we might see more fluctuation than normal due to this being a major election year.”
Getting The Best Car Insurance For The Best Price
For those feeling the pinch of higher rates, there is good news. Experts say there are steps you can take to (hopefully) reduce your expenses and get the best car insurance for the best price:
Call your insurer: First, talk to your insurer and ask if there’s anything they can do to help lower your rate. There could be a discount you don’t know about. (FYI, some of them may be offered to those who pay for a year’s worth of coverage upfront, so take the “Costco” approach if you can, and buy in bulk!) There are also better deals for those who take defensive driving courses, or who bundle their auto insurance with another type of coverage (like homeowners insurance, for example). There may also be discounts for students with good grades. Your first step is picking up the phone to ask.
Shop around: If you’ve been with the same insurance company for many years, it’s easy to fall into a “set it and forget it” mentality and assume you’ve already got the best insurance at the best price… but you shouldn’t get too comfortable. There may be a better rate out there. Before you make a change though, vet any new insurer you’re considering. “Before you switch, be confident in it, because longevity does mean something,” says Smolan.
Don’t limit yourself to big names: Swanson says just because an insurance company has a name that isn’t familiar to you, don’t rule them out. There are smaller, regional carriers that oftentimes offer great service and affordable rates. “Just because you haven’t heard of them yet doesn’t mean they won’t have something great to offer you as a customer,” she points out.
Up your deductible: If you’re willing to take on a bit more of the risk yourself, you can consider raising your deductible. (This means you’ll pay less each month for your premium, but owe more in the event of an accident.) For example, according to the Insurance Information Institute, upping your deductible from $200-$500 could reduce your monthly premium costs anywhere from 15%-30%. Just make sure that you’re prepared for an accident, and have enough to cover repairs in an emergency fund or other savings account.
Keep a clean driving record: Experts agree…the biggest thing you can do to get the best car insurance rate is to maintain a clean driving record. “Tickets and accidents will have a negative impact on your out-of-pocket expenses, as well as your insurance costs,” explains Smolan.
The Bottom Line
If you aren’t successful in reducing your car insurance rate, there are other steps you can take to cut back on your overall vehicle expenses. Namely, maintaining your ride by doing the following:
- Change your oil regularly (heed that little sticker in your window!)
- Check your tire pressure periodically
- Make sure you have the right tires for the weather (for example, snow tires in a wintery climate)
- Regularly check your fluid levels, lights and brakes to make sure nothing is running low, and that there are no safety concerns
Taking these small steps should prevent bigger repairs down the road, and ultimately make you a safer driver, which will have a positive impact on your auto insurance rates. “If you do all the little things, you can hopefully reduce the burden,” says Smolan. “The best way to keep your rates down is to be a safe driver.”
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