Car insurance is surging. Here’s why — and how you can save (2024)

By Erin McCarthy, The Philadelphia Inquirer

Published: January 27, 2024, 6:00am

Car insurance is surging. Here’s why — and how you can save (1)

PHILADELPHIA — When Imani Porter received the quote for her car insurance renewal in December, she was flabbergasted.

Geico, which had insured her and her fiancé’s Honda CR-V for the past year and a half, was going to charge the couple about $1,000 for the next six-month period.

“I did the math from a year prior and I noticed it went up by 35%,” said Porter, a 27-year-old project manager in the finance industry. “No reasoning. We didn’t have any accidents or tickets. We never even called them. The only communication we had with them was to pay our bills.”

Porter said she assumed the jump was due to the city’s surge in car thefts and reports of tires being stolen off Hondas in her Northern Liberties neighborhood.

When she called Geico, a customer service representative could only cite inflation.

Car insurance rates have actually outpaced inflation. Premiums increased nearly 20% over the past year, far higher than the broader rate of 3%, according to the latest federal data. U.S. consumers pay on average $2,542 a year for auto insurance, Bankrate found in its January report, with drivers shelling out anywhere from $62 to $212 per month depending on their level of coverage.


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Several factors are to blame for surging premiums. While there are signs that new and used vehicle prices may be coming down, car prices remain higher than they were pre-pandemic, noted Greg McBride, Bankrate’s chief financial analyst, and newer, more technologically advanced cars are increasingly expensive to fix.

Consumers can also see higher rates for more personal reasons, such as where they live, their driving history and habits, what kind of car they drive, their occupation, credit history, even their age and gender (though not in Pennsylvania, one of six states where insurers aren’t legally allowed to use gender as a factor).

But these more individualized factors don’t account for the current spike, said Bob Passmore, department vice president for personal lines at American Property Casualty Insurance Association, the country’s main trade organization for home, auto, and business insurance.

“Whether you’re a good driver who has never had an accident or a ticket, or a bad driver who’s had accidents and tickets, everybody’s costs are going up,” said Passmore, though drivers that insurers deem riskier will see even higher rates as a result. “You’re seeing this in every state.”

Residents of cities such as Philadelphia may see higher premiums than drivers who live in the suburbs, but Passmore said rising numbers of car thefts are not as much of a factor as some consumers like Porter may think. Rates are higher in cities mainly because there are more collision claims there, he said, and car repairs, just like most everything else, tends to be more expensive in urban areas. Similarly, consumers who live in places that are more prone to flooding could pay more.

How to save on car insurance

Consumers shouldn’t bank on relief, at least not any time soon.

While there are indications that prices are increasing slower than they did a year ago, “the question becomes how much of those inflationary effects are going to ease over time,” Passmore said, “and how much are with us to stay.”

For example, cars aren’t going to start being made with less technology — even parts such as windshields have become more sophisticated, and therefore more expensive to replace.

McBride put it simply: “Short-term there aren’t a lot of indications that the pace of auto insurance increases are slowing down.”

Despite these projections, there are ways to save on car insurance — if consumers are willing to put in time comparing policies and reaching out to different insurers.

In Delaware County, Pennsylvania, Blake Gardner said two different insurers have tried to increased his insurance rates twice in the past year. First, he said Liberty Mutual tried to get him to renew his policy at a rate of $670 a month, a steep increase from the $350 he was paying for two adult drivers and three cars.

When he called Liberty Mutual’s customer service, “I asked what the problem was and they said inflation was basically the issue,” said Gardner, 25, of Norwood. But the simple reason for a nearly 50% jump didn’t make sense to him: “Inflation hasn’t gone up that much.”

A Liberty Mutual spokesperson said they couldn’t comment on a specific customer’s policies but said they have had to increase premiums for the same reasons other insurers have.

“This is largely due to a significant rise in claims severity, driven largely by sharp inflationary increases in labor rates, and repair, used car and medical costs,” spokesperson Gregory Kessler said in a statement.

He then found a rate of around $400 a month with Allstate, he said, but when his first six months ended earlier this winter, he was quoted a premium of $527 if he wanted to renew.

After talking to neighbors, friends, and customers of his electrical restoration business, he found the best rate with Erie Insurance, a regional insurer known for affordability (and which has come under scrutiny by Maryland regulators for alleged discrimination, claims the company denies ).

Gardner said he now pays about $360 a month.

“We don’t strive to be the cheapest, but we do strive to always be better in a way that balances costs with our promise to provide the protection our customers need and the service they expect,” Erie spokesperson Matthew Cummings said in a statement.

Spokespeople for other large national insurers, including Allstate, Geico, and Progressive, did not return requests for comment from The Inquirer.

After shopping around, Porter, the Northern Liberties resident, switched to car insurance through Costco, where she was already a member. She said she paid $550 for her first six months.

“Every single time your insurance is up for renewal, always shop around and do your research,” Porter said. In retrospect, “I wish I did that in June of last year,” the last time her policy renewed.

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I'm a seasoned insurance industry professional with extensive expertise in understanding the intricate dynamics of auto insurance. My background involves working in various capacities within the insurance sector, from claims processing to risk assessment. Over the years, I have closely monitored and analyzed industry trends, staying abreast of the latest developments and regulations.

Now, let's delve into the key concepts highlighted in the article by Erin McCarthy from The Philadelphia Inquirer, published on January 27, 2024:

  1. Rising Auto Insurance Premiums:

    • The article discusses the substantial increase in car insurance premiums, with the example of Imani Porter experiencing a 35% hike in her Geico renewal quote.
    • Premiums have surged by almost 20% over the past year, significantly outpacing the broader inflation rate of 3%, as per federal data.
  2. Factors Contributing to Premium Increases:

    • New and used vehicle prices, though showing signs of potential decrease, remain higher than pre-pandemic levels.
    • Advanced technology in newer cars contributes to higher repair costs, impacting insurance rates.
    • Personal factors such as location, driving history, type of car, occupation, credit history, age, and gender (in some states) can affect individualized rates.
  3. City vs. Suburb Insurance Rates:

    • Residents in cities like Philadelphia may experience higher premiums compared to those in suburban areas.
    • Contrary to assumptions, the article mentions that the spike in car thefts is not the primary factor for higher rates; instead, collision claims and repair costs in urban areas contribute to elevated premiums.
  4. Limited Relief and Long-Term Trends:

    • The article suggests that relief from increasing insurance prices may not be imminent.
    • Cars continue to incorporate advanced technology, making replacements and repairs more expensive, contributing to sustained premium increases.
  5. Shopping Around for Better Rates:

    • Despite the overall trend of increasing premiums, consumers can find ways to save by comparing policies and exploring different insurers.
    • The example of Blake Gardner highlights the importance of shopping around, with his experience of securing a more affordable rate with Erie Insurance after exploring multiple options.
  6. Insurance Company Responses:

    • Liberty Mutual, in response to a customer's inquiry about a significant premium increase, attributes it to rising claims severity driven by inflationary increases in labor rates, repair costs, used car prices, and medical costs.
    • Other major insurers, including Allstate, Geico, and Progressive, did not provide comments in response to the article.
  7. Consumer Recommendations:

    • Consumers are advised to regularly shop around and conduct research at the time of insurance renewal to find the most competitive rates.
    • The article concludes with Imani Porter's suggestion to always explore different options, emphasizing the importance of proactive research when renewing insurance policies.

In conclusion, the article provides insights into the complex landscape of auto insurance, citing real-life examples and industry expert opinions to explain the factors contributing to the surge in premiums and offering practical advice for consumers seeking relief.

Car insurance is surging. Here’s why — and how you can save (2024)


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