A new report from Insurify states that in the first half of this year, full-coverage annual insurance premiums were hiked another 15% to $2,329 on top of post-COVID increases over the past couple of years.

Insurify’s data science team projects a total 22% increase by the end of the year.

“Rate increases in 2024 are largely a continuation of hikes in 2023, a year that saw full-coverage premiums rise by 24% in response to insurers’ record underwriting losses ($33.1 billion) in the year prior,” the report states. “Underwriting losses decreased to $17 billion in 2023 — a financial hit that was still substantial enough to drive significant rate hikes in the first half of 2024.

“Insurer losses result from a combination of inflationary pressures — like the rising cost of vehicle repairs and the skyrocketing price of new cars — and unprecedented climate catastrophes that drive weather-related claims in states that haven’t historically seen as much of this type of damage. These costs strain insurers’ budgets as they pay out more than they earn in profit.”

The researchers also said legislative changes, for example in South Carolina and Maryland, have increased insurers’ financial responsibility with mandated higher coverage expectations, which could lead them to charge higher premiums. They noted that in California, insurance rates were frozen during the pandemic so “some insurers are requesting double-digit hikes as they struggle to return to profitability while others are exiting the state entirely.”

Many insurance companies have also laid off thousands of workers or dropped thousands of policies.

Insurify predicts California, Missouri, and Minnesota could see car insurance costs increase by more than 50% this year with damage from severe storms and wildfires contributing to rising rates in those states.

Maryland has the highest car insurance costs in the U.S., with an average full-coverage rate of $3,400 annually, according to Insurify. New Hampshire drivers pay the least, at an average of $1,000 annually.

Insurify determined the highest costs for car insurance are in Maryland, South Carolina, New York, Nevada, Florida, Louisiana, Delaware, Washington D.C., Michigan, and Georgia.

Insurify noted that, according to the Bureau of Labor Statistics Consumer Price Index, vehicle maintenance and repair costs have increased by nearly 38% over the past five years leading to insurers paying more on claims and putting higher premium hikes on policyholders.

There were significant increases in repair times and costs due to storm-related damages in 2023 and CCC Intelligent Solutions said in its recent Crash Course Q2 report that it’s bound to get worse this year.

Hail-related auto claims rose to 11.8% of all comprehensive claims last year, up from 9% in 2020, with average repair costs for vehicles increasing by 15% over the past three years, according to the report. Hail claims are, on average, 21.7% more costly to repair than the average comprehensive claim and 25.6% more expensive than the average repairable claim.

In 2023, 19.4% of comprehensive claims included paintless dent repair, and 80% of claims identified as “hail” included PDR.

Comprehensive claims that include paintless dent repair have an average total cost of repair (TCOR) 28% higher than non-PDR claims, an average of $1,282 dollars in the 12 months ending in March 2024. Labor costs for PDR are also, on average, 159% higher.

Vehicle age also impacts insurance rates, according to Insurify’s data.

Bankrate found in its new “Hidden Cost of Car Ownership Study” that Americans are also struggling to pay the hidden costs of vehicle ownership, which are, on average, $6,684 annually.

“Years of unpredictable inflation and volatile auto insurance rates have transformed car ownership, one of America’s most foundational elements of financial independence, into a budgetary burden for many drivers,” the study states.

Bankrate evaluated four metrics for gas-powered automobile ownership: car insurance, gas, maintenance and repairs, and vehicle taxes.

The results of the study concluded that insurance is the most expensive hidden cost with a national average of $2,329 annually, or $194 per month, as of August for full coverage.

“Car insurance premiums vary between states due to different state regulations regarding coverage types and tort, traffic density, climate, and several other factors,” Bankrate wrote. “While not all aspects of risk are weighted the same in each state or by each insurance company, there are some notable similarities among the most and least expensive rates for full coverage car insurance.”

New York, Louisiana, Florida, Colorado, and Nevada are the states with the highest average cost of full coverage car insurance as of August 2024.

Colorado, Nevada, New York, and Florida have some of the highest rates of vehicle thefts in the country, and New York, Louisiana and Florida have high claim rates associated with extreme weather, according to the study.

Idaho, Vermont, Ohio, Maine, and Hawaii have the lowest average rates for full coverage car insurance as of August 2024.

Bankrate noted that between June 2022 and June 2024, average full-coverage car insurance rates increased by 20% with inflation as the “significant driver” of the increases. Their research found other factors impacted rates as well including:

• • A 10% increase in car crash fatalities in 2021 is only recently beginning to decline;
  • As of June, vehicle repair and maintenance was 34% higher than pre-pandemic prices;
  • Shortages and supply chain disruptions in the auto mechanic and medical fields have increased the cost of physical damage loss and medical payments related to auto insurance claims; and
  • Nationwide loss increases due to extreme weather, vehicle thefts, and insurance fraud.

Average annual maintenance and repair costs are $1,336, according to Bankrate.

Wyoming, Indiana, and Mississippi average $1,950, $1,855, and $1,675, respectively. Drivers in the District of Columbia spend an average of $742 per year on vehicle maintenance and repairs. New York and Rhode Island also have the lowest average maintenance and repair costs at $1,010 and $1,019, respectively.

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Featured image credit: fatido/iStock

Charts provided by Insurify and Bankrate