Car insurance rates could jump 50% in 3 states this year. Here's where they are.
There's some bad news ahead for the nation's car owners, with a new report forecasting that auto insurance — one of the biggest drivers of inflation this year — will continue to rise in 2024. In fact, residents of three states could see their coverage rates spike by 50% in 2024.
That's according to a new report from Insurify, a company that provides data about auto insurance rates. The typical U.S. insurance policy will jump 22% this year to an average annual premium of $2,469 by year-end, the report found. That comes after drivers saw their policies jump 24% in 2023, it noted.
The three states where insurance rates could jump by more than 50% this year are California, Minnesota and Missouri, the Insurify report found. Drivers in those states could see their rates rise by 54%, 61% and 55%, respectively.
Auto insurance remains a pain point for consumers after experiencing more than two years of elevated inflation. And even as the overall inflation rate is cooling — the Consumer Price Index dropped to 2.9% in July, the first time since March 2021 it's dropped below 3% — drivers are continuing to see their policy rates rev up, fueled by more climate events that are causing vehicle damage.
"Increasingly severe and frequent weather events are driving up auto insurance premiums," Insurify said in its report. "Hail-related auto claims represented 11.8% of all comprehensive claims in 2023, up from 9% in 2020, according to CCC Intelligent Solutions."
Drivers in Maryland currently pay the highest average rate, at $3,400, for annual full coverage as of June, the Insurify analysis found. Their rates are projected to jump 41% to $3,748 by year-end compared with the state's 2023 rates, it noted. The second most expensive state is South Carolina, with an average policy premium of $3,336 in June. That could rise by 38% to $3,687 by the end of the year versus its 2023 rates.
As CBS News has reported, there are a few additional reasons, aside from climate events, that are driving up auto rates — even if your driving record hasn't changed.
First, the costs paid by insurance providers to repair vehicles after an accident, such as for labor and parts, have increased more than 40%, and insurers are passing those increases onto drivers. Secondly, because lawyers are more often involved in handling accident claims than in prior years, settlements are increasing, which also boosts insurance costs.
Some drivers are avoiding filing claims
The surge in auto insurance rates is prompting drivers to change their behavior, according to a new report from LendingTree.
About 4 in 10 insured drivers who have been in an auto accident or incident have skipped filing a claim with their insurance company, its survey of 2,000 U.S. consumers found. About one-quarter of drivers who filed a claim said they later regretted it.
Drivers who avoided filing a claim said they did so because the damage was minimal or the deductible was higher than the cost to fix their vehicle. But another 42% said they skipped an insurance claim because they didn't want their rates to jump.
"Once you've been involved in an accident of any type, insurance companies see you as riskier to insure," LendingTree auto insurance expert and licensed insurance agent Rob Bhatt said in a statement. "Your rates will eventually come down if you avoid claims for three to five years, depending on your insurance company. But you're going to feel a financial squeeze until then."
Still, Bhatt said it's typically worth filing a claim if the repairs will cost a few thousand more than your deductible, even if your rates subsequently rise.
"The whole point of having car insurance is to prevent an accident from leaving you in financial hardship," he said.