As of 2023, car insurance rates are unstoppable. Between 2013 and 2022, the cost of auto insurance grew by 45.4% based on the latest Forbes report. If you're wondering why, inflation, supply chain issues, and costly car accidents are all contributing to greater car insurance premiums in 2023.
Accidents and claims were lower during the peak of the pandemic because driving was considerably curtailed. However, now that drivers are back on the road, accidents are costing far more in auto insurance claims due to higher-priced parts, labour, and medical bills. Based on our findings, an average American pays $1,771 a year or about $148 a month on auto insurance.
Meanwhile, Canadian drivers pay an average of $1,300 to $1,800 in vehicle insurance premiums per year. However, depending on factors, the amount you pay can be much greater or cheaper. For example, car insurance rates are higher for teenages, and they begin to decrease as you become older, as you are no longer a novice driver.
Except for California, Hawaii, Massachusetts, Michigan, North Carolina, and Pennsylvania, gender can also be used as a consideration in vehicle insurance prices. Car insurance firms believe that teenage males are more prone to participate in risky driving behaviour, so they initially charge more than females. Males' rates tend to fall beyond the age of 25, and they eventually catch up to their female counterparts.
Beyond age and gender, another factor is speeding tickets! According to a Forbes Advisor analysis, the national average rise in vehicle insurance rates for drivers who receive a speeding ticket is now up to 24%, or approximately $380 more per year.
Nearly 215 million drivers carry car insurance in the U.S, and the industry as a whole is worth about $316 billion as of 2022, according to IBISWorld. And that’s just insurance cost, to say nothing of maintenance and the increasing cost of gas.
Speaking of gas, an increasing number of drivers are also switching to electric and hybrid vehicles – which also make vehicle insurance more expensive. Apparently, repairing and replacing electric equipment and batteries in EVs is frequently more expensive than in non-electric vehicles. Even repair shops charge more because of the specialized training required to fix EVs. When insurance companies in North America calculate their rates, they look at claims paid for identical cars, among other factors, and set their prices accordingly. For example, if your electric car model has a history of expensive and/or frequent claims, insurance rates will be higher for all owners of the model.
Year over year, the cost of insurance fluctuates a great deal, closely tied to Economics, repair costs, climate change, Inflation, and plenty of other factors. For example, in the US insurance prices were up about 15% in March compared to last year, according to the US Bureau of Labor Statistics.
But, in 2023, when vehicles are becoming smarter, more connected, and capable of self-operation, the landscape of vehicle insurance in North America is also experiencing a paradigm shift. The conventional one-size-fits-all approach to insurance has evolved into a dynamic system, such as technology and changing driving behaviors.
So, with all this doom and gloom, how can we change the future of car insurance for the better?