Biggest Increase in 6 Years
Auto insurance costs are soaring in the US. Insiders predict 2023 rates will skyrocket by 8.4% on average — the biggest pop in six years. By comparison, rates increased by just 1.3% in 2022. The average annual cost of full insurance coverage is expected to reach $1,780.
In some states, drivers will pay multiples of that figure. Michigan, for example, has high minimum insurance requirements, pushing average rates all the way up to $4,788 per year.
Passing on Costs
Post-pandemic, consumers have already been buffeted by broad-based price increases spurred on by supply chain disruptions, a tight labor market, and stimulus check spending. The price hikes in auto insurance also have a COVID connection. As Americans emerge from their homes and return to the office, they are spending more time in their cars, raising both demand and risk.
Two other factors may be contributing to the rise in costs. For one thing, cars are historically expensive. Used car prices skyrocketed over the course of 2022, and the average price of a new car hit a record high in the second half of the year. Costlier cars can mean more expensive repairs, leaving insurers on the hook for bigger payouts. Similarly, extreme weather has caused an uptick in claims – essentially, a fender bender to these companies’ bottom lines.
Fortunately, there are also plenty of ways to put a dent in those premiums. First, bundling all your insurance needs with one carrier can work in your favor. Insuring both home and auto with the same company saves the average consumer about 16% on premiums.
Also, pay only for the miles you drive. If you have a short commute or work from home, you may qualify as a “low-mileage driver.” Drivers who put only 7,500 miles on their vehicle in a year pay about 7% less than those who drive 10,000 miles.
Finally, paying your premium in full or setting up autopay can help you save. Some insurers charge a fee to split the premium into smaller payments made throughout the year. One study found paying up front could save car owners up to 12%. Some insurers may also offer a discount to those who set up autopay.
Not all cost-saving tactics will be offered by all insurance companies. Which is why, just like when haggling for a car, it’s crucial to know and explore all your options.
Feeling uncertain about how much auto insurance you really need or what kind of premium you might have to pay to get what you want? Check out SoFi Online Auto Insurance.
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