The cost of car insurance has increased significantly in 2023, reaching the highest level in 47 years, according to a recent report from the Consumer Price Index. The average annual premium for full coverage in the US is now $1,780, up by 8.4% from 2022. However, some states are facing even higher rate hikes due to the impact of extreme weather events and expensive vehicle repairs.
How climate change affects car insurance rates
One of the main factors behind the rising car insurance rates is the increasing frequency and intensity of natural disasters, such as hurricanes, floods, wildfires, and hailstorms. These events cause significant damage to vehicles and infrastructure, resulting in higher claims and losses for insurance companies. To compensate for these losses, insurers have to raise their rates or reduce their coverage in some areas.
For example, Florida is one of the states that has been hit hard by extreme weather in recent years. In 2023 alone, the state experienced four major hurricanes: Elsa, Fred, Grace, and Ida. These storms caused widespread flooding, power outages, and property damage across the state. According to Insurify, an insurance comparison website, Florida drivers saw their car insurance rates increase by 12.6% in 2023, the second-highest increase in the nation.
Kyle Barone, a 26-year-old driver from Jacksonville, Florida, told CNN that his car insurance rate with USAA went up from $140 a month in 2020 to $278 a month in 2023. He said that he was told by a customer service agent that the rate increases were due to the recent hurricanes in Florida. He tried to shop around for better rates, but he found that other insurers gave him comparable or higher quotes.
How vehicle technology affects car insurance rates
Another factor that contributes to the rising car insurance rates is the increasing cost of vehicle repairs. Modern cars are equipped with advanced technology and safety features, such as cameras, sensors, radars, and computers. While these features can help prevent accidents and save lives, they also make cars more expensive to fix when they are damaged.
According to Bankrate, a personal finance website, the average cost of repairing a car after a collision was $3,053 in 2020, up by 14% from 2016. The cost of repairing a car after a comprehensive claim, such as theft or vandalism, was $1,785 in 2020, up by 21% from 2016. These costs are expected to rise further in 2023 as more cars become equipped with sophisticated technology.
Greg McBride, CFA, Bankrate’s chief financial analyst, said that car insurance rates are likely to continue to increase in the future as vehicle technology becomes more complex and costly. He advised drivers to shop around for the best rates and discounts available and to maintain a good driving record and credit score to lower their premiums.
How drivers can save money on car insurance in 2023
Despite the rising car insurance rates in 2023, there are still some ways that drivers can save money on their premiums. Here are some tips from experts:
- Compare quotes from different insurers at least once a year or whenever there is a change in your driving situation.
- Bundle your car insurance with other policies, such as home or renters insurance.
- Increase your deductible if you can afford to pay more out of pocket in case of a claim.
- Reduce your coverage or drop optional coverages that you don’t need or use.
- Ask for discounts that you may qualify for, such as safe driver, low mileage, good student, or military discounts.
- Drive less or use public transportation or ride-sharing services when possible.
- Drive safely and avoid tickets and accidents that can raise your rates.
- Improve your credit score by paying your bills on time and keeping your debt low.
Car insurance is an essential expense for most drivers, but it doesn’t have to break the bank. By following these tips and staying informed about the factors that affect your rates, you can find the best coverage for your needs and budget.