Why car insurance costs have soared (and what drivers are doing about it)

"(Almost all of that increase came between 2022 and 2024.) Why has the price gone up? Cars are more expensive; parts and repairs are more expensive; medical bills following auto accidents are more expensive. Modern cars are packed with pricey electronics, pushing up the cost of fixing even minor fender benders, while empty streets during the pandemic encouraged speeding and led to more severe (and more expensive) crashes. All those things cost insurers money."

"But those price hikes may finally be about to top out. "The good news is that, largely, the industry is caught up on premiums, and we're now starting to see companies reduce costs and compete for business," says Bob Passmore, a vice president at the American Property Casualty Insurance Association, the trade group that represents insurers. Insurance companies had strong profits last year, and price hikes have stabilized."

Auto insurance premiums have risen roughly 55% since February 2020, with most of the increase occurring between 2022 and 2024. Price pressures stem from more expensive vehicles, pricier parts and repairs, and higher medical costs after crashes. Modern cars contain costly electronics that make even minor repairs expensive. Pandemic conditions led to more speeding and more severe crashes, increasing insurers' claims costs. Insurance regulators must approve rate increases when companies document higher payouts. Insurers reported strong profits last year, competition is emerging, and premium hikes appear to be stabilizing, though rate changes lag insurers' cost experience by six to 12 months.

Read at www.npr.org