Finance
Auto Insurance Rates Set To Increase By 8.4% In 2023
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With inflation fears constantly in the headlines, it’s easy to worry about what this will mean to insurance premiums. Even if inflation shifts downward, auto insurance rates are still expected to increase in 2023 by as much as 8.4% in the U.S.
Whether it’s Fox Business, ABC News, or USA Today, all reports indicate that 2023 will bring the largest increase in insurance rates in the last six years. Research suggests that an annual average cost across the U.S. will lighten wallets to the tune of $1,780. However, that’s an average.
Individual states will vary significantly meaning where you live may save you a few bucks or cost you more. Residency in a state like Vermont may only cost $1,104 compared to expensive Michigan where insurance is estimated to increase to $4,788 in 2023.
It’s expected that 45 of our 50 states will see at least a 1% increase. Lucky residents in Vermont, Hawaii, Wyoming, and California can expect to see a less than 1% increase while those that call Arizona, Illinois, and New Hampshire home will see the largest price increases with a jump of 15.6%, 17%, and 13.6% respectively.
Table of Contents
Why are Insurance Rates Expected to Rise?
Industry experts suggest that the increase in expense will largely be attributable to a return to driving frequency and habits that resemble the pre-pandemic period. Many people who have worked remotely will be returning to the workplace, and travel is expected to increase as well.
With more people on the road, it’s logical to expect accidents to increase and that will inevitably influence the number of claims filed. More claims indicate higher premiums.
Another contributing factor may be the increase in prices to repair vehicles. Difficulty in accessing auto parts and a shortage of workers added significantly to the expense, particularly during the pandemic period.
Equally problematic will be the higher cost of medical care related to auto accidents, as inflation is not selective hitting all sectors. Finally, a determining factor in some areas will be the increase in severe weather events which place both vehicles and drivers at increased risk of accidents and damages.
What do the Experts Predict for Climbing Insurance Rates?
The experts are predicting:
- an average increase of 8.4% in 2023 in auto insurance rates.
- 45 of 50 states will see an increase of at least 1% in the cost of premiums.
- Residents in Florida, Michigan, and Rhode Island can expect to pay the most.
- Drivers with traffic violations may see an average 52% increase in the cost of premiums, so better to keep an eye on the speedometer.
- Eco-friendly owners of electric vehicles can expect to pay 28% more than the owners of traditional gas-gulping autos.
Ways to Save on 2023 Auto Insurance Costs
Despite the significant increases expected, there are several things you can do to limit the damage.
1. Comparative Shopping
The best reason to shop around is to save money. Don’t only compare the annual cost but compare monthly car insurance, especially if you are not going to be paying with a lump sum. Also, make sure when engaged in comparative shopping to compare the coverage. You don’t want to select a less expensive premium if it means less coverage than what you need.
2. Consider Adjusting Your Coverage
If you are on a budget, opting for liability only will cost considerably less than full coverage insurance. This can benefit those that do not have new or expensive autos. Removing the extras like roadside assistance, rental coverage in the event of an accident, or new car replacement coverage will also save you some dollars.
3. Better Your Credit Score
Your insurance and credit score are tied to one another. Drivers with poor credit scores can pay almost double what drivers with good credit scores pay. Insurance providers look at several factors when deciding if you are a good risk and your credit score is one. Bettering your credit score can aid in decreasing your premiums.
4. Research and Inquire about Insurance Discounts
Check with your insurance provider about available discounts and if you are eligible for any. If you want to change insurance companies, make it a point to look for available discounts when engaged in comparative shopping. If you drive less because you work remotely or may be retired, consider pay-by-the-mile options.
If you belong to associations, entities, professional groups, the armed forces, or clubs, see if your affiliation entitles you to a lower rate. Bundling policies for those with homeowners’ insurance, renters insurance, health insurance, or life insurance may also make you eligible for a discount on your premiums. Defensive driving courses will also lower premiums.
Safety and security devices installed on your auto can also get you a less expensive policy. Anti-theft systems and safe driving monitors may reduce the risks for filing claims, so your provider may reduce your insurance expenses.Be bold, ask!
Will Auto Insurance Rates Continue to Climb?
As inflation slows, cost increases are expected to slow as well. Hopefully, manufacturing production will return to pre-pandemic levels with auto parts easier to obtain alleviating any bottlenecks that have slowed down supply chains and contributed to more expense when requesting parts for auto repairs.
It all depends on the state of the economy. If inflation cools down, there is a good possibility that insurance rates will reflect this in the future and hopefully, 2024 will bring very little increases in auto insurance costs.
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