1 dead, 1 injured in motorcycle accident in Dodge Co

If you live in one of the states above, you can compare and see how much car insurance premiums have increased in 2023.

Calmer seas ahead: vehicle insurance rates are stabilizing

After a turbulent year, car insurance premiums are now stabilizing, with less steep increases expected in the coming months.

Insurers faced high loss ratios for most of 2023, which will likely be reflected in further rate increases. This is primarily due to the rapidly increasing costs of car parts as well as the growing number and severity of damage cases.

The insurance industry continued to suffer from inflationary pressures, labor shortages and supply chain slowdowns that arose during the COVID-19 pandemic into 2023. However, losses for private auto insurers have slowed as the impact of rate increases begins to outweigh loss trends. As a result, drivers can expect some stabilization in the industry in the second half of 2024.

Rising maintenance and repair costs = lower profits for insurers

Since 2022, the Bureau of Labor Statistics’ consumer price index for auto maintenance and repair has increased significantly by double digits. Higher costs incurred at the auto repair shop are passed on to insurers, who then adjust their rates to reflect rising claims costs.

Insurers also bear the costs of increasingly frequent and serious accidents. According to the National Highway Traffic Safety Administration (NHTSA), there has been a significant increase in traffic fatalities during the COVID-19 shutdowns. In 2020, the death toll rose by 7.3% and in 2021 it rose by 10.1%.

With the advent of advanced automotive technology, the cost and complexity of car repairs have also increased. The cost of replacing a windshield can be quite high, especially on vehicles equipped with advanced features such as rain-sensing wipers, driver assistance systems, and adaptive cruise control. The cost to replace a windshield on older vehicles typically ranges between $300 and $600.

Repair costs are higher for electric vehicles (EVs). In certain models, Tesla has cleverly integrated batteries as a structural component of their cars, rather than as a mere replaceable part. This strategic move has allowed Tesla, the leading electric vehicle manufacturer in the United States, to consolidate its position in the market. In the event of a minor accident, it may be necessary to replace the entire battery, which can result in a significant cost of between $5,000 and $20,000 for the replacement part.

Tesla: crash-safe cars or crash test dummy insurance?

In an investor call in January 2023, Tesla CEO Elon Musk announced his intention to revise the design and reduce the cost of repairing a Tesla after a collision. In 2019, the company also launched Tesla Insurance, offering customers the opportunity to secure cheaper rates compared to traditional insurance providers.

Nevertheless, numerous Tesla insurance policyholders have expressed frustration with the long wait times for compensation. The automaker is also dealing with class-action lawsuits alleging that Tesla sensors generated inaccurate collision warnings, leading to higher insurance premiums.

Pandemic souvenir – expensive cars that no one can afford

The automotive industry is facing major challenges due to supply chain disruptions and labor shortages caused by the COVID-19 pandemic. The result is a decline in inventories and a noticeable increase in prices for new vehicles. According to Kelley Blue Book, the average new car transaction price has increased about 23% since November 2020 and is now over $48,000.

On the other hand, new car prices have remained stable from year to year thanks to favorable market conditions for car buyers. Used car prices also saw a significant increase, but have fallen 3% since October 2023, with the average list price at $26,533, according to KBB data. However, the inventory of used vehicles, especially the cheapest ones, remains limited.

Fire, flood, anger – climate change is making insurance companies cry

Weather events are increasingly having an impact on insurers’ losses. In the first half of 2023, the United States experienced significant damage due to severe convective storms, resulting in at least $29 billion in insured losses.

In 2023, insurance industry crises occurred in several states particularly vulnerable to climate disasters, such as Florida, California and Louisiana. In 2023, the United States experienced a total of 25 weather or climate disasters, resulting in losses of over $1 billion each, according to the latest data from the National Oceanic and Atmospheric Administration (NOAA) on December 8.

Due to the costly losses associated with climate change, major insurers are reducing coverage, not renewing policies, and stopping sales of new homes and auto insurance in high-risk areas. As severe weather events become more frequent, policyholders may experience a decline in coverage options, potentially resulting in higher rates.

A roadmap (maybe)

A significant majority of drivers experienced multiple premium increases in 2023, resulting in a significant increase in the average annual rate for comprehensive coverage to $2,019. Several factors converged to lead to a significant increase in rates, such as rising repair costs, labor shortages, higher vehicle prices and climate disasters.

In the future, severe weather events and the expensive repairs of high-tech and electric vehicles could affect car insurance prices.

Car insurance premiums are predicted to continue rising in 2024. If you want to reduce your car insurance costs in 2024, you have several options available to you. This includes increasing your deductible, lowering your coverage limits, and getting quotes from multiple insurers to secure a cheaper rate.

Policyholders can check with their insurance company to determine whether they are eligible for possible discounts. Typical discounts include savings on vehicle safety features, defensive driving courses, combining home and automobile insurance, and setting up automatic payments.

Bottom line

• Due to insurers’ record losses due to rising repair costs, climate disasters and serious car accidents, car insurance premiums rose an alarming 24% in 2023.
• According to recent estimates, car insurance premiums will increase by 7% in 2024, almost double the average annual increase.
• Annually, comprehensive insurance nationally costs an average of $2,019, which is 2.6% of the median household income. The national average cost of state-mandated liability insurance rose to $1,154.
• In 2023, average wage growth was 638% less than the increase in car insurance premiums.
• Increasing deductibles and decreasing coverage limits are the most common cost-cutting measures among drivers. However, 45% said they had taken no action to reduce their premiums.
• The average annual premium for comprehensive insurance for New York drivers is $3,374, making it the highest in the country.

This story was produced by Way.com and reviewed and distributed by Stacker Media.