3 Shocking Stats About Rising Auto Insurance Rates

Few drivers will be surprised to read that car insurance costs are rising dramatically. It isn't only insurance -- the cost of financing, maintenance, and gas all add up. Put simply, it is getting increasingly expensive to own a car. Even so, there are ways you can offset rising costs.

These stats might help you better navigate the bumpy road of car insurance.

1. Auto insurance rates have risen 85% since 2014

One of the most shocking stats about auto insurance rates is how much they've risen. According to data from the Bureau of Labor Statistics, car insurance in January 2024 cost 85% more than it did in 2014. Increases in auto insurance costs have considerably outpaced even the high inflation we've experienced.

Here's how insurance rates have increased in the past few years alone:

To put that in real money terms, let's say your auto insurance premiums cost you $2,120 a year in 2020.

• A 4% increase would mean paying an extra $85 or so in 2021.
• A 14% increase would take your premiums to about $2,510 in 2022.
• Another 20% increase in 2023 would push the annual cost up to $3,016.

That's a lot for drivers to swallow, but it's a very real scenario. The Ascent research puts the average annual cost of car insurance in 2023 at $3,017.

What it means for your wallet

Average auto insurance premiums look likely to rise again in 2024. There's not a lot drivers can do to change this upward trend, but there are steps you can take to reduce your premiums:

• Shop around for the best deal: It's worth rate shopping regularly, especially if your circumstances have changed. There's a $926 difference in average annual premiums on our list of cheapest car insurance companies alone.
• Opt in for driver monitoring: More and more people are saying yes to usage-based insurance or telematics. You can use a mobile app or a device that plugs into your car to track how you drive. Discounts vary. Be aware that your premium could increase if the system thinks you're not driving safely. Still, Progressive says people save an average of $231 a year with its Snapshot scheme.
• Bundle your policies: Another way to score insurance discounts is to buy home and car insurance from the same company. Check out our best home and auto bundle insurance companies for more.
• Increase your deductible: If you need to make a claim, your deductible is the amount you're on the hook for. Research from Triple-I estimates you could save 40% by switching to a $1,000 deductible. That said, make sure you have cash tucked away to cover the extra upfront cost.

2. Car insurers lost $0.12 on every $1 of premiums in 2022

Car insurers are not profiting from soaring premiums. In fact, J.D. Power's auto insurance study showed that auto insurers are facing record-high loss ratios. "Auto insurers lost an average of 12 cents on every dollar of premium they collected in 2022 -- the worst performance in more than 20 years," said the report.

Sophisticated technology means repair costs are higher. Plus, an increase in climate events such as hurricanes and wildfires mean there are more claims. Higher accident rates play a role too.

What it means for your wallet

Premiums aren't the only way that car insurers make money, but paying out more than they bring in is not ideal. There's a good chance that your insurance costs will rise again in 2024. As a consumer, that means exploiting every opportunity to reduce insurance costs. In addition to the steps we mentioned above, talk to your insurer to see if there are discounts you might qualify for.

3. Around 1 in 7 drivers are uninsured

Data from the Insurance Research Council showed that 14% of drivers on U.S. roads were not insured in 2022. The situation is worse in the District of Columbia, New Mexico, and Mississippi. In these states, 20% or more drivers are uninsured.

The good news is that the number of drivers without insurance seems to be decreasing. It peaked at almost 15% during the early 2000s and crept up again in the pandemic.

What it means for your wallet

The high number of uninsured drivers on American roads presents a risk for everybody. This is where uninsured motorist coverage comes in. Even if it isn't compulsory in your state, it is worth considering. It would pay out if you're in an accident with someone who does not have enough insurance.

If you're considering skipping car insurance because of the high costs, make sure you understand the risks. Not only could you face a fine, license suspension, and even jail time, depending on your state, you could also have to pay thousands of dollars in costs if you are at fault in an accident.

Bottom line

Car insurance costs are rising, but there are ways drivers can still reduce their premiums. If you're worried about the cost of insurance, try rate shopping to see if you can get a lower quote from another company. Be aware that the cheapest deal isn't always the best -- it's also important to find a company that is reliable and will pay out if you need to file a claim.