Cost of Car Insurance Jumped Nearly 14 Percent Last Year: Study

At least gas is cheaper now? I don’t know what to tell you.

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Cost of Car Insurance Jumped Nearly 14 Percent Last Year: Study © Cost of Car Insurance Jumped Nearly 14 Percent Last Year: Study

Have you heard of that silly thing called inflation? It's costing all of us money for no good reason. As well as the price of a dozen eggs, car insurance costs are on the rise. Financial publication Bank Rate reports that between 2022 and 2023, rates went up a huge 13.72% on average. That means the average American is now paying more than $200 extra a year just to drive their vehicle.

Bank Rate's findings go beyond these figures. It reports that the average American now spends 2.93% of their income on car insurance. Likewise, it breaks down who pays the most and the least based on a variety of factors. The big ones are the sort of car you drive, your credit, as well as driving history. The location has a big part to play as well.

The publication's research doesn't provide a vast list of cars to compare when it notes how much a vehicle might cost to insure. Independent of other figures, however, it notes that a Honda Odyssey, a relatively inexpensive minivan, is far cheaper to insure than something like a BMW 330i, a relatively expensive sports sedan—around $780 less per year. Not only is the Odyssey cheaper as a matter of pure cost, but Americans are paying less as a percentage of their income to insure them.

Credit and driving history are also major factors. In a nutshell, if you have poor credit and a DUI, expect to pay far more for car insurance. Likewise, New York is the most expensive state to insure a vehicle. New Yorkers spend, on average, 5.05% of their income on car insurance. The cheapest state to insure a car is Maine. Mainers pay a little over 1% of their income on insurance. Other states in New England are also cheap. Vermont and New Hampshire are numbers two and three, respectively.

Speaking to Bank Rate, the Assistant Vice President of State Affairs for the National Association of Mutual Insurance Companies Jon Schnautz, said insurance inflation will keep rising in 2023. Everything from higher labor and parts costs to an increased frequency and severity of crashes is leading to raised rates. High numbers of thefts are also contributing to higher insurance costs.

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