Thefts, false insurance claims and inflation all lead to higher car insurance rates.
Auto insurance premiums continue their climb upward, and the rise in auto thefts isn’t helping matters. The National Insurance Crime Bureau (NICB) reports that thefts rose in 2023 by 2% compared to the first half of 2022.
Over one million vehicles were stolen in 2022, which is the most since 2008. This was up 7% from the year before, the NICB report states. Catalytic converters are one of the more frequent thefts that don’t involve the entire vehicle. The NICB found that, in 2022, 64,701 catalytic converter thefts occurred, nearly four times more than in 2020.
Entire vehicle thefts happen across the board, but domestic pickup trucks are the most commonly stolen and result in a complete loss for the insurance company and the driver, according to CCC data.
“Increased crime rates are going to translate to [paying] a higher premium for your vehicle,” NICB President and CEO David Glawe said.
Since this rise in thefts has pushed up claims, auto insurance companies have no choice but to raise premiums to keep pace with growing costs.
To keep your premiums as low as possible, shop around frequently to make sure you’re getting the best rate. Visit Credible to compare rates from multiple companies at once.
AUTO INSURANCE PREMIUMS AND CLAIMS STILL ON THE RISE: STUDY
False claims are also responsible for a rise in premiums
Theft isn’t the only reason car insurance premiums are up. Certain states are facing high rate hikes due to continued fraudulent claims. Florida and South Carolina are two states facing the biggest issues and some of the highest premiums.
Floridians pay an extra $115 per year due to falsely filed personal injury protection claims, helped along by the state’s no-fault insurance policy. This policy means car accident victims get compensated by their personal insurance companies regardless of who’s at fault. These policies, while intended to make the insurance filing process faster, often result in faked accidents that lead to high payouts.
South Carolina faces a similar fate to Florida, with insurance fraud rising each year. A local news station reported that this fraud costs South Carolinians to pay more than $1,000 annually for their auto insurance.
Currently, South Carolina doesn’t have the systems in place to tackle this rampant fraud and prevent it from causing further premium increases.
“I think that we’re doing the best job that we can with the resources we have, but…I think more resources are eventually going to be needed to be put in place at various agencies to attack that problem,” explained the director of the state’s Insurance Fraud Division, Joshua Underwood.
Comparing multiple insurance quotes can potentially save you hundreds of dollars per year. Visit Credible now to compare quotes free of charge without affecting your credit score.
SPENDING ON AUTO INSURANCE IS UP: HERE’S HOW DRIVERS ARE SAVING MONEY
Premium drops aren’t likely in 2024
There isn’t much sign of premiums dropping in 2024, unfortunately. Insurance premiums have been steadily rising for years, according to a Jerry study.
In October 2023, auto insurance rose by 19.2%, the study cites. That’s the fastest increase since the first year they have data for, back in 1985. In the past three years, insurance rose by 43%, which is more than any other car-based expense Jerry’s study looked at.
Inflation, and its continued squeeze on the economy, is another major factor leading to this increase in insurance premiums. As the cost to make cars, ship them and maintain them rises, insurance agency’s costs also rise. They pass these rising costs onto consumers in the form of higher premiums.
Car insurance rates vary based on several factors, including your credit, driving habits and the insurance company. Use a tool like Credible to shop around and lower your car insurance premium today.
Have a finance-related question, but don’t know who to ask? Email The Credible Money Expert at moneyexpert@credible.com and your question might be answered by Credible in our Money Expert column.
