Car insurance premiums around the U.S. are soaring. Here's why. (2024)

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Car insurance premiums around the U.S. are soaring. Here's why.? ›

Climate change is playing a role as well, with more vehicles damaged by extreme weather, leading to more claims and, in turn, higher premiums. Meanwhile, insurance companies face increasing medical, legal and other operational costs, said Greg McBride, chief financial analyst at Bankrate.com.

Car insurance can also keep going up because of factors specific to you that have changed from period to period (like your location, age, claims history, driving record, car make and model, etc.). Keep in mind that car insurance typically increases not right when you make a change but when you renew your policy.

Why is car insurance so expensive in the U.S.? Car insurance is expensive in the United States because many drivers have high-tech vehicles that cost more to repair. Car insurance can also be expensive for a driver with accidents and violations on their driving record.

Inflation. Nobody in America will be surprised to learn that inflation has spread to all areas of the economy, including car insurance. As vehicles become more expensive to repair and replace, car insurance rates climb as well. The price of both new and used cars has soared over the past few years.

It's not uncommon for your rates to go up annually, even if you haven't filed a claim. This can be caused by inflation, an increase in claims in your area or any number of other reasons.

If you're wondering why your car insurance went up, you aren't alone. One of the most common reasons is simply because your insurer increased its rates. Whether to account for inflation, recoup funds after a natural disaster or cover higher claims, many insurance companies increased rates in 2022.

Your Progressive car insurance rates may have gone up due to an auto accident, a traffic violation, an address change or a new vehicle being added to your policy. Other potential reasons why your Progressive premium went up include factors out of your control, such as increased claims in your ZIP code.

Roosevelt, New York. Roosevelt is situated on Long Island's South Shore in Nassau County, New York. It ranks first on our list of cities with the most expensive car insurance in the US. Drivers in Roosevelt pay an average of $3,549 annually for full coverage.

Michigan is the state with the highest average car insurance rates at $3,643 per year for full coverage and $1,360 per year for minimum coverage.

For auto policies, State Farm is the largest insurance company in the U.S., with the biggest market share (16.9 percent) and over $46.6 million in direct premiums written in 2022.

Does credit score affect car insurance? ›

If you've ever applied for a credit card, leased a car or gotten a mortgage for a home, you know that credit scores count. You may be surprised to find out they can also affect your car insurance premiums much the same way your driving record, marital status and payment history can.

Higher overall auto prices and auto repair costs prompted insurers to start raising premiums as overall car values jumped. Price increases for insurance rates, like many other increases from food to clothing, have been sticky and are less likely to drop at the same rate as broader inflation, if at all.

Other factors like labor shortages, supply chain disruptions, extreme weather events and spikes in the number of accidents can also raise costs. When conditions like these make it more expensive to pay claims, insurers often need to increase rates.

Although most people believe that 25 is the age when car insurance rates go down, the most significant decreases occur when drivers turn 19 and 21. Rates continue to lower until you turn 30.

Advanced technology and repair costs

Many new cars have complex electronics and technology. While this technology enhances driving experiences and improves safety, it also contributes to higher insurance costs.

Your Progressive rates may increase after six months depending on a number of factors. Like other car insurance providers, Progressive will typically raise your rates if you receive a speeding ticket or moving violation, cause an accident or make comprehensive insurance claims.

Cars with low safety ratings, high repair/replacement costs, more insurance claims, and a higher likelihood to cause damage to others are more expensive to insure, on average. These cars tend to cost insurers more in claims costs, and insurers price policies accordingly.