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Americans Will Pay 16% More for Car Insurance by the End of 2023
The average American driver will pay nearly $1,900 for car insurance in 2023, as insurance rates continue to rise across the country, according to the Insurify 2022 Auto Insurance Trends Report: 2022 in Review and What’s Ahead for 2023.
By the end of 2023, Americans will pay 16% more for car insurance than they did at the beginning of this year. Auto insurance rates increased by 9% throughout 2022 and will likely rise another 7% in 2023, with the average American spending $1,895 on auto insurance by year’s end.
Insurify’s report leverages more than 69 million car insurance rates from car insurance applications across the U.S. The final installment of a two-part series on car insurance trends in America, it forecasts insurance prices for 2023, details where costs rose the most in 2022, and surveys drivers on how their rates are changing and how they’re trying to save.
Coverage in 2022 cost the average driver $1,777 per year, a 9% increase from 2021 and a whopping 21% increase from 2020. Oregon, Maryland and Virginia saw the greatest price increases, with premiums rising by more than 25% in all three states.
California, meanwhile, saw car insurance prices fall 15% in 2022, in part due to an ongoing moratorium on rate increases
since the start of the COVID-19 pandemic. Some insurance providers and experts, however, argue that the moratorium is also limiting insurance availability in the state, according to Insurance Journal.
“Many of the factors that contributed to rate increases in 2022 will continue to be in play for American drivers in 2023,” said Snejina Zacharia, Insurify’s CEO and founder. “Our annual data reflects the state of the insurance industry, and our new report projects that higher driving rates, more severe accidents, inflation’s impact on vehicle repairs and medical costs, and the potentially increased frequency of wildfires and hurricanes will continue to be the key factors contributing to rate increases next year.”
Key Findings from the Report
The rising costs of vehicle repair and medical expenses, higher driving and accident rates, and the potential for more frequent natural disasters due to climate change are the biggest reasons costs will rise throughout 2023, according to Insurify’s panel of insurance experts.
Nearly half (47%) of drivers reported at least one increase in their auto insurance rates in 2022, and 19%—nearly one in five drivers—even reported their rates increasing multiple times this year.
Drivers were half as likely to consider purchasing a hybrid or electric vehicle in November as they were in July. However, in November, more drivers considered switching their insurance provider and even dropping their coverage altogether than in July, despite the serious legal and financial risks of driving without insurance.
With prices potentially rising throughout 2023, Insurify’s panel of insurance experts offered advice for drivers looking to save on their car insurance premiums.
Finding a vehicle that matches your budget is key for Dan Roccato, MBA, clinical professor of finance at the University of San Diego School of Business.
“Boring is better when it comes to saving money on auto insurance,” Roccato said. “Your heart wants a new convertible, but your wallet is happier with an older sedan.”
Credit: Shutterstock
Source: Insurify
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