Why car insurance rates are so high: ou’re paying a lot more for car insurance than you were in 2020. Here’s why.

Vox ^ | 03/22/2024 | Marin Cogan

[SeekAndFind]

If you pay for car insurance, you’ve probably noticed that rates are really high lately. You’re not alone.

Last week’s Consumer Price Index (CPI) report — the government’s method for tracking what people are paying for goods and services and how that’s changing over time — noted that the price of car insurance was up more than 20 percent over the same time last year. What’s particularly painful is that rates were already rising: CPI reports have shown that, overall, car insurance rates are up more than 38 percent since January 2020.

What’s going on? The big insurance companies have been relatively quiet about what’s driving rates up.

Inflation is definitely a big part of the equation. Everything now costs more, including cars and car repairs, and insurance companies are passing those costs on to consumers.

But industry insiders and experts I spoke with say there are a few under-the-radar trends also driving rates up, and they relate to the subjects I cover at Vox, so let’s dive in.

We’re driving more dangerously

One reason rates are up is that driving became much more dangerous during the pandemic. People started engaging in risky behaviors like speeding and using their phones while driving more.

“Since Covid, we saw this incredible increase in distracted driving,” says Ryan McMahon, senior vice president of strategy for Cambridge Mobile Telematics. “You could almost track it by the day schools started to shut down.”

He’s not just speculating: CMT has access to driver data for millions of drivers, who download apps via their insurance companies that measure things like speeding, hard braking, and cellphone use while driving. McMahon told me that the huge jump they saw in distracted behaviors during the pandemic hasn’t come down since.

Maybe not surprisingly, the number of fatal accidents spiked; so did the severity of auto insurance claims, meaning cars came in severely damaged and requiring expensive repairs.

Costs keep rising

While drivers were getting more dangerous, law enforcement in many parts of the country began pulling back on traffic safety enforcement, likely due to Covid-related staff shortages and criticisms over racial biases following the murder of George Floyd.

Traffic enforcement has always been a deeply imperfect mode of safety enforcement, one that leaves Black drivers susceptible to racial biases from law enforcement. But it’s also one of the factors insurance companies use to determine individual rates.

“Ultimately, without traffic violation data, insurers aren’t able to accurately assess and underwrite a driver’s risk. With the compounding cost from accidents, carriers are now increasing rates for everyone, meaning we are all paying for this problem,” Mark McElroy, executive vice president and head of TransUnion’s insurance business, said in a recent report.

Cars have also become more technologically advanced, making car repair more expensive.

Think of a car made in 2004 versus a car made in 2024. If the two crashed, the car from 2024 would probably be more expensive to fix because it’s more likely to have advanced technology like backup cameras and lane sensors.

According to one report by industry analysts CCC, the average estimate for a front-end claim in 2022 was $3,706, up more than 15 percent over the year before. Vehicles more than seven years old, meanwhile, were over $1,000 less to repair.

When does it end?

This is, needless to say, not good news for consumers.

The price of new cars has grown so much that they’re practically unaffordable for middle-class consumers now, and these rising costs hit low-income people even harder. It’s particularly difficult because for many, a car is often an essential means of keeping a good job.

So they’re stuck with a kind of Catch-22: They can’t live with the rising costs of car ownership, but they can’t live without them, either. And their rates are already likely to be higher if they have poor credit or live in a high-crime neighborhood. “The people least able to afford it are paying the highest amount,” said the industry insider.

The good news — if you can call it that — is that experts don’t think rates will keep growing so much over the next year.

“You had this problem where the insurance companies fell behind, so the prices didn’t match the costs and they were losing a bunch of money,” another insider told me. Rates rose in an attempt by insurance companies to catch up with costs, but now inflation isn’t growing at the same runaway clip and insurers aren’t seeing the same levels of loss.

“Costs shouldn’t be as high as last year,” he said.

[Alberta's Child]

I work professionally in a field where traffic safety is a big focus of our work.

The biggest shortcoming of this article is that it doesn’t even mention the factor that might be the biggest contributor to rising auto insurance rates other than escalating auto repair/replacement costs: the widespread legalization of marijuana and other narcotics.

[grey_whiskers]

Throw up a cloud of squid ink to cover illegal aliens.

Then ignore that more people are driving $100,000 trucks.

Then ignore cars are far more complex. Computer chips and sensors everywhere, so even a minor collision can cost nearly $10k.

Then add in the high cost of both new and used cars, so if a car is totaled, it costs the insurance company more to replace it.

[frnewsjunkie]

I have Nationwide and have for years. One reason I am staying with them.. we had a hurricane came through here a few years ago.. rare to get one that causes damages..
we bought this house new and the roof was builders grade. the hurricane did a little damage to the roof. Insurance replaced the roof with a good brand and also put in a new gate ..the one I held and propped to keep the whole fence from coming down.
My cost for an $8000 new roof and gate ...$1000. I’m balancing it all in my brain as a good deal.. so far..

[P.O.E.]

Decades ago, one of our fellow workers always took fancy vacations, had lots of expensive jewelry, etc. And was otherwise as poor as the rest of us.

We found out she was an expert at causing other cars to rear-end her (when she pulled the trick on someone we knew). She’d settle for a few grand and off she’d go on a two-week cruise to the islands.

[God luvs America]

Nope...

1- the insured are paying for those who are uninsured which is rampant in blue cities

2- illegals have driven up the cost of auto insurance. many of them are unable to purchase or register cars so they do so with a friend, usually in another state that is able to insure and register cars. Here in NY there are huge numbers of cars with Connecticut plates that are parked on the streets, in driveways, etc.

3- theft of cars and the cutting out of catalytic converters is another huge problem- in blue states. Nothing happens to the thugs that do it and the insurance companies pay

4- and the obvious- insurance companies are leaving certain states, mostly blue states, because they are sick and tired of paying out millions while nothing is done to curb crime which causes claims. Like people in Florida have a tough time getting home insurance, blues states are seeing the same with auto insurance

[Old Yeller]

According to the Allstate commercial, crackas are the only ones driving crazy. The black dude is driving real careful so he can get the safe driver discount. He’s so smart and responsible.

[Old Yeller]

That might explain why there are so many cars on the road in Kansas with expired tags. Other than it costs more to register a vehicle in Kansas than any other state, you need to show proof of insurance. These people can’t afford the insurance, therefore no registering.

[grame]

Ours has gone up three months in a row. 11-20 bucks each time. I should say Had gone up. Hubs did some checking and found a new policy at half the price. Now we’re waiting to see what they do to our homeowners. We’ve been with the same company more than 30 years. But does having the same company for car and home make that much difference?

[KC Burke]

You forgot to account for chronic gum disease.

[Recompennation]

It’s ...... tha,
“You’re covered Kevin” as the co mercial ad said.
Another desert gift fallout
providsionering accomodationeerig by the ensurence companies, socialism.

[bert]

With the lowest cost pickup truck listed for $53,000 insurance has to go up. Reports are that even strip down no frills fleet pickup list for $43,000

The reasons put forward may be the cause of insurance rate escalation but the desire for vehicles to come with tons of bells and whistles is the reality.

[grobdriver]

So in an article about rising insurance costs, they just have to work this irrelevancy in:

one that leaves Black drivers susceptible to racial biases

[yldstrk]

I am a veteran and have always been able to beat USAA’s rates with State Farm.

[tomkat]

Wetback Invaders

[nicollo]

“Since Covid, we saw this incredible increase in distracted driving,” says Ryan McMahon, senior vice president of strategy for Cambridge Mobile Telematics. “You could almost track it by the day schools started to shut down.”

Key word "almost."

Auto accidents and fatalities have been rising since 2014 as a result of coordinated leftist and governmental attacks against law and order, amplified after St. George's martyrdom in 2020, which Mr. McMahon from the quotation above, deliberately avoids.

Under Biden, NHTSA has quit general reporting of traffic fatalities by race, although the granular data is still there. See for example, Early Estimate of Motor Vehicle Traffic Fatalities For the First Half (January–June) of 2023, which has nothing on race, although black auto deaths were up significantly from the prior year. From what I have reviewed, from 2020 black traffic fatalities were up 50% over 2015 totals compared with an increase of 11% for whites and 11% overall. 2020 fatalities were up from 2019 by 23% for blacks and 3.7% for whites. It wasn't the shutdown.

Anecdotally, I distinctly recall a conversation with an insurance rep in March of 2020, when I called in to report that my wife's car was no longer being used for commuting. I asked the agent if she was enjoying a slow-down in business, and she laughed at me, saying, "It's never been busier: people are driving crazy."

The shutdown certainly impacted driver behavior, but the underlying cause of your higher insurance premiums is anti-police hysteria and victim privilege mentality.

[butlerweave]

Why do you think Elon Musk blasted his used EV into space because it was worthless and it was the only way to get rid of it ,LOL

[dfwgator]

All part of the plan to make personal transportation unaffordable.

[dfwgator]

All that was missing was blaming it on Climate Change.

[SMARTY]

THAT’S the deal breaker!

[mewzilla]

Not all of us are driving dangerously.

But we’re being made to pay for those who do...