Why Car Insurance Rates Are Going Up in 2023
Inflation, labor shortages, and a rise in serious car accidents all contributed to a 26% increase in the cost of car insurance since 2021.
Written by R.E. Fulton
Edited by Kathleen Flear
Table of Contents
- Car insurance rates have gone up 26% since 2021. Here are the top 5 reasons why.
- The average cost per claim increased close to 50% from 2018 to 2022
- The average cost of car insurance in 2023 is $189 per month
- You can still find cheap car insurance in 2023. Here’s how.
- FAQs
- Sources
Load full table of contents
Most drivers
renewing their car insurance
in 2023 are seeing steep increases due to rising auto repair and medical costs. Pandemic-related supply chain issues, labor shortages, and inflation have made auto insurance 26% more expensive in the past two years. Car insurance rates have gone up 26% since 2021. Here are the top 5 reasons why.
Car insurance premiums have increased by an average of 26% since 2021.
While it’s normal for car insurance companies to raise rates slightly each year, the current state of car insurance costs is due to a serious crisis in the insurance industry caused by inflation, supply chain shortages, and rising auto accident rates.
Normal reasons your car insurance might increase | Why car insurance rates are going up right now |
|---|---|
|
|
1. Insurers lost money during the pandemic—then accident rates and car prices went up
When the COVID-19 pandemic began, thousands of Americans abruptly stopped driving. Many insurance companies actually refunded unused premiums to policyholders who weren’t using their coverage during the initial lockdown, losing money as a result.
Then, in the second half of 2020, car accident rates saw a sharp increase as Americans returned to the road. Accident rates continued to rise through 2021, leading to increased claims and overall costs to insurers. Alongside rising crash rates, car values rose throughout the pandemic due to supply chain disruptions,
hitting an all-time high in the summer of 2022
. 2. Auto repair costs are up by 18.4% thanks to supply chain disruptions
The COVID-19 pandemic caused two major problems for the automotive repair industry: a shortage of both parts and labor.
Delays in both production and shipping in 2021 and 2022 made it difficult for mechanics to source replacement parts, especially
microchips
. Because today’s cars are more technologically advanced than ever, the microchip shortage caused serious delays and price increases—leading to ballooning insurance claims. 
How many microchips are in your car?
How many microchips are in your car?
The following systems in your car likely use microchips:
Powertrain | Safety features | Comfort & convenience |
|---|---|---|
|
|
|
The average modern car contains over 1,400 microchips!
But microchips aren’t the only parts that got more expensive in the past year. According to the
2023 Crash Course report
by CCC Intelligent Solutions, the cost of front and rear headlights, windshields, and quarter panels all increased by more than 10% between 2021 and 2022, and the average cost per replacement part exceeded $100 for the first time in over 20 years. 3. Labor costs are increasing for collision repair shops
Scarcity of parts isn’t the only thing driving repair costs up—labor costs more in 2023, too.
The average age of repair technicians is increasing as fewer new mechanics enter the industry, leading to overall shortages in qualified repair technicians. The
2022 FenderBender Industry Survey
found that 34% of collision repair shop owners believe that a shortage of qualified technicians is the single biggest challenge facing their business today. Change in average hourly auto repair labor costs, 2021 vs. 2022
2021 | 2022 | |
|---|---|---|
Body labor rate | $52.92 | $56 |
Frame labor rate | $62.80 | $67.87 |
Mechanical labor rate | $95.50 | $105.55 |
Paint labor rate | $52.49 | $55.57 |
Source: Auto Insurance: The Uncertain Road Ahead, American Property Casualty Insurance Association,
https://www.apci.org/attachment/static/8465/
. 4. Unsafe driving is on the rise
According to
Jerry’s 2023 State of the American Driver
report, 31% of drivers feel that driving has become more dangerous since the pandemic—and they’re right. A June 2023 report by the
American Property Casualty Insurance Association (APCIA)
found that risky driving behaviors like speeding, texting while driving, and drunk driving all increased from 2020 to 2021. Not only can any of these habits raise your insurance premiums, they carry a higher risk of serious accidents, driving up the cost to insurance companies. 5. Healthcare costs are increasing steadily
In addition to car repairs, auto insurance companies have to consider the rising cost of healthcare, especially emergency room visits.
A 2023 study from
Rice University and the UTHealth Houston School of Public Health
found that rising service costs have significantly increased the cost of emergency room care in the past decade, with average increases from $703 to $976. In addition, consumer price index data from the Bureau of Labor Statistics
shows steady growth in the cost of hospital services in US cities from January 2021 to May 2023. The average cost per claim increased close to 50% from 2018 to 2022
Pandemic losses, rising auto parts and labor costs, a rise in unsafe driving practices, and inflated healthcare costs all contributed to a 40 to 50% increase in the average cost per auto insurance claim from 2018 to 2022.
According to the American Property Casualty Insurance Association, the average bodily injury claim increased by 40% in that time frame, while liability and collision insurance claims increased by nearly 50%. Claim frequency and claim severity both contributed to a rise in overall insurance losses in 2022.
Auto insurance losses, 2018 to 2022
2018 | 2019 | 2020 | 2021 | 2022 | Overall change | |
|---|---|---|---|---|---|---|
Liability | $91,736,331 | $96,183,910 | $81,622,211 | $96,103,658 | $117,875,684 | 28% increase |
Physical damage | $58,766,743 | $62,636,230 | $54,684,357 | $73,849,765 | $91,020,987 | 55% increase |
Source: Facts + Statistics: Auto insurance, Insurance Information Institute (III),
https://www.iii.org/fact-statistic/facts-statistics-auto-insurance
. The average cost of car insurance in 2023 is $189 per month
As of August 2023, the average cost of a
full-coverage car insurance policy
in the United States is approximately $2,265 per year, or $189 per month. According to a recent study Jerry conducted of over 1,200 car owners in the US, nearly 75% of drivers feel that
car insurance is becoming too expensive
for the average person, and over 50% report “moderate” to “extreme” financial stress due to their auto insurance rates. State | Minimum coverage | Full coverage |
|---|---|---|
$64 | $149 | |
$61 | $157 | |
$66 | $161 | |
$66 | $200 | |
$60 | $181 | |
$98 | $183 | |
$77 | $185 | |
District of Columbia | $83 | $164 |
$174 | $312 | |
$104 | $213 | |
$44 | $114 | |
$42 | $102 | |
$63 | $138 | |
$56 | $114 | |
$55 | $135 | |
$109 | $199 | |
$105 | $260 | |
$60 | $129 | |
$91 | $192 | |
$41 | $75 | |
$118 | $197 | |
$67 | $133 | |
$65 | $162 | |
$59 | $147 | |
$45 | $124 | |
$43 | $109 | |
$73 | $152 | |
$52 | $121 | |
$43 | $82 | |
$93 | $181 | |
$54 | $159 | |
$63 | $150 | |
$122 | $211 | |
$49 | $106 | |
$60 | $137 | |
$70 | $149 | |
$53 | $133 | |
$67 | $152 | |
$113 | $218 | |
$53 | $124 | |
$59 | $155 | |
$85 | $198 | |
$67 | $132 | |
$61 | $130 | |
$36 | $80 | |
$65 | $145 | |
$42 | $103 | |
$59 | $134 | |
$29 | $89 | |
Average coverage cost | $77 | $165 |
You can still find cheap car insurance in 2023. Here’s how.
Cheap car insurance
might be harder to find in 2023, but it’s not entirely a thing of the past. The key to finding affordable coverage in the new climate is savvy shopping
—with a deeper understanding of what causes insurance prices to rise, you can guard against rate hikes and find the best insurance quotes for your profile. The 5 easiest ways to find lower car insurance rates in 2023
The 5 easiest ways to find lower car insurance rates in 2023
- Consider switching insurers. Insurance companies use different algorithms tocalculate premiums, so switching to a new insurer could land you a better rate. Use the Jerry app to quickly compare real quotes from dozens of insurers in your state.
- Research discounts.Car insurance discountsfor safe drivers, good students, and homeowners offer the biggest savings—around 20 to 40% off your premium. But even small discounts, like a 5% discount for electronic payments or an 11% discount for paying your premium in full, can add up.
- Track your driving habits. Telematics discounts based on your proven safe driving habits are one of the most powerful saving tools in the insurance industry today, with average discounts around 20% or more.
- Put off buying a new car—or go used. New cars mean expensive car repairs—and steep insurance rates. Your insurance rate will be about 3% lower per model year of age on your car.
- Re-shop regularly. You can switch insurers any time your policy is up for renewal, but 70% of drivers never bother to compare new rates. Don’t be one of them: use Jerry’s automatic reshopping service to compare quotes whenever you have the chance to save.
FAQs
Why did my car insurance go up in 2023?
Your car insurance likely increased in 2023 due to supply chain shortages, rising accident rates, and inflated healthcare costs—all of which drove up losses for auto insurance companies and increased the overall cost of coverage.
But you might also have seen a rate increase due to moving violations on your driving record, a recent at-fault accident, or changes in your driver profile like a new car, driver, or garaging address on your policy.
Why is car insurance so expensive all of a sudden?
Inflation, rising auto repair costs, and an uptick in unsafe driving all led to sharp increases in the average cost of car insurance in 2022 and 2023.
Why did my car insurance go up when nothing changed?
If your car insurance recently went up with no changes to your driving history, coverage and deductibles, or driver profile, you’re likely seeing the effect of industry-wide rate increases due to pandemic-related repair cost hikes and rising auto accident rates.
What can you do to make your insurance rates go down?
Some easy ways to lower your car insurance rates include comparison shopping for cheaper quotes,
combining your auto policy with a home or renters
insurance policy, and opting for lower coverage with higher deductibles. 
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