Car insurance prices will jump in 2023. Here’s why — and how you can save

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Inflation is showing signs of slowing in the US, but car owners beware: Insurance is expected to skyrocket in 2023.

Experts expect car insurance rates will increase by 8.4% in 2023, bringing the average cost to $1,780 per year or about $150 per month, according to a new report from ValuePenguin. This marks the largest increase in rate costs in six years and a total increase of 16.5% since 2017.

Here’s what drivers need to know about why rates are climbing — and the best ways to save, according to experts.

Car insurance rates rely on varying factors

Car insurance is determined by a number of factors — such as state of residence, the type of car being insured, insurance company, age and gender — so it varies person-to-person.

With an average annual cost of $4,788, Michigan drivers pay the most for car insurance in the US, according to Value Penguin’s data. On the other end of the spectrum, Vermont drivers pay an annual average of $1,104 for insurance, the lowest rate in the country.

The type of car also determines insurance rates. Large SUVs and pickup trucks are the most expensive to insure while crossovers and sedans are the cheapest, ValuePenguin’s analysis shows.

Among the 10 top-selling cars in the US, Chevy Silverados, Jeep Grand Cherokees and GMC Sierras are the most expensive to insure, according to the report. The cheapest cars to insure are Honda CR-Vs, Toyota RAV4s and Ram pickups.

Rates also vary depending on a driver’s previous traffic violations, ValuePenguin’s data shows.

Why is car insurance getting more expensive?

Experts have offered a few reasons car insurance rates are climbing so steeply.

  • More crashes: As more people in the United States have returned to the roads following the height of the COVID-19 pandemic, there has been an increase in the risk of car crashes, driving insurance up, ValuePenguin said. Wrecks are also getting more severe, costing insurance companies more, according to Kelley Blue Book.

  • Cars and car parts are more expensive: In 2022, new cars got 6.2% more expensive, and vehicle maintenance and repair jumped 13%, according to data from the Bureau of Labor Statistics. This price increase has been driven by inflation and supply chain snags lingering throughout the COVID-19 pandemic, ValuePenguin experts said. As the price of a product rises, so does the cost to insure it, putting a bigger burden on insurers that is passed back to customers in the form of higher rate prices.

  • More costs for insurers across the board: Other factors, like weather, are also creating more costs for car insurance companies, ValuePenguin said. And more broadly, insurers are dealing with other costs, too, driving the price of other kinds of insurance up, according to Kelley Blue Book.

Four ways to save on car insurance

As prices continue to rise, for car insurance and other goods and services, experts offer tips for saving. Here’s what car owners should know.

  • Take your time: Experts suggest shopping around for car insurance, comparing prices and ensuring that you are getting the best deal. Spend time researching possible packages and companies to work with to find the cheapest option instead of settling on the first deal you find.

  • Drive safely: Traffic violations can make your insurance costs even higher. Bankrate estimates that on average, a speeding ticket will drive a full coverage premium up 21%, an at-fault crash can increase premiums 42%, and a DUI conviction can raise your monthly payments to nearly $300.

  • Adjust your coverage or your car: If you’re in the market for a new car, you might consider getting a car that is cheaper to insure, experts suggest. Otherwise, consider adjusting your coverage to cut costs. You can remove optional coverage or downgrade to a lower coverage plan if you’ve paid off your vehicle.

  • Maintain a good credit score: Credit scores are a big determinant in deciding a drivers insurance rate. ValuePenguin estimates that credit score can change premiums by 80%, so by improving and maintaining your credit score, you can manage your insurance rate better.

Hurt in an accident? Get the help you need instantly by calling 888-577-5988

The post Car insurance prices will jump in 2023. Here’s why — and how you can save first appeared on Daily Florida Press.

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