Why Did My Car Insurance Go Up?: Expert Answers (2024) (2024)

If you’re looking at a recent car insurance bill and wondering, “Why did my car insurance go up?” you aren’t alone. According to the U.S. Bureau of Labor Statistics, car insurance prices rose 21% between January 2023 and January 2024. When we took a closer look at why, we found that a few critical factors contributed to this staggering increase, such as inflation, more road travel and higher vehicle repair costs.

In this article, we at the MarketWatch Guides team will help you understand why your car insurance bill may be higher this year. We’ll also offer ways for you to save money, and detail our recommendations for best car insurance companies to compare quotes from.

Learn more about our methodology and editorial guidelines.

Many Insurance Companies Hiked Rates in 2023

Put simply, insurance rates haven’t risen this much in a single year in around half a century. While the factors behind this hike can be complex, one of the most straightforward reasons for rate increases is simply that insurance companies have increased rates.

Whether to account for inflation, recoup funds after a natural disaster or cover higher claims, many large insurance companies increased rates by double digits in 2023, according to S&P Global Market Intelligence.

S&P indicates these hikes follow years of back-to-back rate increases, a claim that appears to be confirmed by increases in the consumer price index (CPI) for car insurance as reported by the Bureau of Labor Statistics. Since 2021, insurance rates have steadily risen over 44%. This trend has continued into 2024, with rates rising another 6% between January and June alone.

National Reasons Why Your Car Insurance Went Up

It’s clear car insurance rates rose in 2023. But why exactly do car insurance companies raise policy rates? Let’s examine five factors behind recent rate hikes.

1. Increased Inflation From 2023 Into 2024

Since early 2021, the country has seen an increase in inflation for a variety of reasons. The COVID-19 pandemic caused shortages in manufacturing and hampered shipping lines, the fiscal response to the pandemic increased the money supply in the market and the 2022 Russian invasion of Ukraine increased the prices of oil and commodities. As inflation continued throughout 2022 and 2023, car insurance was just another thing that became more expensive.

According to the Bureau of Labor Statistics, the consumer price index rose by 7.7% between October 2021 and October 2022. The rate slowed between 2023 and 2024 but still climbed to 3%. This BLS metric measures the costs consumers pay across all categories, meaning prices have increased across several sectors, including car insurance. The bureau also reports that the average cost of labor increased by 4.2% from March 2023 to March 2024, which suggests car insurance companies may be spending more on their staff.

2. Increased Repair Costs

The cost of vehicle repairs has also increased over the past year. Since an auto insurance policy pays for repairs after an accident, this is another reason insurers have been raising their rates.

Ask an Expert

Nathan Weller

Insurance Staff Writer for Fit Small Business and licensed claims adjuster in 13 states

“The insurance industry as a whole is raising rates. There are several factors, but all of them come down to the high loss ratio companies are experiencing. Since the end of lockdown, supply chain issues and backed-up shops have caused the cost of all claims, including minor claims, to skyrocket.”

According to the BLS, overall motor vehicle maintenance and repair costs rose by an average of 6% from June 2023 to June 2024. More specifically, the price of bodywork rose by 0.7% on average and repair costs rose by 6.7%.

A repair that used to cost $200 in 2023 would now cost $213 on average. But if there’s a shortage of a particular component, the repair could be even more expensive relative to 2023. Add to that the increase in labor costs, and car insurance companies are having to fork over a lot more money for repairs. Those costs factor into average rates, and insurers pass the increases on to policyholders.

3. Supply Chain Slowdowns

The COVID-19 pandemic and one or two international shipping incidents shutting down factories significantly impacted global trade methods and routes. Automotive manufacturing has been in steady recovery since 2020, but some parts remain hard to find and source. In particular, a microchip shortage caused manufacturers to cut about 4.26 million vehicles from production in 2022, according to Automotive News. Producers of select vehicles and their components have also faced challenges due to different geopolitical conflicts.

Supply chain issues have also affected repair shops across the country. Some parts that were easy to get before the pandemic are harder to find now. A mechanic may have to order a part from overseas and wait weeks to complete a repair that would have taken a few days before. If your car spends more time in the shop, you’ll need a rental car for longer as well.

4. Environmental Events in Your State

When one region of the country has an increase in severe weather or natural disasters, the number of vehicle damage claims may increase in the area. Car insurance companies can raise rates in the state to compensate. Even people who didn’t file claims may pay higher rates in the area after the environmental event.

Say a car insurance company expects a certain number of cars to have flood damage in a state in a year. Now, if a serious storm causes 10 times that amount of flood damage, the money to pay all those claims will reduce the company’s reserves. When the company reassesses its rates, it could raise prices to recover funds.

5. Increased Insurance Claims

In 2022, travel began to return to pre-pandemic numbers and as of 2024, agencies like AAA have reported record numbers of anticipated travelers during peak holidays. As the number of people on the road rises, more accidents can happen, which may mean more filed insurance claims. This means insurance companies face a higher risk of costly payouts, which directly translates to an increase in premiums.

Beyond an increased number of claims, the claims themselves are also more costly for insurance providers, since the price of parts and labor have increased. Weller gives an example of how labor and supply-chain issues could make even a minor repair more expensive for insurance companies now. In this scenario, the at-fault driver’s insurance company pays for the claimant’s headlight to be repaired.

Personal Changes That Can Cause Your Car Insurance To Go Up

Up until now, we’ve discussed factors that affect car insurance rates en masse. But there are also a variety of personal factors that can affect your rate. If you’re wondering why your car insurance went up, consider these as parts of the equation.

Location

Car insurance rates vary by ZIP code and even by neighborhood. These variations have a lot to do with traffic patterns, accident rates and other location-specific risk factors. If everything else about your situation stays the same, you could see a rate increase simply because you move to a new location.

It’s worth noting that rate hikes across insurance providers in 2024 were not universal, meaning drivers in some states may have seen more significant increases than others.

Age

Car insurance rates are highest for teen drivers, due to their lack of driving experience and driving statistics that show they’re more at-risk for accidents. In general, your car insurance rates should decrease as you age. However, senior drivers do pay slightly higher rates than middle-aged drivers. People will see their rates increase as they age beyond 65, though, since senior driving stats show a rise in accidents.

Driving Record

If you have an at-fault accident or get a speeding ticket, your rates will increase as you become riskier to insure. You should be expecting a rate increase in this case. However, it’s possible for an increase to come as a surprise. This may happen if you forgot to mention a moving violation in your driving history when you were signing up for insurance and the company found out about it later.

Remember, these factors work together to determine your final premium amount. Each driver has a unique history and driving habits, so your rate could be different from the averages you see. If you’re looking to compare car insurance rates before reaching out for quotes, find a driver profile similar to yours in our list of average insurance costs for a realistic picture of prices for drivers like you.

Will Car Insurance Rates Go Down?

The short answer is that it isn’t looking good. Car insurance rates are still on the rise in 2024, according to data from the BLS. From January to June, car insurance rates rose 6%, almost double the rate of increase from the same period in 2023. Experts say that costs may continue to stay high.

Stephen Yao, assistant professor of insurance and risk management at the University of Central Arkansas, said inflation — which is one of the leading causes behind price increases — can make this pattern permanent:

Once inflation is reflected in the general price levels, prices tend to stay at a higher level,” he said. “Even [a] lower inflation rate still means price levels continue to increase.

Fortunately, there are still ways every driver can save on coverage.

How To Find Cheaper Car Insurance

If you noticed your car insurance went up, it might be time to do some comparison shopping. There’s no penalty for switching car insurance companies, and most companies give prorated refunds if you cancel mid-term. Consider the following to find cheap car insurance:

• Compare companies: You can find very different prices from different providers. One company may offer an annual rate that’s hundreds less than another company’s rate, so compare at least three when you shop.
• Bundle policies: If you have homeowners or renters insurance, bundle your auto coverage with one of these to save money.
• Shop for the best discounts: Finding the right car insurance discounts can make your coverage more affordable. For instance, some companies offer better discounts for students and others offer better discounts for military members.
• Try usage-based insurance: If you’re one of the many people who started working from home during the pandemic, you could save money with usage-based programs. Programs like Progressive’s Snapshot® reward low-mileage drivers. Or you could get a pay-per-mile policy like Allstate Milewise® or Metromile.
• Raise your deductible: Increasing your deductible will lower your car insurance premium. But be sure you can pay it if you get into a car accident.

Why Did My Car Insurance Go Up?: The Bottom Line

There are several reasons your car insurance may have gone up in 2024. Many companies raised insurance pricing to keep up with the cost of claims or inflation, but other things may have affected your rate as well. The bottom line is that you can compare car insurance quotes and change providers if you think your coverage is too expensive.

Compare Car Insurance Rates

Get matched with a top provider and compare instant quotes in just a few clicks

Check Availability

With our comparison partner,

Why Did My Car Insurance Go Up: FAQ

Below are frequently asked questions about car insurance rates going up:

Your car insurance rate will increase if you get a ticket for a traffic violation or cause an accident, but there are other possible reasons as well. In 2024, many car insurance companies raised their rates to keep up with inflation or to account for higher claims than the prior year.

Your car insurance can increase if the cost of repairs, labor or health care services increases. This is because car insurance companies raise rates to account for higher costs in these areas. Also, a major environmental event that damages many cars in your area can increase rates for drivers in the state.

Unfortunately, it’s normal for car insurance rates to increase most years. However, companies do cut insurance rates from time to time. Some companies offer loyalty discounts, so you may see your rate decline after a number of years with the same provider.

Our Methodology

Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies. We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the insurers that scored the most points topping the list.

Here are the factors our ratings take into account:

• Coverage (30% of total score): Companies that offer a variety of choices for insurance coverage are more likely to meet consumer needs.
• Cost and Discounts (25% of total score): Auto insurance rate estimates generated by Quadrant Information Services and discount opportunities are both taken into consideration.
• Industry Standing (20% of total score): Our research team considers market share, ratings from industry experts and years in business when giving this score.
• Customer Experience (15% of total score): This score is based on volume of complaints reported by the National Association of Insurance Commissioners (NAIC) and customer satisfaction ratings reported by J.D. Power. We also consider the responsiveness, friendliness and helpfulness of each insurance company’s customer service team based on our own shopper analysis.
• Availability (10% of total score): Auto insurance companies with greater state availability and few eligibility requirements score highest in this category.

Our credentials:

• 800 hours researched
• 130+ companies reviewed
• 8,500+ consumers surveyed

*Data accurate at time of publication.