Car-insurance rates spike the most in 47 years, and they aren’t the only premiums rising
Paying a premium… for your premium. US car-insurance prices are up 19% from last year — the biggest annual spike in 47 years. Driving is taking a bigger chunk out of Americans’ monthly budgets, from rising gas prices to higher maintenance costs to near-record vehicle prices. Pricier insurance is adding to drivers’ woes:
Insurers like State Farm and Allstate cite higher accident levels, rising repair costs, and climate disasters as reasons for premium hikes. Example: Colorado’s blizzards, hailstorms, and tornadoes have led to a 52% spike in premiums since last July.
The costliest policies are in Florida, where drivers pay an average $3.2K/year (a 15% increase from last year). Louisiana drivers pay the second-highest premiums ($2.5K/year) and those costs are expected to rise 18% this year.
As premiums balloon, some consumers are opting for cheaper rates with a higher deductible (and less coverage). Some may even (illegally) ditch insurance.
Feeling the pinch… but not covered for pinches. Auto insurance isn't the only coverage trending up. Health-insurance costs are projected to rise 6.5% next year, the most in more than a decade. And home insurers have been approved for double-digit rate hikes in 31 states since the beginning of last year — and some have ditched climate-disaster-prone states like Florida and California altogether. Even pet insurance is soaring.
Insurers benefit when their services aren’t used… not your typical business model. Auto insurers reaped at least $29B in profits in 2020 as Americans drove way less but kept paying premiums. Health insurers like UnitedHealth saw a similar benefit during the pandemic when people avoided germy doctors’ offices. Now that highways and waiting rooms are packed again, insurers are having to shell out more $$.