A new study has revealed car insurance rates are rising, and among the many factors leading to the surge in pricing are the uptick in extreme weather events and the climate crisis.
What’s happening?
Insurify released a report showing that car insurance rates rose 15% in 2024, meaning drivers pay an average of $2,313 in most states, with six states exceeding $3,000 annually.
Per the company’s research, insurers are “factoring climate risk into their rates as insurers can incur significant losses from severe weather events.” Some of the states facing the highest rates include California, Florida, South Carolina, and Louisiana, all of which have faced an increase in extreme weather events in the past few years.
Why are rising insurance rates important?
Rising insurance rates have been an issue for homeowners recently, and now that financial burden is spreading to car owners as well. Insurify shared that Hurricanes Helene and Milton caused nearly $50 billion in insured losses, according to Swiss Re, and CARFAX reported 138,000 flooded vehicles were among the damage caused by Helene.
“Comprehensive car insurance covers these perils, and as a result, an area’s level of climate-risk exposure factors into rates,” Insurify explained.
Climate risk is increasing primarily due to human activity. NASA shared a 2021 report that found “human-caused rise in greenhouse gases has increased the frequency and intensity of extreme weather events.” Those activities include using fuel from dirty energy sources like gas and coal, which release pollution into the atmosphere at every step of their life cycle, from excavation to home usage. Extreme weather events create havoc for every living thing on the planet, altering environments and leading to economic and physical tolls on humans.
And electric vehicles, which generally aid in reducing pollution, are hit with higher insurance rates due to costly repairs and maintenance.
What’s being done about rising insurance rates?
Insurify noted that the high costs, apart from climate risk, were related to the volatile markets from the fallout of the COVID-19 pandemic and will hopefully level off for most drivers in the next year or so in most — but likely not all — states. And those with electric vehicles can compare rates and look for providers that offer discounts for EVs, per Yahoo Finance.
The increasing impacts of the warming climate are only becoming more profound and will require changes at a macro level from large corporations and smaller everyday changes from the average person to mitigate.
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Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.