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Car Insurance Costs Are Rising Faster Than Any Other Service We Buy

cars parked on parking place of new apartment condos in florida suburban area family housing in quiet neighborhood real estate development in american suburbs
It's Not Just You—Car Insurance Cost Is Way Up Bilanol - Getty Images
  • Car insurance topped the list of items tracked by the U.S. Bureau of Labor Services as having the highest annual cost increase.

  • Americans spent 20 percent more on car insurance in 2023 than they did in the previous year.

  • There are a few things that might help.

In just three years, car insurance has risen to the point where it costs Americans 43 percent more than it did during the depths of the pandemic in December 2020. That's according to the latest December 2023 consumer price index data from the Bureau of Labor Statistics, the U.S. agency everyone now watches since inflation hit a 40-year record. But while inflation is finally cooling—December's recorded 3.4 percent is down almost two-thirds from June 2022's 9.1 percent—car insurance is still seeing double-digit surges.

Just in the past year, Americans spent an estimated 20 percent more on car insurance than they did in 2022—the largest such increase since 1976. Among the roughly 200 categories the BLS tracks, car insurance had the highest yearly increase of any expenditure. Only frozen noncarbonated juices and drinks, at 19 percent, came near. College tuition and rent increases were nowhere close to that of car insurance.

bls chart of auto insurance increases 2013 to 2023
Bureau of Labor Statistics

While actual premiums are notoriously difficult to track due to differing regulations in all 50 states (and a government-protected insurance industry that keeps its most useful data shrouded), there are a few direct causations. In the first half of 2020, when COVID-19 shutdowns stopped people from going anywhere, insurance companies racked up so much cash from a lack of claims that some sent rebate checks or discounts to their customers. In that year, car insurance expenditures were down 5 percent, the lowest annual decrease ever since 1955, according to the BLS. When the roads and the economy reopened—and the number of speeding-related accidents during the pandemic caused the most yearly fatalities in a decade—insurance rates began bouncing back.

Purchase and Repair Costs Are Way Up Too

New-car prices are very much to blame. After reaching a 13-percent year-over-year increase in April 2022, spending increases on new cars were nearly flat in December at 1 percent. But fixing them isn't getting cheaper. According to the BLS, vehicle maintenance and repair costs jumped 7 percent last year (and 27 percent since December 2020). Labor rates, due to a longtime shortage of skilled auto technicians, are a major factor. Newer cars with more expensive sensors and LED lighting in the bumpers mean even a minor bender can cost thousands. And while EVs are not necessarily more expensive to insure than ICE cars, if their battery packs receive damage, the repair bills are almost always higher.

Our advice: shop around for the best rate—the one with the funniest ads may have a more expensive bottom line than a local mid-size insurance company with a less famous name. And before you buy your next vehicle, research what you can expect to pay to insure it; that should be part of the decision-making process.

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