Americans See Biggest Car Insurance Hikes in Generations
Henry Hoenig
· 2 min read
The average American driver saw
car insurance
premiums jump 14% in 2022, the biggest increase on record in data going back to 1985. More increases are likely in 2023 as insurance companies try to keep up with soaring prices of everything from vehicle parts to maintenance and repair services. Key Insights
- Car insurance premiums rose 14% in 2022, the most in at least 37 years, according to data analysis byJerry.
- Car insurance has been one of thefastest-risingexpenses for Americans over the past decade, growing 57% as of the end of 2022. That’s more than most major living expenses, including health insurance, medical care and rents.
- Since the start of the COVID-19 pandemic, though, car insurance has risen more slowly than other major car-ownership expenses and overall inflation—even after the big jump in 2022.
In 2022, insurance premiums rose more than any other major car-ownership expense except repairs. Higher prices for vehicles and parts and rising costs for maintenance and repairs will likely continue feeding into higher insurance premiums over time.
Rising premiums can’t be blamed entirely on the pandemic-era return of steep inflation. Car insurance has been one of the
fastest-rising
expenses for Americans over the past decade, growing 57% as of the end of 2022. That’s more than most major living expenses, including health insurance, medical care and rents. Insurance companies point to steep increases in the cost of claims and associated costs, including vehicle parts, hospital services and legal fees. The frequency and severity of accidents have also increased.
Soaring vehicle prices, particularly for used cars and trucks, have been in focus over the past two years as inflation marched toward a 40-year high reached in June 2022. And with good reason. But car insurance has been spiraling higher for years, outpacing all other vehicle-related costs.
Yet car insurance premiums have lagged behind other vehicle-related expenses since the pandemic started. For one thing, insurers cut rates during the shutdowns that began in March 2020 and premiums didn’t surpass those March 2020 levels until February of 2022, when overall inflation had already reached 7.9%.
This is at least partly because in most states the government must approve any rate hike, a laborious and time-consuming process that can leave insurers
counting their losses
as inflation drives up prices of repairs, parts, and other costs associated with claims.
Conclusion
Rising claims and insurance premiums are
correlated
, due partly to inflation-driven increases in costs associated with claims. This means American drivers can expect further rate hikes in 2023 as insurers seek to keep pace with those increases. 
