Expert Quotes: Understanding the Surge in Car Insurance Prices

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Americans are suffering from a painful surge in car insurance prices. Learn more about why car insurance prices are so expensive, and how you can save money. 

Car insurance prices are rising fast in America. According to a survey from industry analysts at Insurify, the average annual cost of a car insurance policy increased by 17% in the first half of 2023. There are several complex reasons why car insurance prices are skyrocketing, ranging from post-pandemic distracted driving to climate change and natural disasters.

We talked with a few car insurance industry experts to see how people can navigate the landscape of higher insurance prices, whether there is hope for lower prices on the horizon, and what you can do to reduce your car insurance costs today.

Here are a few big insights into why car insurance prices are so expensive, and what you can do about it.

Americans are getting in more car crashes

One surprising result of the pandemic is that it seems to have made Americans worse at driving. According to data from the Insurance Institute for Highway Safety (IIHS), from 2020 to 2021, there was a 10% increase in fatal motor vehicle crashes.

This is a tragic sign that Americans’ driving habits have gotten less safe in the past few years. There are a few possible reasons why Americans are having more car crashes:

Drinking and driving: Alcohol consumption increased significantly during the pandemicDistracted driving: More people are looking at phones or multi-tasking while behind the wheelRegression in driving skills: Some people got out of practice with driving, due to driving less during pandemic-era lockdowns and working from homeAggressive driving: Too many people are driving too fast, are vulnerable to road rage, and are taking unnecessary risks at the wheel

Car insurance companies are ultimately in the business of collecting money upfront (premiums) to pay for car repairs and medical bills in the future (insurance claims). When people get in more car crashes, insurance companies have to bring in more money by raising premiums on everyone.

Fixing cars is getting more expensive

Another cause of rising premiums, in addition to more dangerous driving, is the escalating cost of paying for vehicle repairs. When you get in a car crash and have to call your insurance company to file a claim, the insurance company can help you find a body shop to get your car fixed. But getting your car fixed after a car crash doesn’t often happen overnight.

According to Nick Schrader, insurance agent and owner of Second Western Insurance, many mechanics and auto body repair shops have been slammed with work, and have struggled to find auto parts due to supply chain problems. These car repair shops have also had to raise prices to keep up with their own costs of doing business.

“Because of all these factors, the costs of car insurance claims have skyrocketed,” Schrader said. “It is more expensive to repair or replace a vehicle because the cost of labor and materials have gone up with inflation, and it is difficult to get the labor completed in a timely fashion.”

Better car technology has also made it more expensive to buy car insurance. It’s great to have advanced safety features that are becoming more prevalent with newer vehicles. But when a car gets in a crash, or suffers a simple kind of damage like a broken windshield, those advanced features can make the car repairs even more pricey.

“Technology advancements are also impacting insurance losses,” Schrader said. “For example, a basic glass claim for a rock hitting a windshield can cost over $1,000 because the glass has lane changing sensors that also need to be replaced. Insurance carriers are increasing rates to make sure they have enough premium to settle losses.”

What you can do now to fight high car insurance prices

We asked a few industry experts if there are signs of hope for future reductions in car insurance prices. Schrader predicts that, unfortunately, high car insurance prices are likely here for the foreseeable future. “I do not expect rates to go down anytime soon,” he said. Schrader says that the overall impact of inflation, rising costs of claims, and the basic need for insurance companies to stay profitable is going to keep insurance rates high.

But even if car insurance rates stay higher at a national or industry level, there are still a few key moves you can make right now to get lower prices on car insurance.

“People can get discounts on their auto insurance by asking their insurance company for discounts related to education, professional associations, driver safety training, low mileage, and bundling policies together,” Schrader said. “If you keep your current insurance, you can always increase your deductibles, and/or remove physical damage coverage on older vehicles that do not need to be repaired or replaced after a loss.”

Another idea to get cheaper car insurance is to try a pay-per-mile car insurance policy. If your driving habits have changed in the past few years and you’re not driving as often, you could save money by only paying for the coverage that you need. Some car insurance companies also let you earn a big discount with a special program called telematics car insurance. With telematics, you give your insurance company permission to track your driving data via mobile device, and you get rewarded for being a safe driver.

Keep in mind that even if car insurance gets more expensive on a national level, you still have choices. Your personal car insurance situation depends on a number of factors, like the age of your vehicle, where you live, and how you drive. You can ask for discounts, raise your deductible, or shop around for a new policy. The best car insurance companies can still offer competitive rates and will want to win your business.

Our best car insurance companies for 2022

Ready to shop for car insurance? Whether you’re focused on price, claims handling, or customer service, we’ve researched insurers nationwide to provide our best-in-class picks for car insurance coverage. Read our free expert review today to get started.

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