The cost of car ownership has been one of the most painful parts of high inflation in the past few years, with rising car insurance costs partly to blame. Car insurance costs rose 20% in 2023, and are up 43% in the past three years through December 2023. Car repair costs increased 10.3% in 2023, helping to drive up the price of insurance.
Higher car insurance premiums are causing many Americans to cut back on their budgets for "fun money" and even for food. A new survey from car app Jerry (getjerry.com) found that 58% of American car drivers are cutting their spending on restaurants, clothing, and groceries to make up for the rising cost of car ownership.
Is there any hope for car insurance customers? Will car insurance premiums get more affordable in 2024, or are high costs here to stay?
Let's look at a few findings from the Jerry 2024 State of the American Driver Report, and see how car insurance customers can get the best deal on your next policy.
1. Car insurance rate hikes are not slowing down
Josh Damico, VP of Insurance Operations at Jerry, predicts that car insurance premiums still have room to climb in 2024. "The upward trend will continue this year but it's too early to tell exactly how high it could go," Damico said.
If your insurance keeps getting more expensive in 2024, one strategy could be to raise your deductible or cancel non-essential coverages. Other drivers are making the same move. The Jerry 2024 State of the American Driver Report found that many American car owners have been forced to compromise on insurance coverage to try to lower their premiums. In fact, 22% of American drivers bought less car insurance coverage than they wanted in 2023, including 39% of Generation Z drivers.
Read more: check out our picks for the best car insurance companies
2. Beware of your next auto insurance policy renewal
If your car insurance premiums went up in 2023, take a deep breath. You might have to pay even more when your auto policy renews in 2024 and you receive notice from your insurance company about your new (higher) car insurance premium.
In case you didn't notice last year's rate hike, or it was a manageable amount that fits easily into your budget, you might have sticker shock this year. Jerry's Damico believes that May-July of 2024 will be a breaking point for frustrated auto insurance customers who suddenly decide to shop for price quotes.
"By mid-2024, insurers will be ready to grow and many car owners will see large renewal increases hit, due to the rising cost of doing business for insurers," Damico said. "This dynamic is expected to cause record levels of shopping around and switching insurers."
One surprising finding from the Jerry survey was that, despite painful price hikes for auto insurance, most Americans are not trying to find a better deal. Only 38% of drivers attempted to shop around for auto insurance price quotes in 2023 -- fewer than those who cut back on restaurants and groceries.
Keep in mind that just because your auto insurance company is raising your premiums, that doesn't mean you are helpless. You don't have to just sit back and accept that higher cost of car insurance. You have choices. Shopping for auto insurance price quotes could open up some surprisingly cheap car insurance deals. And don't be too quick to raise your deductible or cut your coverage -- that can set you up for financial disaster, just like Mayhem from Allstate tried to warn us about.
Bottom line
Car insurance has gotten shockingly expensive in the past few years, and it's becoming a major source of pain for people's personal finances. But you don't have to stop buying groceries or give up all your fun in life. Mid-2024 could be a perfect time for customers to shop around, with car insurance companies eager to compete for your business.
Get auto insurance price quotes and try to find a better deal. Talk to insurance companies about the full picture of your insurance needs, such as bundling home and auto coverage. You might also want to consider a "usage-based" insurance policy that rewards safe drivers, like . But whatever you do, don't just take the first offer you get from your current insurance provider. Switching car insurance companies might be your best option to get cheaper car insurance in 2024.
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FAQs
Car insurance rates have risen sharply since the start of the COVID-19 pandemic, and current trends make it highly unlikely that they'll drop much in 2024.
Why is car insurance getting so expensive? ›
As vehicles become more expensive to repair and replace, car insurance rates climb as well so insurers can cover future claim payouts.
What is the best car insurance? ›
The best car insurance companies in 2024
- State Farm. Best for local agencies. 4.3. Rating: 4.3 stars out of 5. ...
- Travelers. Best for personalized coverage. 4.2. Rating: 4.2 stars out of 5. ...
- USAA. Best for military-focused coverage. 4.2. ...
- Nationwide. Best for discounts. 4.0. ...
- Liberty Mutual. Best for bundling numerous products. 3.8.
There's no downside to getting multiple car insurance quotes. It's important for people to get quotes from several insurers so they can be sure they're paying a fair price for coverage.
Are car rates going down in 2024? ›
Auto loan rates for new and used vehicle purchases fell in the first quarter of 2024 to 6.73% and 11.91%, respectively, down slightly from the 15-year highs we saw at the end of 2023, according to Experian.
At what age do auto insurance premiums tend to drop? ›
Although most people believe that 25 is the age when car insurance rates go down, the most significant decreases occur when drivers turn 19 and 21. Rates continue to lower until you turn 30.
Does credit score affect car insurance? ›
Car insurance companies consider more than a dozen rating factors when calculating your premium. Although your credit score can significantly impact your rate, some other rating factors include the make and model of your vehicle, your driving record, claim history and how you use your car.
Why did my car insurance go up when nothing changed? ›
If your car insurance goes up for seemingly no reason when you renew your policy, it's likely due to an increase in risk that's outside of your control. This could include reasons like increased claims in your area (due to more extreme weather damage, more accidents, etc.)
Does insurance ever get cheaper? ›
Does car insurance ever go down? Yes, car insurance typically goes down as you age. Also, your insurance may decrease if violations or at-fault accidents fall off of your driving record. You may get a loyalty discount if you stay with the same company as well.
Who typically has the cheapest car insurance? ›
USAA, Nationwide, Travelers, Erie, Geico and Progressive are the cheapest car insurance companies nationwide, according to our analysis.
Is Progressive or Geico better? Both Geico and Progressive are reputable insurers with positive industry reputations, but which is better for you depends on your situation. We found Geico offers slightly better rates for the average driver while Progressive tends to have lower rates for high-risk drivers in particular.
What is the #1 insurance in America? ›
The largest P&C insurers in the United States
| Ranking | P/C insurance company name | % change from previous year |
|---|
| 1 | State Farm Group | 19.1 |
| 2 | Berkshire Hathaway Ins | 4.9 |
| 3 | Progressive Ins Group | 20.4 |
| 4 | Allstate Ins Group | 11.6 |
96 more rowsCommon rating factors include age, location, driving history, credit score, and more. Put simply, the less risky your rating factors are, the cheaper your car insurance policy will be. Some auto insurance rating factors — such as driving record or vehicle type — have relatively sizeable impacts on car insurance costs.
Is it okay to shop around for car insurance? ›
There is generally no penalty for switching car insurance companies, but make sure that you're comparing policies with the same coverage types and amounts to ensure that you're looking at prices for comparable coverage.
Should you shop around for car insurance every 6 months? ›
Look for car insurance every six months to a year to make sure you're getting the best coverage. If you haven't thought about how much you're paying for car insurance in a while, you probably should.
Will my car insurance go down when I turn 25? ›
Does car insurance go down at 25? Usually, yes. At Progressive, rates drop by 9% on average at age 25. But there are other cost factors impacting your car insurance, such as your claims history.
Why does my car insurance go up every year instead of down? ›
Claims in your area
If your area has a high rate of theft, accident, or weather-related claims, it becomes riskier for an insurance company to cover drivers there. That risk can lead to an auto insurance price increase, even if you have a perfect driving record.
How much are health insurance premiums going up in 2024? ›
SACRAMENTO, Calif. – The CalPERS Board of Administration today approved health plan premiums for calendar year 2024, at an overall premium increase of 10.77%. Basic (non-Medicare) plans will increase 10.95% overall.
How much does car insurance go down after 1 year no claims? ›
In many cases, your insurance will go down by 5-20% in the first year of no claim, depending on your insurer. After the first year, this discount increases each year, usually by 5%, if you don't make a claim. But it only increases up to a maximum discount, usually 50-60%, and a number of years — usually 5-6 years.
