Car insurance premiums and claims still rising: study

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AM Best’s latest market segment report provides a bleak outlook for the auto insurance industry, both for insurers and consumers. The auto insurance industry is suffering, with premiums and claims steadily rising, according to the survey.

For insurers, the increase in auto insurance claims is largely due to drivers returning to the workforce. The number of people on the roads is increasing compared to the height of COVID-19. The more drivers on the road, the more accidents are reported and the higher premiums tend to rise.

“Workplace patterns have changed since the pandemic with work-from-home arrangements reducing the number of vehicles on the road. However, driver inattention and riskier driving habits have become more problematic over the past few years, and as a result, vehicle weight has worsened,” said Christopher Graham, senior industry analyst, in a press release.

Inflation is another reason for rising premiums, along with supply chain issues, the AM Best study cited. All these problems together have resulted in significant losses for insurers that are passed on to consumers.

Car insurance rates vary based on a variety of factors, from your credit score to your driving habits. You can use Credible’s free tools to shop around and lower your auto insurance premium today.

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Auto insurance premiums are at record highs

Auto insurance premiums are going up everywhere, even for those with good credit or good driving records. Car insurance costs have increased by 43% in the last three years, according to a recent study by Jerry.

Interest rates have not only risen significantly, but are rising at an unprecedented rate. In October, car insurance prices rose at an annual rate of 19.2%, according to Jerry’s survey. That’s the fastest increase since insurance data began being reported in 1985.

This cost is putting a heavy burden on Americans across the country. A recent survey found that over 51% of respondents had to cut costs elsewhere to afford the increase in insurance rates. And 45% of respondents also stopped saving as much money because they were paying more for car insurance.

Comparing multiple insurance quotes can potentially save you hundreds of dollars a year. Don’t leave money on the table! Visit Credible now to compare quotes from multiple car insurance providers for free.

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Climate change is seriously affecting the insurance industry

More drivers on the road aren’t the only driving factor behind the changes taking place in auto insurance. Another big reason for premium increases is climate change, according to AM Best’s 2020 study.

Climate change has led to more frequent and more dangerous natural disasters, prompting some insurance companies to pull certain insurance products from at-risk states like Texas and Florida.

The effects of climate change also cause more claims every year, resulting in large losses for insurance companies. AM Best’s 2023 study points to weather-related events as a contributing factor to the more than $90 billion in losses the industry has recently seen. Hurricane Ian alone was responsible for $50 billion to $65 billion in losses.

Comparing multiple insurance quotes can potentially save you hundreds of dollars a year. It’s easy to get a free quote in minutes through Credible’s car insurance partners here.

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How to lower your car insurance premiums

When car insurance rates are high, it may seem like you have no control over how much you pay, but there are things in your options to help lower your rates.

  • Shop for insurance often: Sites like Credible help you compare insurance rates from multiple companies so you can be sure you’re getting the best rate possible.
  • Consider a higher deductible: Higher deductibles mean you pay more out of pocket if you file a claim, but you’ll pay less upfront each month in premiums.
  • Package insurance products: Combining home and auto insurance or renters and auto insurance often entitles you to a discount on both products.
  • Watch your credit: Some insurance companies offer lower premiums to those with good or excellent credit.

Have a finance-related question but don’t know who to ask? Email the trusted money expert at [email protected] and your question can be answered by Credible in our Money Expert column.

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