SAN DIEGO — Car insurance rates have surged significantly, reflecting broader economic trends. According to the United States Department of Labor, these rates have increased by 20.6% over the past year, and more than 50% since 2021.
In California, the financial impact is particularly pronounced. A Forbes Advisor analysis found that drivers in the state pay an average of $2,061 annually for full coverage, significantly higher than the national average.
“Californians pay about 20.7% more than the national average,” noted David Straughan, senior automotive journalist for Market Watch Guides. Straughan attributed the rising rates to several factors, including the increased cost of vehicles and the complexity of modern automotive technology.
“Repairing cars today, especially those with advanced technology and intricate parts, is much more expensive. A simple dent might require extensive repairs that were not necessary 20 years ago,” explained Straughan.
Another contributing factor to higher insurance premiums is the tracking of driving habits via internet-connected vehicles. These habits are monitored and sold to insurance companies, affecting individual rates.
“You might not even realize it, but your driving behavior could be tracked. Good driving can lower your rates, but erratic driving or driving late at night can increase them,” said Kimberly Palmer, a personal finance expert with NerdWallet.
Tips for Drivers
Check for Tracking Capabilities: Palmer advises drivers to verify whether their vehicle has tracking capabilities by contacting the manufacturer. If tracking is enabled and you prefer not to be monitored, ensure you opt out.
Understand Vehicle Data Collection: To see what data your vehicle collects, submit the Vehicle Identification Number (VIN) at Vehicle Privacy Report. For detailed consumer reports, request your LexisNexis disclosure at the same site, and Verisk reports at Verisk.
Explore Ways to Save: To reduce insurance costs, consider increasing your deductible, bundling policies, and regularly comparing insurance providers. “Many people let their car insurance auto-renew without comparing prices. Take the time to shop around, as switching providers can often lead to better rates,” Palmer advised.
By staying informed and proactive, drivers can navigate the complexities of rising car insurance rates and potentially mitigate their financial impact.