State of Auto Insurance in 2023
Car insurance rates are expected to increase by 8.4% across the U.S. in 2023, amid the increase in drivers returning to the road. That’s the biggest jump in car insurance costs in the past six years. The average cost of full coverage car insurance across the U.S. is $1,780 per year.
ValuePenguin used the Quadrant Information Services database to analyze millions of quotes for drivers across the U.S. We also analyzed car insurance rate changes filed by top companies across the country to show the current and historical landscape of the auto insurance industry.
2023 car insurance trends
Car insurance companies have begun raising rates for 2023 due to an increase in car repair costs and claims. Many drivers can expect to see a higher car insurance bill this year. The factors driving these changes include, but are not limited to:
RETURN TO TRAVEL AND RETURN TO OFFICE
Car accidents and claims have increased as more people resume regular travel or return to their daily commute. More people driving means a higher risk of getting in a crash, which means higher car insurance rates.
RISING CAR COSTS
Cars are becoming more expensive to repair, in part because replacement parts are becoming difficult to find due to supply shortages or more expensive due to inflation. The lack of availability for used and new cars has also increased the typical market value for many cars, which means insurance companies are paying out higher amounts for claims across the board.
Severe storms and hurricanes cause a rise in car insurance claims from cars that are flooded, damaged or destroyed. As the U.S. faces more extreme weather over time, car insurance rates will increase to match a higher risk of damage, especially in coastal areas.
HIGHER EV SALES
The popularity of electric vehicles will only increase as technology improves. However, EVs cost around 28% more to insure than a new gasoline-powered car. Look for vehicle-specific insurance discounts, like electric car and safety feature discounts.
Source: ValuePenguin by Lending Tree
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