Auto insurance rates have spiked more than 20% over the last year. Here's why

David González Image
Tuesday, April 30, 2024
Auto insurance rates are surging across the US. Here's why
Drivers are feeling the pain of insuring their vehicles as prices for car insurance premiums surge - and drivers in California pay even more.

LOS ANGELES (KABC) -- Drivers are feeling the pain of insuring their vehicles as prices for car insurance premiums surge.

"Every six months we pay and it's gone up like $300 in the last year, year and a half," Leo Dumas said.

"We have a GMC Sierra 2021 and we also have a trailer package," Mario Morales said. "With workers' comp, general liability and all that I'm looking at about $756 and we used to pay about $495."

According to the Bureau of Labor Statistics, auto insurance rates are up more than 22% compared to this time last year.

It's the biggest spike since the 1970s.

Bankrate, a consumer financial services company, shows the average premium cost for full coverage in the U.S. ballooned to $2,543 this year compared to $2,014 in 2023.

Drivers in California pay even more as prices rose to $2,697.

In the Los Angeles metro area that number jumps to $3,013.

What's causing surging auto insurance rates?

Janet Ruiz with Insurance Information Institute, a nonprofit insurance trade association that provides information to the public, said one of the main reasons for the spike in prices is that new cars feature advanced technology which is more expensive to fix.

"A simple bumper used to be $1,000 to repair or replace, but these days with cameras and technology in the bumper, etc. it can be more around $10,000 to replace," Ruiz said.

Cars with more sophisticated technology also require more skilled labor.

"There are certain areas or types of cars that there are shortages of mechanics to work on. One is the electric vehicles, the batteries," Ruiz said.

How to lower your cost

So what can you do to save yourself some money?

Ruiz said having a good driving record and a higher deductible can lower premiums.

"If you've had a $500 deductible maybe you can put away $1,000 in a rainy day fund and use that as your deductible," she said. "You'll save money with a higher deductible."

Drivers are encouraged to shop around and get quotes from different insurance companies.

Also, discounts could be offered if you bundle multiple polices like home and auto under one company.