Market Trends: Rising Auto Insurance Rates

Various sources speculate that auto premiums will continue to rise throughout 2024, but not as swiftly as in the previous two years.

Auto insurance costs rose 22% between March 2023 and March 2024, according to the Bureau of Labor Statistics Consumer Price Index for All Urban Consumers. It was the largest unadjusted change since December 1976.

The 2024 index has shown signs of slowing, with reports that the Federal Reserve may cut interest rates in late 2024. However, auto rates will stay on the incline as insurance companies recover from losses due to extreme weather and the cost of vehicle repairs.

The cost of auto insurance will likely level off in 2025, although it will remain much higher than in the past. According to Bankrate, the national average for full-coverage auto insurance is around $2,500. In 2021, it was just over $1,600.

For now, auto insurance is in a hard market. Auto rates remain high while insurance companies remain selective about who gets the best rates. But you can try these strategies to secure better rates.

How can you lower your auto insurance premiums?

Contact your agent about discounts. Qualifying might be easier than you imagine. Ask about these potential savings moves:

  • Bundle your car and property insurance.
  • Pay the entire policy upfront instead of monthly.
  • Enroll in autopay.
  • Go paperless.
  • Try telematics. (Before you commit, ensure there are no penalties for driving errors or unenrolling from the program if you don’t like it. How this effects your insurance will differ by state.)
  • Get good student driver discounts.
  • Improve your credit score.
  • Raise your deductible. (You’ll pay a lower monthly premium but more out of pocket if you’re in an accident. Choose an out-of-pocket amount that works for your budget.)

Your independent agent can walk you through these options. Ask them to run multiple quotes with different discounts, deductibles and options. They can shop for better rates if they think you can get them. If you’ve had difficulty securing auto insurance, you might be better off staying with your current insurance carrier. Your agent can advise you on the best move for your situation.

Get an insurance quote before you buy your next car

If you’re in the market for another car, call your insurance agent before you sign the deal. Different makes and models come with different insurance price tags. Luxury or sporty models often cost more to insure because they cost more to repair or replace. Some electric cars also cost more to insure. Specific model years may cost more, too. It doesn’t mean you have to go with a car you don’t like, but you might change your mind about the kind of car you want once you know what the insurance will cost.

Why do your costs go up even though you’re a good driver?

Insurance rates go up for several reasons, and they don’t always have to do with your driving record. Usually, they go up during a hard market when insurance companies raise their standards and rates to compensate for the losses they incurred in previous years. It may seem unfair, but insurance carriers could go bankrupt if they didn’t raise rates to reflect the current conditions. Here are some reasons auto rates increase:

  • An increase in accident rates. High congestion in urban areas and increased distracted and impaired driving contribute to more accidents.
  • Higher medical costs from accidents involving injuries. The medical expenses associated with these claims have also been growing.
  • An increase in car prices and technology. Modern cars come equipped with features like backup cameras and collision warning systems, making them more expensive to repair or replace.
  • A rise in uninsured or underinsured drivers. When more drivers are uninsured, insurance companies pay more for accidents, especially when the payment would have come from the other uninsured driver’s insurance carrier.
  • Fraud. Scammers often stage accidents or exaggerate claims, increasing the overall cost. Policyholders absorb these costs.
Renewal pricing is often the best bet.

Your advisor can help find and discuss options on your current policy during the review process that can not only enhance your coverage to make sure there are no gaps, but also add updates and discounts that may help offset premium increases. These changes are often better than what you can receive by moving to a new carrier and in most cases the longer you stay with a carrier, the more options you will have to continue your relationship with that carrier after a loss or two. 

Call for an auto coverage review

Your insurance agent monitors the market for trends in auto insurance. They’re happy to help you stay updated about ways to save. If you have questions about protecting your automobiles, reach out to our Personal Insurance team.

This content is for informational purposes only and not for the purpose of providing professional, financial, medical or legal advice. You should contact your licensed professional to obtain advice with respect to any particular issue or problem. Please refer to your policy contract for any specific information or questions on applicability of coverage.

Please note coverage can not be bound or a claim reported without written acknowledgment from a OneGroup Representative.

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