This is why your car insurance is going to be more expensive

Auto insurance rates could skyrocket 22 percent by the end of the year, according to a new mid-year report from Insurify.

Car insurance prices have already skyrocketed by 15 percent in the first half of 2024, but that doesn’t look like the end of the headaches that await drivers.

The prediction means the average car insurance rate would be around $2,469 and states that experiencing severe weather could trigger a 61 percent spike in car insurance rates.

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Currently, the average annual cost for full coverage is $2,329, up 15 percent from $2,018 at the end of 2023.

States that will see some of the most intense rate changes are Minnesota, California and Missouri, which will see increases of more than 50 percent by the end of 2024.

Maryland was the most expensive state for car insurance. With rates up 41 percent, Insurify predicted the state average would rise to $3,400.

Several auto insurance industry experts have predicted lower rate increases in 2024, but Insurify found that the data so far is not consistent with these estimates.

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Instead, skyrocketing auto repair costs and new-car prices, coupled with a surge in weather-related claims, are causing insurers to continue raising rates.

Repair and maintenance costs have risen 38 percent over the past five years, according to the Bureau of Labor Statistics’ Consumer Price Index, and hail-related auto claims accounted for 11.8 percent of all claims in 2023, up from 9 percent in 2020.

Kevin Thompson, a financial expert and founder and CEO of 9i Capital Group, said the increasing amount of technology in vehicles is a key driver of perpetual price increases.

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“Especially for foreign cars, I recently discovered that replacing a side view mirror on a BMW X3 cost over a thousand dollars,” Thompson said. Newsweek Magazine“The replacement cost of inputs in these vehicles continues to rise as more chips and technology are placed inside vehicles.”

Recent data from the National Highway Traffic Safety Administration found that traffic fatalities rose by 7,000 in 2022, which also saw the number of claims and eventual insurance rates rise.

“It’s the perfect storm of elements for insurance companies to say, ‘We need to raise prices to compensate for all these new potential risks,'” said Alex Beene, a financial literacy instructor at the University of Tennessee at Martin. Newsweek Magazine.

Driving without car insurance, despite the initial cost savings, can create many financial hurdles down the road if you end up in an accident and also potentially expose you to a lawsuit.

“At the same time, despite higher prices, car insurance is not something drivers want to do without,” Beene said. “While it may not be fun to pay that insurance bill, the reality is that the cost of an accident and subsequent repairs are much higher.”