Record-High Car Insurance Premiums Reported

Americans are grappling with rising costs across various aspects of their lives, including food, housing, and now, car insurance premiums. In 2022, car insurers faced record underwriting losses, amounting to $33.1 billion. In response, they increased premiums by an average of 24 percent in 2023. Factors contributing to this surge in premiums include general inflation, the increased cost of vehicle repairs, higher prices for new cars, repair delays caused by supply chain disruptions, and a rise in car accidents. Although underwriting losses decreased significantly in 2023 to $17 billion, the impact on premiums has still been substantial.

While many factors that drive up insurance rates are beyond the control of car owners, one aspect individuals can influence is their driving habits. According to Shannon Martin, an insurance analyst at Bankrate, current car insurance premiums are reaching unprecedented levels. Martin emphasizes the importance of controlling what one can, particularly maintaining safe driving practices, such as avoiding distractions from phones, reducing speeding, and refraining from drinking and driving.

Bankrate’s monthly tracking of premium data reveals interesting insights. As of September, drivers with one at-fault car accident experience an average premium increase of 44 percent. Those with a speeding ticket face a 22 percent increase, and individuals charged with DUI (driving under the influence) see their rates spike up by 92 percent. Martin suggests that the pandemic may have contributed to a temporary lapse in adherence to driving rules, resulting in higher accident rates. While the accident rate is gradually decreasing, it remains elevated compared to pre-pandemic levels.

Drawing from her experience as an insurance underwriter, Martin provides valuable advice for parents. She encourages open and candid discussions about safe driving with teenagers, even before they obtain their license. Parental guidance regarding understanding the financial implications of traffic violations is crucial. Providing teens a clear understanding of insurance premium increases resulting from speeding tickets can foster responsible driving habits. Additionally, Martin recommends considering the financial burden of collision coverage when purchasing a new car for teenagers. While safety features are important, they should not overshadow the significant cost that collision coverage adds to insurance premiums. Opting for a reliable used vehicle and foregoing collision coverage can save thousands of dollars on premiums.