Car insurance premiums to top $150 monthly in 2023
Drivers are facing car insurance premium hikes in 2023 as more expensive vehicles and higher rates of crashes translate into more expensive coverage.
Why it matters: Drivers can't avoid insurance costs, so increases tend to hurt low-income and fixed-income people more than others.
Driving the news: The average driver is expected to pay $1,895 per vehicle for car insurance in 2023, according to a study by Insurify, which analyzed 69 million rates in 50 states.
- That’s up 7% from 2022 and up 29.5% from 2020, and marks the first time average insurance premiums will top $150 monthly.
The big picture: Vehicle prices have spiked since the pandemic due to production shortfalls and shoppers gravitating toward larger rides.
- New vehicle prices hit a record high of more than $47,000 this summer, according to Edmunds.
- "If the vehicle is more expensive, if it’s newer, if it has more expensive parts, then it’s going to cost more to repair or replace in the event of an accident — and that’s a huge factor why insurance costs have increased more in the past couple years,” Insurify’s Chase Gardner tells Axios.
Between the lines: Other factors are at play, as well, including more serious crashes as auto safety watchdogs have reported increased speeding and reckless driving during the pandemic.
- 2020 and 2021 were the deadliest years on the road in the U.S. since 2007 based on the rate of fatalities per miles driven, according to the National Highway Traffic Safety Administration.
- “That’s leading to more claims being made to insurance companies,” Gardner says. “So they need to raise rates to offset that.”
Yes, but: Car owners in some states will fare better than others.
- Oregon, Maryland and Virginia are poised to experience average increases of 26% in 2023, while Michigan — the most expensive state for insurance — is set for a 1% increase, according to Insurify's projections.
Be smart: Drivers can quickly price-shop for insurance online to save a few bucks. They can also save money by agreeing to install a remotely monitored mileage-gauge on their vehicle to prove that their driving habits are deserving of lower premiums.
- Another way to save on insurance is to drive a cheaper vehicle.
- "Making sure you’re driving a vehicle that makes sense for your budget,” Gardner says. “An older sedan is going to be much, much cheaper to insure than something new or flashy.”
The bottom line: After record highs for vehicles prices and gasoline costs in 2022, insurance increases are poised to make transportation costs even higher.