More inflationary woes: In one year, car insurance rates surge 26%

(The Center Square) – Car insurance rates surged 26% nationwide in the past year and are expected to remain elevated until 2025.

That’s according to the “True Cost of Auto Insurance” report from Bankrate, an independent comparison service company.

The report used the most recent median income data from the U.S. Census Bureau to calculate 2024 percentage of income spent on auto insurance. Previously, it used average income data. Bankrate switched to using median income data in 2024 because it said it was more representative “of what people earn in a given geographic area.”

Bankrate’s insurance editorial team also analyzed the average total percentage of household income spent on car insurance to determine the its true cost and assigned a true cost ranking to each state and 25 metro areas in the country. The higher the ranking, the higher the true cost of car insurance, it notes.

The average annual premium cost for full coverage car insurance in 2024 nationwide is $2,543, the report found, up from $2,014 in 2023 and $1,771 in 2022. For an individual with a median household income of $74,580, car insurance accounts for 3.41% of the individual’s income.

The state with the greatest percentage increase in the average annual cost of full coverage car insurance is Missouri, with a 44% spike. Rates went from $1,943 in 2023 to $2,801 in 2024, the largest increase of all 50 states.

Floridians pay the highest average rate of full coverage car insurance at $3,945 per year, an increase of $762 from the previous year.

Louisiana drivers pay the greatest average percentage of their income on car insurance, at 6.53%, the report found. Florida ranked second highest at 5.69%. Arkansas ranked third at 3.95%.

By comparison, Massachusetts drivers pay the least percentage of their income on car insurance – 1.76%.

When evaluating car insurance rates in 25 major metro areas, the report found that “drivers in Detroit pay the highest net average cost of car insurance and highest true cost of car insurance, with a staggering 7.98 percent of income spent on auto coverage.”

The average annual premium true cost for Detroit drivers is $5,687 in 2024.

Three Florida cities ranked behind Detroit in the top five: Miami ranked second highest ($4,213), Tampa ranked third highest ($4,078), and Orlando ranked fifth highest ($3,631).

St. Louis ranked fourth-worst ($3,352), rounding out the top five most expensive metro areas.

In the two most populous states, in the 25 metros analyzed, Californians living in Los Angeles, Riverside-San Bernardino, San Diego and San Francisco pay the highest average annual premiums. Texans living in Houston, San Antonio and Dallas pay the most.

“Auto insurance rates have been rising at a breakneck pace,” Greg McBride, chief financial analyst for Bankrate, said. “And though the pace of increases will eventually slow, that doesn’t mean premiums are coming down. The insurance market is very competitive – lots of commercials – so shop around and compare coverage to see if you can get a better deal elsewhere. If you have a healthy savings cushion, see if increasing your deductible can reduce your premiums.”

The report notes that multiple factors influence a rate beyond a policy holder’s control, including increased car accidents and driving habits overall in their zip code, medical bills related to car accidents, increased costs for parts and labor, state-mandated car insurance requirements, population density, among other factors.

“Inflation and extreme weather, which are both significant influencers for rates in 2024, are also beyond your control,” the report notes.

Driving history, vehicle type, and credit history are all variables drivers can use to help positively influence their premium, the report notes.