Why Did My Car Insurance Go up in 2024?

Key points

• Average car insurance costs have increased 20% year over year, according to recent data from the United States Bureau of Labor and Statistics. 
• Increased vehicle thefts and severe weather events resulting in comprehensive claims were some factors that contributed to the increase in cost. 
• Electric car registrations grew by over 40% in 2023 compared to 2022. These vehicles tend to cost more to insure due to their specialized parts. 

Consumers are grappling with rising costs in nearly every sector, and car insurance is no exception. As of June 2024, the average cost of car insurance has increased by 20% year over year, according to the U.S. Bureau of Labor Statistics. That’s significantly higher than the 3.3% increase reported across all indexes. 

If you’re wondering why your car insurance went up, you’re not alone. Drivers across the nation are seeing rates inflate, but there’s no single culprit. Instead, a variety of factors, including high repair rates and severe weather trends, are to blame. The good news is there are still ways to lower the price to insure your car, even in the face of cost hikes. 

Industry trends increase car insurance rates

Your car insurance rates are a reflection of the type and amount of coverage you need, where you live and your driving record, among other things. But insurers also set rates based on operational expenses, including the cost to cover claims.

In recent years, several trends, such as repair rates, claims severity, climate change and an increase in auto thefts, have left insurers grappling with higher operational expenses.

Cost of repairs driving up claims

Vehicle repair costs have been on the rise, and that correlates to higher costs for insurers and increased premiums for policyholders. 

“From 2020 through 2023, replacement costs increased an average of 45% cumulatively, whereas inflation for the overall U.S. economy increased 15% within the same time frame.”

Mark Friedlander, Director of Corporate Communications, Insurance Information Institute

Higher repair costs stemmed, in part, from pandemic-related issues, including part shortages, increased labor costs and lulls in vehicle inventory. And even though many of those pain points are easing, insurers are still adapting to the impact those factors had on property damage claims. 

According to the LexisNexis 2024 U.S. Auto Insurance Trends Report, material damage claims increased 47% from 2020 to 2023. The issue is compounded by new vehicle technologies.

New cars come with more technologically advanced features, such as adaptive cruise control, lane departure and blind spot monitoring and rear cross traffic alert. While these features are a boon to drivers, making them safer on the road, they also drive up repair costs and subsequently, insurance premiums to cover claims. 

Increase in claims severity

Repair costs are feeding into increased claims severity trends, as are bodily injury liability expenses and litigation frequency. 

The LexisNexis 2024 Auto Trends Report points to a 20% increase in bodily injury claim severity compared to 2020. When paired with the rising cost of material damage repairs, claim severity is compounded by the cost of legal intervention, as claimants are turning to attorneys in an effort to secure high claims payouts. Among claimants who hired an attorney, 51% received a higher claims payout than they would have. 

A trend of higher claims payouts equates to mounting expenses for insurers and higher premiums for drivers. 

Recent data from Triple-I also shows an upward trend in claim severity and the financial impact it has on insurers between 2019 and 2022.

^{Source: Insurance Information Institute and the Insurance Research Council, 2024. Data reflect the loss and claim severity change from 2019 to 2022.}

Climate change and natural disasters drive up costs

Climate change and the resulting natural disasters are wreaking havoc on the homeowners insurance industry, but the auto insurance industry hasn’t and won’t remain unscathed.

Last year, 28 separate weather events caused over $1 billion in damage each, making 2023 a record year. According to the National Oceanic and Atmospheric Administration (NOAA), the total cost of damages was nearly $92.9 billion. 

In contrast, from 2010 to 2019, there was an average of 13.1 billion-dollar weather events per year in the U.S., meaning that the events had overall damages/costs that were more than $1 billion, adjusted to the 2023 Consumer Price Index (CPI). 

The frequency of and rising costs associated with storms is even more significant when compared to data from 2000 to 2009. During that time frame, there were only 6.7 billion-dollar events per year on average.

For auto insurance companies, climate change and natural disasters lead to an uptick in comprehensive car insurance claims. This type of car insurance helps policyowners cover damages from non-collision events, such as hail, fire, flooding, falling trees and other storm-related damage. 

Vehicle thefts on the rise 

Vehicle theft increased at the start of the pandemic and continues to trend upwards. According to the National Insurance Crime Bureau (NICB), 1,020,729 vehicles were stolen nationwide in 2023, a 1% year-over-year increase and a nearly 9% increase from 2021. 

Vehicle theft is covered under comprehensive insurance and gap insurance policies. Typically, you are paid out for the actual cash value of your car if it is stolen, meaning depreciation is factored in. But these claims can be especially costly for insurers if the driver has new car replacement coverage — then the insurer pays out the cost of a brand-new replacement vehicle, minus deductibles.

Over time, increasing thefts can lead to higher premiums for policyholders, especially those who live in cities where theft is more common. 

Theft was most prevalent in California, where 208,668 vehicles were reported stolen in 2023. Texas and Florida also top the charts. Combined those states held the top three spots each quarter of that year. They also have some of the highest average car insurance rates, according to our analysis of full coverage car insurance costs. 

Which vehicles are most likely to be stolen? The Hyundai Elantra and Sonata take the top two spots, according to the NCIB’s 2023 Vehicle Theft Trends Report. The Kia Optima, Chevrolet Silverado 1500 and Kia Soul are also among the vehicles most likely to be stolen.

Driver-specific factors that increase car insurance rates

Industry trends are only one part of the story. Insurers use various driver-specific factors to determine the cost of coverage, including your driving record, age and, depending on where you live, your insurance-based credit score and gender. 

Driving record

Insurance companies base rates on risk, and drivers with speeding tickets, at-fault car accidents and DUIs present a greater risk to insurers. The same is true for poor credit (in most states) and a lapse in coverage. 

If you’ve been charged with a moving violation, have poor credit or have gone without the required car insurance, you’ll likely see higher rates when it’s time to renew your policy. 

Good drivers pay an average of $169 per month for coverage, or $2,026 per year. The table below shows just how much even a single violation can increase rates.

Age

In most states, car insurance companies can factor in your age when determining your premium. Teens and seniors looking for coverage typically see the highest rates.

Insurers see teen drivers as particularly risky and set premiums accordingly. In general, teens have less experience behind the wheel. And, per mile driven, they are four times more likely to be in a crash than drivers who are 20 or older, according to the Insurance Institute for Highway Safety (IIHS).

Car insurance for teens is always pricy, but teens on their own policy pay significantly more than those who are added to a parent’s policy.

Average monthly cost of car insurance for teens by age

Senior driver rates aren’t as high as teens, but they do increase starting around age 65. Like teen rates, senior car insurance costs are tied to the insurer’s assumption of risk. IIHS data indicates that drivers who are 70 or older are more likely to be in a fatal crash, per mile driven, when compared to middle-aged drivers. This increased risk is generally associated with the visual, physical and cognitive impairments that become more pronounced among older drivers. 

Average car insurance rates for seniors by age

Other driver-specific factors that can affect rates

Age and driving record aren’t the only factors that can affect your rates. You may see a higher premium if you: 

• Bought a new car. When you purchase and insure a new vehicle, be on the lookout for higher rates. New vehicles often have a higher market value, meaning they cost more to replace if totaled in an accident or stolen. Newer technology can also lead to higher repair costs, driving up the cost claims. 
• Added a driver to your policy. If you’ve recently added a driver to your policy, you may not see much of a change if they have a clean record. However, a high-risk driver — someone who has speeding, at-fault accident or DUI violations on their record — can drive your rates up. 
• Experienced a drop in your credit score. Depending on where you live, an insurer may be able to use your insurance-based credit score to set car insurance rates. A poor score can lead to higher premiums. 
• Moved. Where you live affects your car insurance rates. If you’ve moved to an area that has a higher incidence of accidents, vandalism and theft, you may see higher rates. Generally, people who live in urban areas pay more for car insurance than those in suburban or rural areas. 
• Made changes to your coverage. Increasing your policy limits or reducing your deductible will increase your coverage costs. Likewise, adding different types of coverage or features, such as collision and comprehensive coverage, roadside assistance or new car replacement can also drive up costs. Keep in mind that insurers and policy features vary, so always check with your insurer to see how a policy change will affect your rate.
• Are no longer eligible for certain discounts: Many car insurance discounts, like those for bundling home and auto insurance, will stick around for the long haul, but some may disappear as your circumstances change. For instance, a low-mileage discount may be revoked if you’re traveling more frequently or a good student discount may fall off if your child no longer meets the requirements. 
• Have a usage-based insurance (UBI) policy. UBIs can lead to lower rates for good drivers, but some insurers will increase your rates if you exhibit risky driving habits. If you’re enrolled in a UBI program and frequently speed, slam on your brakes or accelerate aggressively, it may show in your premium. 

How to reduce car insurance costs

There are ways to lower your car insurance costs, however. Here are just a few ideas: 

• Adjust coverage: Getting a higher deductible on collision and comprehensive coverage will lower your premiums. However, keep in mind this means you’ll receive less money in your claim payout. You can also drop unnecessary coverages. 
• Bundle policies: If you use the same insurance company, bundling homeowners and auto insurance can get you a discount. 
• Get discounts: Insurance companies offer various discounts, from car insurance discounts for having no accidents in a certain time period to discounts for installing anti-theft devices. 
• Get usage-based insurance: Usage-based insurance measures your driving habits and/or mileage. If you drive well, accelerate slowly and mainly drive during the day and keep your mileage low, you can get a discount from companies like Progressive. 
• Improve your credit score: Improving your credit score will raise your credit-based insurance score, meaning that companies see you as lower risk and may charge you less for premiums. 
• Reduce mileage: Separate from telematics, you can get a low-mileage discount based on your average number of miles per year. If you carpool or work from home, for example, the mileage discount could work in your favor. 
• Shop around: If you’ve tried all of the above and your premiums aren’t low enough, get at least three car insurance quotes from different companies. 

Will car insurance rates go down?

When all factors are considered, Friedlander said that car insurance rates are expected to increase in 2024 “due to costlier repairs, driven by parts shortages and higher costs of labor, as well as low inventories of vehicles, which generates higher costs of replacing totaled cars.” 

More losses can lead to higher premiums. “Unless replacement cost begins to decrease materially — which is not currently forecast — we project personal auto insurance to remain at an underwriting loss through 2025,” said Friedlander. 

Frequently asked questions (FAQs)

Why did my car insurance go up when nothing changed?

Your car insurance may have increased this year due to various factors, including inflation, higher repair costs and an increase in auto thefts in your area. 

Shopping around can help you save. The best car insurance companies of 2024

Is it normal for car insurance to increase every year?

It is normal for car insurance rates to increase every year. According to the Bureau of Labor Statistics, for urban consumers, the cost of motor vehicle insurance has increased by an average of 6% every year from 2013 to 2023, a total increase of 71%. The cost has increased every year except in 2020 during the COVID-19 pandemic.

Looking for cheap car insurance? The cheapest car insurance companies of 2024