The average car insurance premium is projected to cost nearly $2,500 this year — almost $1,000 higher than in 2021, when prices bottomed out during the pandemic.
A new report from Insurify, an insurance marketplace, estimates that the average cost for a full coverage auto insurance policy will rise to $2,469 by the end of 2024. That would be a 22% increase over last year, when premiums averaged $2,019.
The rise is even more dramatic compared to what drivers were paying for insurance a few years ago. The average cost of full coverage was in the low $1,600s in 2020 and 2022, and it dipped to $1,567 in 2021, according to Insurify data. (You may remember that during the early months of the pandemic, auto insurance prices dropped significantly and some insurers actually gave customers rebates because people were driving so much less.)
Why car insurance prices are rising so fast
While prices for most goods rose in the aftermath of the pandemic, costs spiked to a staggering degree for car insurance. Around this time a year ago, Bureau of Labor Statistics (BLS) data indicated that auto insurance rates were increasing faster than any other common expense — up around 17% in a year, compared to general inflation of 3%.
As of March, the rate of inflation for car insurance hit 22% annually. Recent BLS reports show that auto insurance prices briefly eased off the gas in the spring — falling 0.1% from April to May — but then popped 1% higher from May to June.
Prices have skyrocketed for a variety of reasons. The most obvious one is that prices for new and used vehicles have surged in the past few years. Cars are much more expensive to repair or replace, and insurers are factoring in rising costs related to customer claims and passing them along to drivers in the form of higher premiums.
Among the other factors causing car insurance rates to climb are increases in dangerous driving (and more road fatalities and costly crashes) and severe weather episodes that can damage or destroy vehicles such as wildfires, floods and hailstorms.
Most expensive states for car insurance
Insurify says that Maryland is the most expensive state for auto insurance, with average full coverage premiums running $3,400 per year as of June.
Here are the 10 states with the most expensive car insurance rates:
- Maryland: $3,400
- South Carolina: $3,336
- New York: $3,325
- Nevada: $3,271
- Florida: $3,201
- Louisiana: $3,182
- Delaware: $2,982
- Washington, D.C.: $2,977
- Michigan: $2,719
- Georgia: $2,688
Unfortunately, premiums are expected to keep climbing. For example, by the end of 2024, the average in Maryland will rise to $3,748, Insurify predicts — a potential increase of 41% versus 2023. Rates are supposed to soar in states such as California, Missouri and Minnesota as well, with year-over-year spikes forecasted at 54%, 55% and 61%, respectively.
To some extent, rising car insurance prices are unavoidable. But there are some classic strategies for lowering car insurance premiums that are worth trying, including raising your deductible and bundling home and auto insurance policies to get a discount. It’s also smart to shop around for cheaper car insurance once a year or so, to see if there are better options.
More from Money:
Why Most People Don’t Trust Their Car Insurance Companies
Why States With No Income Tax Aren’t as Affordable as They Seem
What Actually Happens if You Don’t Buy Car Insurance?