“The only certainties in life are death and taxes,” wrote Benjamin Franklin. If he had been discussing 18th-century insurance practices, he might have added rising insurance rates to that maxim, which first emerged around 1900. Recently, car insurance costs have been climbing across the U.S., with no signs of slowing down. A report indicates that three states may experience rate hikes exceeding 50 percent by the year’s end.
A recent report from Insurify reveals that nationwide premiums for full coverage car insurance have surged by 15 percent in the first half of the year, even for those with unchanged driving records. Projections for the end of the year suggest an overall increase of 22 percent, but California, Minnesota, and Missouri could see even steeper jumps, with increases of 54, 61, and 55 percent, respectively.
Insurify attributes these hikes to several factors, including natural disasters—like severe storms, wildfires, and car thefts. For instance, last year, the Midwest faced a supercell that produced hail the size of golf balls, heavy rainfall, and tornadoes. In Minnesota, some hailstones reached the size of baseballs, while California frequently battles wildfires.
In California, a freeze on rate increases was implemented during the COVID pandemic, which many other states also adopted. This delay in premium adjustments led to increases of as much as 45 percent over the past year. Furthermore, the state plans to raise its minimum car insurance requirements, effective in 2025. These rising costs have compelled some insurers to limit new policies, refrain from renewing existing ones, or consider exiting the California market entirely. While the struggles of insurance companies might not elicit sympathy, the reduced competition ultimately affects consumers negatively.
CBS News notes that nearly 40 percent of drivers choose not to file insurance claims after an accident. The primary reasons cited include minimal damage, deductibles exceeding the repair costs, or concerns about premium increases. Among those who did file claims, about 25 percent expressed regret over their decision.
In compiling the report, Insurify reviewed over 97 million insurance rates and calculated the median costs for drivers aged 20 to 70. To qualify, owners needed to maintain a clean driving record and possess an “average” or better credit score—currently, the national average credit score is around 705 according to Equifax. Full-coverage insurance includes bodily injury limits ranging from state minimums to $50,000 per person, $100,000 per accident; property damage coverage between $10,000 and $50,000; and comprehensive and collision coverage with deductibles set at $1,000.
Is there any positive news for car insurance consumers? Washington state may see a decrease of 10 percent year-over-year, but it stands alone as the only state expected to experience a reduction in rates.
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