Soaring Cost Of Car Insurance Has Consumers Hunting for Better Deals – Forbes Advisor

Are you looking to break up with your car insurance company? Two new reports show more consumers are shopping around for car insurance—and soaring rates are a big factor.

The cost of insuring a car spiked 17.8% in July from a year earlier, according to the government’s latest consumer price index report. The average driver now shells out $1,668 a year for an auto insurance policy. And that has many people searching for cheaper car insurance.

A quarterly insurance trends report from credit bureau TransUnion finds shopping around for auto insurance in the April to June period was up 12% from a year earlier, as drivers sought refuge from skyrocketing prices.

Consumers considered to be higher risk because they have a credit score of 500 or lower were the most active shoppers. Their insurance shopping activity was up 25%. Drivers with fair or poor credit scores are routinely charged hundreds of dollars more for car insurance, even if they have a clean record, according to the Consumer Federation of America.

Overall, new policy growth—the rate at which consumers either switched insurance companies or purchased new auto coverage—climbed 10.2% from a year earlier, according to LexisNexis’s latest quarterly report on insurance demand. Some switching may reflect the reluctance of certain companies—including State Farm and Allstate—to insure Kia and Hyundai models that are commonly targeted for theft.

At the same time, there has been an uptick in new car buying. A J.D. Power report shows new vehicle sales shot up 22.6% year-over-year from June 2022 levels. Used car sales were down slightly.

More Homeowners and Renters Are Also Shopping For Insurance

Consumers also shopped more for homeowners insurance in the spring. The TransUnion report found the amount of shopping for property insurance jumped 13% year over year. For renters insurance, there was a small uptick in shopping volume between April and June.

Lower rates are getting harder to find. Rates for homeowners and renters insurance edged higher last month, according to the U.S. Bureau of Labor Statistics.

What’s Next?

TransUnion predicts consumers will continue to shop around for auto and home insurance as rates increase, though industry challenges could make it harder to score a better price.

As insurers face profitability problems, they’re aiming to raise rates. They’re also taking other steps, such as requiring customers to bundle policies or pulling out of some geographic markets altogether.

Insurance companies “are being much more discerning in their underwriting processes,” Adam Pichon, senior vice president of auto insurance and claims at LexisNexis Risk Solutions, said in a news release. “But motivated shoppers still sought better cost savings, and switched their policies in record numbers in May and June.”