Rising repair costs, legislative activity and rate approvals are driving substantial car insurance premium increases
Cambridge, Mass.—Car insurance rates have increased in post-COVID years, according to a new report from Insurify. And despite many insurance industry experts predicting slower rate hikes in 2024, data from the first half of the year shows a 15% increase in full-coverage premiums. Insurify’s data science team projects a total 22% increase in 2024.
Average Annual Cost of Full Coverage Car Insurance
(June 2024)
Each state has its own insurance regulations and risk factors, so premiums vary across the U.S. The average annual cost of full coverage is more than $3,000 in six states: Florida, Louisiana, Maryland, Nevada, New York, and South Carolina. New Hampshire drivers pay the least, at an average annual rate of $1,000.
Rate increases in 2024 are largely a continuation of hikes in 2023, a year that saw full-coverage premiums rise by 24% in response to insurers’ record underwriting losses ($33.1 billion) in the year prior. Underwriting losses decreased to $17 billion in 2023 — a financial hit that was still substantial enough to drive significant rate hikes in the first half of 2024.
Insurer losses result from a combination of inflationary pressures — such as the rising cost of vehicle repairs and the rising prices of new cars — and unprecedented climate catastrophes that drive weather-related claims in states that haven’t historically seen as much of this type of damage.
Additionally, legislative changes in states such as South Carolina and Maryland have increased insurers’ financial responsibility, leading them to charge higher premiums. In California, which froze insurance rates during the COVID-19 pandemic, some insurers are requesting double-digit hikes as they struggle to return to profitability, while others are exiting the state entirely.
Insurify analyzed average car insurance rates across the United States to determine where drivers saw the most significant increases and which factors pushed up premiums in the first half of 2024.
Key Takeaways
- The cost of full-coverage car insurance increased by 15% in the first half of the year, despite industry expert predictions that rate hikes could slow in 2024. The average annual full-coverage premium now costs $2,329, according to Insurify data.
- Insurify predicts California, Missouri, and Minnesota could see car insurance costs increase by more than 50% in 2024. Damage from severe storms and wildfires contributes to rising rates in the states.
- Maryland has the highest car insurance costs in the U.S., with an average full-coverage rate of $3,400 annually. New Hampshire drivers pay the least, at an average of $1,000 annually.
- Vehicle maintenance and repair costs have increased by nearly 38% over the past five years, according to the Bureau of Labor Statistics Consumer Price Index (BLS CPI). Higher repair costs mean insurers pay more expensive claims and policyholders see higher premium hikes.
- Increasingly severe and frequent weather events are driving up auto insurance premiums. Hail-related auto claims represented 11.8% of all comprehensive claims in 2023, up from 9% in 2020, according to CCC Intelligent Solutions.
Read the full report here.
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