“What the heck?!?!” is a common reaction when motorists open their car insurance bills this year. The U.S. Bureau of Labor Statistics says car insurance premiums surged more than 20% from February 2023 to February 2024.
The usual suspects invariably affect a motorist’s rate. As examples, Bankrate.com found that a crash raises annual insurance premiums by $1,034 on average; a DUI by $2,247; and a speeding ticket by $523. But this year, motorists who aren’t guilty of such transgressions are seeing rate spikes for other reasons.
For one, the average price of a new car approaches the $50,000 mark, requiring insurers to pay large sums to replace them if they’re totaled after a collision. Newer cars also have become more expensive to repair.
Advanced driver-assistance features use sensors, cameras, and other gizmos to help prevent crashes, but they make even a minor mishap costly. For example, according to analysis by the National Association of Mutual Insurance Companies, a 2017 Toyota Camry front bumper has 18 parts and costs $947. Toyota redesigned the Camry in 2018; the bumper now has 43 parts and costs $2,064.
The country also is experiencing near-record theft rates, not only for whole cars but also for their catalytic converters. Drivers distracted by phones and infotainment screens are contributing to an uptick in crashes, prompting insurers to cover their losses by raising premiums.
Late-model, internet-connected cars may tattle on their owners. In some states, insurers offer the possibility of a premium reduction when car owners agree to let them monitor their driving through the car’s onboard diagnostic system or a smartphone app.
The insurers watch for such red flags as hard braking, sudden acceleration, speeding, and how much they drive. But the New York Times found that unbeknownst to car owners, some automakers share such information with data brokers, who in turn provide the information to insurers, who may use it to raise premiums.
Apart from swapping your late-model car for a 15-year-old clunker that’s not connected to the internet, there are ways you might reduce your premium. For example, bundling your home and auto insurance with the same insurer is likely to lower the cost. Raising your policy’s deductible also saves money, but make sure you have the cash to cover the deductible amount in case you’re involved in a crash.
Dropping comprehensive and collision coverage on an old, fully depreciated car will reduce your premium; again, be sure you can afford to repair, replace, or do without the car if it’s damaged. But when an elderly car qualifies as a classic, a special classic-car policy that includes full coverage can be surprisingly inexpensive.
If you start driving fewer annual miles—say, because you retire or start working from home—alert your insurer, who may reduce your premium. Should you receive a moving violation, attend traffic school if the court allows it. The violation will remain on your record but will be “masked” from insurers, so it won’t affect your premium.
Teens who graduate from the AAA Driving School may qualify for an insurance discount. Likewise, some insurers offer discounts to seniors who complete a defensive-driving course.
If you plan to change cars, ask your insurer to give you a quote on the car you expect to buy so you’ll know if you can afford the premium. Finally, if you can’t reduce your current insurer’s premium, shop around. The Insurance Information Institute recommends obtaining quotes from 3 insurers.
