My car insurance just went up 32%. Did I have an accident or get a few tickets? Nope. Since 2020, car insurance rates in the U.S. have risen by a whopping 37%. The main reason? High-tech vehicles — aka anything remotely new — cost way more to repair. And you don’t need to have a high-tech car to feel the pinch. It’s hitting everyone.
Driving up costs
Our cars are packed with dozens of sensors and endless lines of computer code. Combine that with the rising cost of replacement parts and repairs, and voila, soaring auto insurance rates.
Look at these numbers from Bloomberg. They say that EVs are part of what’s driving costs. For a gas car, the average repair bill is around $4,437. The average for an electric vehicle is $6,618.
No wonder the average collision insurance claim jumped by 64% between 2018 and 2022. In 2023, auto insurance rates jumped another 20%, the biggest increase since 1976. Don’t even get me started on how much new and used cars cost right now.
Let’s look under the hood
In 2018, Toyota redesigned its uber-popular Camry. The number of parts in the front bumper alone increased from 18 to 43 — most are related to advanced driver-assist features.
The upgrades also mean a front-end collision repair is 43% more expensive. It’s not just driver-assist jacking up costs.
- Lots of new cars have LED headlights, which cost around five times more than halogen lights to replace.
- New cars contain more aluminum. Compared to steel, aluminum is lighter and provides better gas mileage and more protection in a crash — but harder and more expensive to fix.
- EVs take 20 days, on average, to repair. That’s 40% longer than traditional vehicles and $500 more expensive for labor.
Smart ways to save
I make it my business to find the best ways to save. Then, I pass them along to you. Let’s do this.
- Review your current plan and make adjustments to your coverage. Raising the deductible could result in a significant decrease in your premium. Keep in mind you’ll pay more out of pocket if you get into an accident.
- Ask for discounts. You might get one if your car has an anti-theft system installed, you’re a safe (accident-free) driver, or you’ve completed defensive driving courses. Talk to your agent.
- Consider switching to usage-based insurance. If you don’t drive that much or have a relatively short commute, you could pay much less than you would under a traditional plan.
- Bundle with other insurance plans from the same provider. Carrying home, auto, life and even pet insurance under one company means better rates.
The million-dollar question
“Should I install one of those trackers to get a discount?” You know, just toss it in your car to save. Yeah, it tracks everything. My podcast co-host Andrew made a good point: His phone is already tracking him anyway. Fair enough.
For me, the discount isn’t worth it. Review your plan, talk to your agent and see how much you’ll really save by letting them know everywhere you go — and every time you hit the gas or slam on the brakes.
🍝 Why does pasta always have to pay so much for car insurance? It can’t drive a car without making it al dente.