There is bad news for car owners from the auto insurance industry, new reports from credible sources are predicting significant increases in auto insurance will continue to rise this year. Rates across the United States are already on its peak with the rise of 24% in 2024, some states experiencing jump up to 61%. Here are some of the figures:
1. Maryland
- Average annual cost of full coverage: $3,400
- Percent higher than the U.S. average: 46%
- Projected average rate increase in 2024: 41%
2. South Carolina
- Average annual cost of full coverage: $3,336
- Percent higher than the U.S. average: 43%
- Projected average rate increase in 2024: 38%
3. New York
- Average annual cost of full coverage: $3,325
- Percent higher than the U.S. average: 43%
- Projected average rate increase in 2024: 4%
4. Nevada
- Average annual cost of full coverage: $3,271
- Percent higher than the U.S. average: 40%
- Projected average rate increase in 2024: 20%
5. Florida
- Average annual cost of full coverage: $3,201
- Percent higher than the U.S. average: 37%
- Projected average rate increase in 2024: 18%
6. Louisiana
- Average annual cost of full coverage: $3,182
- Percent higher than the U.S. average: 37%
- Projected average rate increase in 2024: 23%
7. Delaware
- Average annual cost of full coverage: $2,982
- Percent higher than the U.S. average: 28%
- Projected average rate increase in 2024: 13%
8. Washington, D.C.
- Average annual cost of full coverage: $2,977
- Percent higher than the U.S. average: 28%
- Projected average rate increase in 2024: 17%
9. Michigan
- Average annual cost of full coverage: $2,719
- Percent higher than the U.S. average: 17%
- Projected average rate increase in 2024: 8%
10. Georgia
- Average annual cost of full coverage: $2,688
- Percent higher than the U.S. average: 15%
- Projected average rate increase in 2024: 24%
Key Factors Behind the Increase
Weather Events:
Increasingly severe weather events are driving up claims. The U.S. saw an average of 20.4 billion USD weather events related damages per year in last four years, which is 56% increase from an average of 13.1 billion USD annually between 2010 and 2019.
Hail-related auto claims represented 11.8% of all comprehensive claims in 2023, up from 9% in 2020, according to CCC Intelligent Solutions. This spike in damage resulted in an increase in premium prices.
Repair Costs:
The costs for vehicle repairs have surged by over 38% over the past five years, and these expenses are being passed on to the consumers. New vehicles are reliant on fragile semiconductor chips to enable advanced safety features like collision warnings and lane-departure alerts. These features help to prevent accidents but at the same time these are very costly to repair. Electric vehicles (EVs) present add on challenges, typically taking 5.8 days longer and costing 46.9% more to repair than gas-powered cars, with average repair costs. All these higher costs end up on the policy holder’s bill.
What Are The Expectations
At the beginning of the year, we saw stability in the market, but premiums continued increasing in 2024. Rising vehicle repair costs became more complicated and expensive fixes caused more premiums. Drivers in states with frequent heavy storms, hail, hurricanes, and wildfires that are affecting a large portion of the country will reflect in their premiums. As reinsurance companies raise rates, auto insurers pass some of that cost to the policyholders.
By the end of the year, data science expects a 22% year-over-year increase in full-coverage rates, bringing the average annual cost to $2,469.