Banking, finance, and taxes

Car Insurance Rates Keep Surging

Douglas A. McIntyre

Published: December 13, 2023 12:25 pm

The Consumer Price Index for All Urban Consumers for November, released by the Bureau of Labor Statistics, showed inflation rose 3.1% year over year. It was another sign that inflation had slowed considerably since 2022 when the rate for the year was 8%. Not all prices dropped. The CPI covers a large number of categories. Among these, the one that rose the most was car insurance, which was up 19.1%. (These states have the most expensive car insurance.)

While car insurance dragged the CPI higher, energy prices pulled it lower. The overall energy category was down 5.4%. Fuel prices dropped 24.8%. According to GasBuddy, the price of a gallon of regular gas has dropped below $3. The EIA showed that the price was over $4.50 in the summer of 2022. There was a concern that rising oil prices might make that figure worse for drivers.

Forbes reports the car insurance increase is due to several factors. Car parts cost more. While there is no single reason for that, it may be that the supply chain problems that drove up car prices have also affected parts prices. Another reason is weather catastrophes that have damaged cars in several parts of the country. While these may be isolated, they raise the national average.

Within the car insurance category, several factors drive insurance rates from group to group. Among these is age. Younger drivers are at higher risk for accidents than other age groups. Auto insurance for someone in their 20s can be twice as high as for someone in their 50s.

Another factor in car insurance prices is location. According to Bankrate, the figure in New York is $3,139 per year, while in Maine it is $941.

Car insurance rates have been among the major contributors to CPI increases this year, so owners can expect that will not end soon.