This blog was updated to reflect the most recent data.

Aside from a handful of exotic and low-volume specialty cars, the values of most personal vehicles decline the minute you drive them off the dealer lot. So, if your car or truck is constantly depreciating, shouldn’t it cost less to insure every year? Instead, many drivers see their car insurance rates go up at annual renewal time, which can typically be due to one or more of the following factors:

  • The driver or someone on their policy received a ticket or had an accident claim.
  • A driver or vehicle was added to their policy.
  • They moved into or closer to an urban area, which generally is more heavily trafficked, or to a location that increased their daily commute.
  • They changed or upgraded their insurance coverage.

However, we know that many drivers may be looking at this list and thinking that none of these situations applies to them, and yet they’ve experienced fairly substantial car insurance rate increases over the past several years.

Unfortunately, the upward trend of car insurance premiums doesn’t look as if it is going to end anytime soon. Halfway through 2024, the national average cost of a car insurance policy with full coverage had already increased by 26% versus the prior year. It has been decades since the U.S. has experienced an annual rise this dramatic.

The team at Fred C. Church is here to help you understand why almost every insurance company is feeling the pressure to raise car insurance rates right now. In addition, we want to share ways you may be able to get the same high-quality coverage you have now—or better—at a more budget-friendly premium.

Why Are Car Insurance Rates Increasing So Dramatically?

When the number of car insurance claims rises sharply, and the expense to resolve these claims escalates greatly, insurance companies experience higher-than-normal loss costs, which ultimately leads to rate increases for car owners. This is precisely what is currently going on in the car insurance marketplace.

There are three main reasons why there are costlier car insurance claims, and more of them, than ever before:

1. Car accidents are more frequent and severe. Now that we are four years removed from the pandemic, it is very informative to compare today’s roadway facts and statistics to pre-COVID-19 data. Overall driving and traffic patterns are back to where they were before many of us became remote workers and stay-cationers. But in returning to the roadways, there has also been a return to the risky driving behaviors that often cause accidents, like speeding, texting behind the wheel, and driving under the influence, especially among younger demographics. For example, distracted driving violations by Gen Z increased an astounding 66% in comparison to 2019, although occurrences were up across all age demographics. As the roadways have become more congested, especially during the daily commute, and poor driving habits have escalated, the risk for a car accident has increased. The National Highway Traffic Safety Administration reports that the number of traffic accidents, including those involving fatalities, remains at levels well beyond what it was before the pandemic. As a result, insurers are seeing a much higher volume of car insurance claims, which ultimately means they are making more payouts to their customers as well as to people who are involved in accidents with their customers.

2. Car insurance claim costs keep going up. There was hope that when inventory and supply chain challenges of the pandemic wound down, there would be a coinciding drop in motor vehicle parts and equipment prices, auto repair costs, and new and used car valuations. But no such relief has come. The cost to repair vehicles continues to rise at a faster clip than the overall consumer price index, inflation continues to drive up the cost of parts, and the auto industry’s labor shortage has put upward pressure on car mechanics’ wages. In addition, most vehicles are not getting any cheaper to buy—and certainly not less expensive to fix. Today’s vehicles, whether they are standard, hybrid, or electric, are filled with advanced technology, sensitive electronics, and specialized parts and materials that are pricier and more complex to repair and replace. Additionally, insurers are paying more to settle car insurance claims due to the continuous rising cost of medical and other types of care for injured parties. As a result, many insurers are raising car insurance premiums to ensure they can cover both the cost to repair or replace a damaged or totaled vehicle as well as injury-related expenses.

3. Drivers, vehicles, and roadways are vulnerable to extreme weather. If you own a home, you may have heard that one of the main reasons home insurance rates are going up is due to the increasing number of climate-related disasters and the havoc they cause to homes. Well, these weather extremes are also a contributing factor to climbing car insurance rates. As catastrophic weather events strike with more force and frequency, the risk of widespread property damage to vehicles has risen. In addition, extreme weather, including longer and fiercer snow and ice storms, tornadoes, hurricanes, rain and hailstorms, and floods, are proving to be very detrimental to road conditions and driving safety, increasing the likelihood of a crash. Raising car insurance rates is the way that insurers are preparing for the higher risk of auto damage and accidents resulting from more frequent and extreme climate events.

Some drivers may be tempted to try to offset a higher car insurance premium by increasing their deductible or changing their coverage to the minimums required by their state. However, this can be risky if you end up getting in a car accident—and may end up costing you more in the long run. Fred C. Church would like to try to find a smarter and safer way to get you a more competitive rate.

How Can Fred C. Church Help You Save Money on Your Car Insurance?

Our team is here to assist you in many ways, including evaluating your car insurance coverage requirements, identifying any gaps in your current insurance, and helping you secure better coverage, if needed.

But there is another really good reason to reach out to Fred C. Church today. Whether you’ve already experienced a hike in your car insurance premium or you’re anticipating one at renewal time, we might be able to help you find ways to reduce the hit to your budget.

We work with many of the top national and regional insurance companies, so we can compare your current auto insurance coverage and premium to what we might be able to access for you through another insurer in our network.

In addition, as we review your car insurance policy, we will check to see if you’re taking advantage of all the discounts and credits you may qualify to receive, including:

  • Advanced Driver Training Credit
  • Student Away at School Discount
  • Military Away Discount
  • Low Mileage Discount
  • Energy-Saving Hybrids or Electrics Credit

We will also help you explore your eligibility for car insurance endorsements such as Accident Forgiveness, Loan/Lease Gap, and Disappearing Deductible. When added to your car insurance policy, these coverage options may save you money by minimizing the financial consequences if you are in a car accident.

If you have more questions about your car insurance policy, including your premium, coverage, discounts, or endorsements, we have the answers, so please give us a call. Remember, you can ask us anything.