Kyle Shirley put off a marketing plan for his roofing company after insurance premiums for his work trucks shot up 55%. Becky Brinkerhoff’s insurance bill has doubled and she is checking with other companies for a better deal. Stephanie Rankin will likely reduce the coverage on one of her vehicles to help cover the 44% increase in her insurance rates.
The three Denver-area residents are among Coloradans reeling from rising auto insurance costs on top of higher grocery bills and other expenses. The insurance rates are expected to keep increasing over the next few years.
Nationwide, auto insurance rates went up 20.6% over the past 12 months, the U.S. Bureau of Labor Statistics said. Higher costs for fixing and replacing cars and medical costs for people injured in car crashes are fueling the increases.
Colorado-specific issues adding to the expense are the hailstorms that pummel cars on a frequent basis and the state’s position as first in the country for the number of vehicle thefts per capita. The state’s auto insurance premiums increased 53% over the last 10 years, according to the Rocky Mountain Insurance Information Association, an industry organization.
One projection shows Colorado with the nation’s fourth-highest premiums, an estimated annual average of $2,968, in 2033. The analysis by subscription car service FINN showed Colorado had the second-largest increases from 2013 to 2023, behind No. 1 Florida and ahead of Nevada.
With an annual average premium of $1,940, Colorado is currently the 11th costliest state.
“Unfortunately, we are in a situation where everything that insurance pays for and how insurance costs are determined are going up, for homes, for cars. People are feeling it in the pocketbook,” said Carole Walker, executive director of the insurance information organization.
The COVID-19 pandemic provided a pause in what had been continual increases to insure vehicles. People were staying home, not driving as much and accidents and claims decreased. Insurance companies issued refunds to customers, although two consumer groups said customers were shortchanged on the givebacks.
“We always knew it would not be a long-term trend,” Walker said. “Coming out of COVID, we’ve seen increases in bad driving behavior.”
In 2020, 574 people died in fatal crashes on Colorado roads, according to the Colorado Department of Transportation. The number rose to 638 in 2021 and then to 699 in 2022. The total declined to 665 in 2023.
Arrests for driving under the influence went up, with 4,532 recorded in 2021; 4,727 in 2022; and 6,060 in 2023.
Vehicle damage claim costs rose nearly 50% from 2018 to 2022, according to the American Property Casualty Insurance Association. Auto body prices in April 2023 were 4.5% higher than the Consumer Price Index.
“As our cars become computers that we drive down the road, those become more expensive and more complex to repair,” Walker said.
The natural elements also play into Colorado’s rising auto insurance rates. The state is second only to Texas for insurance claims for hail damage.
And insurance-related lawsuits help drive up costs, Walker said. The bar is low in Colorado for bad-faith claims, she said. Those involve disputes in which customers say insurance companies have unreasonably denied or delayed payment of benefits.
“Certainly everybody should have the option to sue in a car crash situation,” Walker said.
But the double or triple damages allowed go beyond what the medical or car repair costs are, Walker said. “We’ve tried to address those things to bring down costs in Colorado because we can’t control the hail, but at least we could have a more stable litigation environment.”
100% increase? “Unacceptable”
Becky Brinkerhoff of Parker didn’t sue, but she sought help from the Colorado Division of Insurance to get her health insurance carrier to pay the hospital bills after her husband was injured in a hit-and-run accident on his motorcycle a couple of years ago.
She’ll likely call the division again to see if there is anything she can do about a 100% jump in her home and auto insurance premiums. If she can’t find a better deal, she and her husband will go from paying roughly $5,000 a year for home and auto insurance to paying $11,000.
“I’ve got two vehicles that I was paying $1,200 a year on. Now one of them is going to be $3,000 to $3,200,” Brinkerhoff said.
The cars are a Tesla and a Kia Stinger. Brinkerhoff said the couple haven’t had many claims in more than 30 years with the same company, but did recently have to replace their roof because of hail damage. Her husband’s truck was totaled by a hailstorm.
“I understand the cost of doing business. Everything is up, I get that. But 100% increase? No, that’s unacceptable,” Brinkerhoff said.
People with similar complaints or questions about their bills can call the Division of Insurance, said spokesman Vincent Plymell. The division fields complaints about all kinds of insurance.
“We always tell people, if you have any questions at all, contact us,” Plymell said. “It might be a misunderstanding and we can explain something. Other times maybe it is a complaint that needs to be looked at.”
People can contact the division’s consumer services team by calling 303-894-7490 or by going to doi.colorado.govand clicking on “File a Complaint.”
For auto insurance alone, the division received 1,648 formal complaints from July 1, 2022, to June 30, 2023. That was up from 1,318 in the previous fiscal year.
While answering individual questions, division staffers also look for any patterns that might indicate systemic issues with a company or the industry, Plymell said. The office reviews insurance companies’ plans to make sure they are following the law and aren’t charging excessive amounts.
The division also reviews whether a company is collecting enough to be able to pay its claims.
Kyle Shirley’s Sol Vista Roofing in Denver got hit with a 55% increase in auto insurance, but he isn’t looking around for lower rates. He called a couple of agents who told him it was a market trend, partly driven by a high rate of auto thefts.
The premiums on Shirley’s six work trucks shot up last year. This year, he might see a 5% increase. The unexpected hike in rates forced Sol Vista to scale back in other areas, including putting on hold a marketing plan until later this year.
“Everywhere we looked, we had to tighten up,” Shirley said. “Last year was kind of a big eye-opener.”
Colorado no longer No. 1 for car thefts?
Colorado’s status as the nation’s No. 1 car-theft spot accounts for part of the eye-catching insurance bills. However, thefts are declining. State officials credit recent changes in state law, an infusion of state money for grant programs and targeted anti-theft strategies by public agencies and the private sector.
Colorado’s 711 auto thefts per 100,000 people in 2022 made it the worst in the nation, said Cale Gould, the statewide public outreach coordinator for the Colorado Auto Theft Prevention Authority. The total number of vehicles stolen was 41,520. Washington state was the second-worst for thefts.
The authority, part of the Colorado State Patrol, uses its own database to track the individual vehicles. Gould said thefts dropped 21% in 2023 with a total of 32,875 vehicles taken. He estimated the state’s rate will drop to around 630 thefts per capita or lower, which means Colorado might no longer be the worst.
“As it relates to insurance premiums, auto theft is a piece of the pie,” Gould said. “But from our side of the house, we’re working to reduce auto theft and we’ve made great progress.”
A national consumer organization said while higher overall costs explain some of the surging auto rate premiums, companies are exaggerating the part they play.
“Inflation has mostly subsided, so we think that auto insurance costs right now are going up in part because insurance companies got greedy and have not invested well,” said Michael DeLong, a research and advocacy associate at theConsumer Federation of America.
A report by the Consumer Federation of America and the Center for Economic Justice said the insurance companies reaped $42 billion in excess premiums during the pandemic when claims dropped but provided only $13 billion in customer refunds. The consumer federation also pins the blame on what it said were huge executive salaries and bonuses in 2021 and 2022.
DeLong’s organization has taken aim at the use of data such as a person’s credit score, education level, job, zip code and other information that doesn’t pertain to the person’s driving record to set premiums. A 2021 Colorado law that prohibits using the data in a way that discriminates against people is a good step, DeLong said, but it’s still in the early stages.
Walker of the Rocky Mountain Insurance Information Association said how people manage their finances is considered as a factor in the risk they present to an insurance company. She said not all insurers use employment or education when determining risk.
Stephanie Rankin of Littleton doesn’t see herself as much of a risk. She doesn’t drive a lot, hasn’t had any accidents or received any tickets. Her credit is good. She bundles her auto, home and life insurance and yet her premium will increase 44% when it comes up for renewal soon.
Rankin got quotes from other companies, but they weren’t any better. “The independent agent wouldn’t even share the rates with me.”
Ranking is looking for ways to save money on her insurance. She plans to lower the coverage on her mother’s car to just liability, which pays for damage to another person or vehicle when the insured is at fault in an accident. Rankin might sell her car for a cheaper one to lower her car payment.
“What’s frustrating to me is that any kind of pay increase I get does not offset this,” she said.
Updated at 8:55 March 11, 2024, to add Colorado’s current average annual premium.
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