Why are car insurance premiums skyrocketing in 2024?
Car insurance premiums are spiking across the United States in 2024. Many drivers are wondering why.
According to a recent report by Insurify, the average cost of full car insurance surged to $2,329 in the first half of the year. This marks a 15% increase from 2023 and a giant 48% rise since 2021.
Some states are facing even steeper hikes. Projections show that rates could climb over 50% by year-end.
Several factors contribute to these surges, like increased vehicle repair costs and a shortage of skilled mechanics.
But also, the aftermath of insurers’ losses from fatal car accidents in recent years contributes to rising premiums.
Notably, new and used car skyrocketed post-COVID-19 and made vehicles more expensive to replace. This drives up repair costs and consequently insurance premiums.
Which states will be hit the hardest?
Some states experience particularly sharp increases in car insurance premiums due to a combination of local factors.
Minnesota tops the list. Rates in that state are expected to rise by 61% in 2024. Severe weather events and a rise in insurance fraud are the biggest causes.
In Missouri, premiums are projected to jump by 55%. There, climate change plays a significant role as the state catches up to the national average.
Meanwhile, California deals with a 54% hike as the state’s insurance market adjusts after a freeze on rate increases during the COVID-19 pandemic.
Californian insurers are now seeking substantial rate hikes to recover from the losses incurred during that period. Others are even pulling out of the state altogether.
Nevada has the second-highest car insurance rates in the country. There, weather-related risks also cause significant increases. This makes it one of the most expensive states for car insurance.
What does this mean for drivers?
For drivers, these rising car insurance premiums mean an additional financial burden even as car prices begin to stabilize.
Insurify’s report highlights that the national average for full-coverage insurance could reach $2,469 by the end of 2024.
As said, this increase is not uniform across the country. Some states are seeing some of the highest premiums due to legislative changes, fraud, and severe weather risks.
Also, the cost of vehicle maintenance and repairs having risen by nearly 38% over the past five years. Insurers find it increasingly expensive to cover claims.
This trend suggests that drivers should prepare for further increases in car insurance costs. Particularly states where natural disasters are more frequent and severe need to be cautious.