Auto insurance is the latest necessity to jump in price, and Americans feel the effects as premiums rise.
Car Insurance Rates Skyrocket in 2024
In the past year, auto insurance rates have increased by an astonishing 26%, leaving some Americans struggling to insure their vehicles.
Bankrate Report Lays Out the Numbers
A report from Bankrate shows that the average annual car insurance premium is around $2,500, a stunning increase from 2023’s rates.
Inflation Partly to Blame
The reasons for the increases vary, but the report shows that one major driving force behind the hikes is the fact that repair costs have gone up significantly as a result of inflation, making it more expensive for insurers to cover damage.
Some Rate Increases Depend on the Driver
Drivers who have had a lapse in insurance coverage also find themselves later paying higher than average rates, as do those with records of speeding, DUI, and accidents for which they were at fault.
People whose credit scores took a hit also received higher insurance quotes.
Most Increases Caused by Inflation or Acts of God
But many of the increases had nothing to do with factors that drivers can control.
In states like Louisiana and Florida, rates have always been higher than the national average because of natural disasters that happen regularly in those areas.
State-By-State Basis
In Louisiana, residents pay around 6.53% of their income toward their car insurance bills.
In Florida, it’s 5.69%. In contrast, Massachusetts drivers only spend about 1.76% of their household income on the same bill.
Other Factors That Have Weight
The Bankrate report also explained that rates can be impacted by other factors, like local insurance requirements and the driving records of those around you.
Inflation was also noted as a prominent influencer of insurance rates.
Location, Location, Location
Location matters, too – for people living in areas with high population rates and extreme traffic, rates are higher because accident rates are higher.
Why Credit History Matters
For those with poor credit histories, car insurance rates could be significantly higher.
Bankrate says that studies have shown people who have lower credit are more likely to file more insurance claims.
Four States Ban Use of Credit to Determine Insurance Rates
However, some states find that to be an unfair measurement and have banned the practice of using credit scores to impact insurance rates.
Teen Drivers Cost More to Insure
The cost of insuring your newly licensed teenage driver is high, too.
Since they are considered a high-risk population on the road, insurance companies tend to err on the side of caution and charge more until these drivers have spent more time behind the wheel.
The Impact of Your Vehicle Type
Bankrate also pointed out that the type of vehicle you drive impacts your car insurance rates, but it’s difficult to pinpoint exactly what goes into the ratings.
They advise getting insurance quotes before purchasing a new vehicle and bearing in mind that more expensive cars often come with higher insurance premiums.
No Relief on the Horizon, Experts Say
The report warns that while inflation in some areas is coming down, insurance rates show no sign of doing the same.
“Auto Insurance Rates Have Been Rising at a Breakneck Pace”
“Auto insurance rates have been rising at a breakneck pace,” Greg McBride said. McBride is Bankrate’s chief financial analyst and was quoted in the report.
“And though the pace of increases will eventually slow, that doesn’t mean premiums are coming down.”
Many Worry About Rising Costs
This news is troublesome for Americans who are struggling to make ends meet but have no choice but to keep their vehicles insured.
In less urban areas of the country, public transportation is limited, and people rely on their cars to get around.
Bankrate’s Advice for Struggling Americans
For those concerned about how to keep up with the rising cost of insurance, Bankrate says there are options.
Could We See an Eventual Plateau?
While the report states that there likely won’t be a reduction in car insurance rates going forward, there is hope that they could level out.
Rate Shopping Is Your Best Bet
McBride suggests searching for the best rate by obtaining quotes from several different insurance providers.
“The Insurance Market Is Very Competitive”
“The insurance market is very competitive – lots of commercials – so shop around and compare coverage to see if you can get a better deal elsewhere.
If you have a healthy savings cushion, see if increasing your deductible can reduce your premiums,” McBride advised.
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The post Car Insurance Premiums Surge 26% in 2024, Drivers Across America Feel the Pinch first appeared on From Frugal to Free.
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
