Illinois Residents Should Prepare for Another Car Insurance Price Hike
Illinois residents are facing another price hike for their car insurance from State Farm.
Written by Andrew Kidd
Reviewed by Kathleen Flear
Did you think Illinois would catch a break from the increased cost of
car insurance
hitting drivers in the U.S.? Think again; State Farm joined several other insurers in revealing its intent to raise prices in Illinois.Filings with Illinois’ department of insurance indicate that State Farm’s average insurance premium will increase by $60 a year, or 3%. This increase follows just two weeks after the insurer implemented a
5% price increase
.State Farm’s increased cost of doing business
State Farm is the largest insurance provider in its home state of Illinois as well as the nation—and is raising its rates in response to the higher cost of claims.
State Farm differs from other insurers in that it’s a mutual insurer and not publicly traded; it’s technically owned by its policyholders. That means it doesn’t have the same pressure from shareholders to be as profitable as its publicly traded counterparts.
State Farm’s auto insurance rates are still below its pre-COVID-19 levels in Illinois. The company is keeping an eye on trends to match price to risk and make incremental adjustments based on driving behaviors.
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Increases across the auto industry
Car insurance companies like State Farm and Allstate are reckoning with the growing number of drivers hitting the roads again—and the accidents they cause—by making their customers pay more.
Auto insurers are citing
inflation
as a leading cause for their premium price hikes, which have raised between 6-8% on average nationwide; the cost of repairs, replacement vehicles and rentals have all jumped as new and used car inventory plummets amid high demand and pricing.The
Wall Street Journal
previously reported that the number of insurance claims has jumped across the industry due in part to accident damage being generally more severe from higher driving speeds. Distracted driving and driving under the influence of drugs and alcohol has also become more common.One thing that might hurt traditional auto insurers in the years to come is the move by some automakers to provide their own insurance options to customers; Tesla’s company-backed insurance has launched in five states with hopes for rollouts in 45 states by the end of 2022.
Tesla could insure up to 300,000 of its cars by 2025 and manufacturer-backed insurance plans could save the consumer quite a bit on already costly to insure electric vehicles.
GM seems to be following in Tesla’s footsteps, with ambitions for more insurance revenue since reviving its GMAC insurance brand as OnStar Insurance in 2020.
Don’t accept paying more for car insurance
If you’re hurting from higher insurance premiums, it’s probably time to shop around.
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