Car insurance prices are climbing. Here’s why — and how you can save on your policy

Moira Ritter
·3 min read

Inflation is finally easing the the U.S.

The Bureau of Labor Statistics’ latest data, released Sept. 13, showed that consumer prices increased just 3.7% in the 12-month period ending in August 2023. Between July and August, prices climbed only 0.4%.

But while overall price hikes are slowing down, some things are still getting more expensive — and fast. Auto insurance was among the items that saw the biggest price climbs between August 2022 and August 2023.

In that year-long period, the price of car insurance jumped 19.1%, according to the BLS. From July to August alone, car insurance prices climbed 2.1%.

With overall inflation cooling off, why is car insurance still skyrocketing? And how can drivers save?

Here’s what to know.

3 reasons insurance is getting more expensive

Car insurance is determined by a number of factors — including where you live, the type of car being insured, your insurance company, your age and your gender — so it varies person-to-person.

Experts have cited more specific reasons for the recent uptick in prices, though.

  • Increased repair and replacement costs: The cost of repairing cars and replacing parts has been increasing since the COVID-19 pandemic upended the supply of labor and parts, according to Experian. Maintenance and repair costs have jumped 12% in the last 12 months, the latest CPI data showed. At the same time, as cars have become more technologically advanced, their parts have become more time-consuming and expensive to replace. Not only are parts expensive, but also rental cars saw huge price increases during the pandemic, making it more pricey for insurance to offer drivers rentals while their cars were in the shop.

  • More crashes: Roadway fatalities saw dramatic increases in 2021, but they have been on the decline this year, according to the National Highway Traffic Safety Administration. However, as traffic has normalized post-pandemic, there has been an overall uptick in collisions, costing insurance companies more and driving premiums up, according to a ValuePenguin analysis.

  • Climate change and inclement weather: Severe weather, including hurricanes and tornadoes, is also partly responsible for driving car insurance premiums up, according to BWO Insurance. These weather events increase the likelihood of auto collisions and damage, which causes a rise in insurance claims and forces increases in premiums. For example, as waters from Hurricane Idalia receded in Florida, two Teslas spontaneously combusted after they were filled with saltwater, officials said.

How to save on car insurance as prices rise

Although prices continue to rise, experts have suggestions for drivers looking to save on their car insurance premiums.

  • Shop around before picking a plan: Experts suggest taking your time when picking a car insurance plan. It’s worth the extra time to compare prices and explore possible discounts. You may be eligible for group insurance discounts, multi-policy discounts, multi-car discounts, good student discounts, homeowner discounts or loyal customer discounts, according to Kelley Blue Book.

  • Maintain a good credit score: Credit scores are a big determinant in deciding a driver’s insurance rate. ValuePenguin estimates that credit scores can change premiums by 80%, and by improving and maintaining your credit score, you can manage your insurance rate.

  • Drive safely: Traffic violations can increase your insurance costs even more. Bankrate estimates that, on average, speeding tickets can drive a full-coverage premium up 21%, an at-fault wreck could increase premiums 42%, and a DUI conviction can raise monthly payments to more than $300.

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