4 Reasons Why Auto Insurance Rates Are Unlikely to Fall in 2024

If you own a car, chances are you need auto insurance. In almost all states, except New Hampshire, having car insurance is a must for drivers. But here’s the tricky part: auto insurance is getting more expensive, and it’s not showing signs of getting cheaper any time soon in 2024. Let’s take a peek at why your auto insurance bill keeps climbing and what can be done about it.

Understanding How Auto Insurance Rates Work

Figuring Out Insurance Rates

Auto insurance rates aren’t just picked out of thin air. They’re decided by considering lots of things about you. Your driving history, the kind of car you have, and where you live all play a part in deciding how much you pay for insurance.

How Insurers Figure It Out

Insurance companies don’t guess when it comes to setting prices. They’re pretty smart about it. They look at things like how many claims people make, what’s going on in the world, and how much they might have to pay in the future to figure out how much to charge for insurance

1. Cars Cost More to Fix

Fixing cars isn’t cheap, and the costs have been soaring faster than usual inflation rates. According to a report from the American Property Casualty Association in June 2023, car repairs have become pricier. Modern cars are more complex, which means repairs need more skilled labor, and the prices of parts and equipment are shooting up too. Even though used car prices have cooled down a bit, they’re still high. When insurers decide whether to fix or replace a vehicle, they check its actual value, and high used car prices mean insurers pay more for repairs or replacements.

2. Injuries Cost More Too

The cost of bodily injury claims is rising too. Hospital and medical expenses increase faster than regular inflation, making injury claims more expensive. Lawsuit values have shot up as well. Between 2019 and 2020, the median personal injury judgment went up by nearly 25%, much more than the Consumer Price Index’s 3.1% for the same period.

3. Risky Business on the Roads

Sadly, traffic fatalities have gone up in recent years. Though the numbers are dropping, people are still dying in road accidents at higher rates than before the pandemic. This bump in accidents and deaths on the road means higher insurance costs. More people have reported risky driving behaviors, like speeding way over the limit, reading texts while driving, or even driving when they’re probably too tipsy. Plus, changes in traffic rules, like less policing, could be playing a role.

4. Mother Nature’s Fury

Extreme weather is becoming more common, think hurricanes, floods, and wildfires. These events are probably boosting insurance premiums, especially in states vulnerable to such disasters. Florida, for example, saw a massive increase in insurance costs after Hurricane Ian in 2022. Some insurers are leaving riskier states, making the ones that stay bump up their prices. And insurers are shelling out more for their own insurance (yes, insurers buy insurance too!) and passing that cost to us, the customers.

How to Save Money on Car Insurance (And What to Avoid)

While car insurance rates probably won’t drop in 2024, there are tricks to save some bucks. Good insurance companies offer discounts for things like being a safe driver or taking a defensive driving course. It’s smart to shop around and get quotes from different companies a few weeks before your policy renews to make sure you’re getting the best deal.

Boosting your deductible is one way to cut premiums, but make sure you’ve got enough money set aside to cover that higher deductible if needed. But here’s a big no-no: cutting down on your liability coverage. If you’re in an accident where the costs go beyond your coverage, you might end up getting sued personally for the difference. Having enough auto insurance coverage is crucial, especially in a major crash. Keeping higher liability coverage gives you financial protection in a worst-case scenario.

Remember, while insurance rates might not go down anytime soon, knowing how to navigate these waters can help you find the best coverage without breaking the bank.