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Cost of car insurance: Why has car insurance gone up so much in Georgia?

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Published  August 23, 2024 9:42pm EDT
Georgia
FOX 5 Atlanta

Rising cost of car insurance

FOX LOCAL Host Ariyl Onstott and Atlanta insurance broker John D'Angelo explore why car insurance costs are on the rise.

In Brief

  • Premium Hikes: Many drivers report car insurance increases of 10% to 30% without any changes to their coverage.

  • National Spike: U.S. full coverage auto insurance rose 26% from 2023 to 2024, with Georgia slightly above average.

  • Key Drivers: Higher repair costs, more claims, inflation, and natural disasters are behind the rate hikes.

  • State Differences: Missouri saw the biggest increase (44%), while Louisiana has the highest average rates. Only Wyoming saw a slight decrease.

  • Action Steps: Drivers can file complaints with state insurance departments, CFPB, BBB, or contact elected officials.

ATLANTA - Has your car insurance cost increased recently? If so, you are not alone—and it’s probably not your fault.

We recently asked our Facebook followers if they had noticed a rise in their car insurance premiums, and nearly 2,000 people responded with a resounding "yes." For the vast majority of these individuals, nothing had changed—they hadn’t bought a new car, been in an accident, received a traffic ticket, added anyone to their policy, or moved. Yet, FOX 5 viewers reported that their rates had increased by 10% to 30%, and in some cases, even more.

With so many people experiencing these unexpected hikes, we decided to take a closer look at what’s happening with car insurance and see if we could uncover some answers. 

READ ALL THE STORIES

How much has car insurance gone up recently?

According to a recent report from Bankrate, average nationwide premiums for full coverage auto insurance hit $2,543 per year or $212 per month in 2024, which is a 26% increase from 2023. Drivers with minimum coverage pay an average of $740 a year or $62 a month. 

The average cost of full coverage insurance for a driver in Georgia is $2,610, which is only slightly above the nationwide average. The average cost of full coverage insurance for a resident of Atlanta is $2,859.

Between 2017 and 2021, the national average expenditure for car insurance only increased by 5.27%.

The state of Missouri saw a massive 44% increase, the biggest increase in any state. Louisiana ($3,618 or 6.53% of their income) has the highest true cost average rate followed by Florida ($3,945/5.69%); Michigan ($3,356/5.01%); Nevada ($3,549/4.91%); and New York ($3,840/4.83%).

The true cost of insurance is cheapest in Massachusetts ($1,655/1.76%) followed by Hawaii ($1,654/1.79%), Washington ($1,643/1.80%); New Hampshire ($1,636/1,82%) and Vermont ($1,353/1.83%). 

Note: To determine the true cost, Bankrate's insurance editorial team analyzed the total percentage of household income spent on car insurance. 

There was only one state where the cost actually decreased – Wyoming. However, it only dropped by $1. Washington, North Carolina, Minnesota and Ohio also have not been hit by big increases. 

For metro areas, the cost of car insurance is highest in Detroit, Philadelphia, St. Louis, Orlando and New York.  Residents in Seattle, Boston and Washington D.C. are paying the least amount in a major metro area. The smallest increases for metro areas were seen in Los Angeles, Portland, Seattle, Minneapolis and Charlotte. 

What's behind the increased cost in car insurance

According to experts, car insurance rates have also increased significantly in recent years because of the following:

Rising Repair Costs: The cost of repairing modern vehicles has increased due to more advanced technology, expensive parts and labor costs. So, although these things often help prevent very costly crashes and collisions, they also cost a lot to get fixed.

2017:

Average Cost for Minor Car Repair: Approximately $200 to $400.

This could include basic repairs like fixing a brake pad, replacing a battery, or minor engine tune-ups.

2024:

Average Cost for Minor Car Repair: Approximately $300 to $600.

Note: The numbers above will change depending on the type of car and where you live. These are nationwide averages. 

Increased Claims Frequency: More accidents, likely due to increased driving and distracted driving, have led to more insurance claims. There was also a drastic uptick in how many people were involved in crashes/collisions after the COVID-19 pandemic. Additionally, people are more likely to file claims and seek compensation for even minor things like a scratched bumper or small dent than they did prior to 2020. 

In 2023, the U.S. saw approximately 5.5 million auto insurance claims, with collision claims being the most frequent, occurring at a rate of about 4.2 per 100 insured vehicles. The severity of these claims increased notably due to rising repair costs and vehicle complexities. Comprehensive claims, which cover non-collision-related incidents like theft and natural disasters, were also common, with a frequency of 3.15 claims per 100 insured vehicles, and saw a rise in severity due to extreme weather events.

Bodily injury claims, though less frequent at 0.78 per 100 insured vehicles, were the most costly for insurers, driven by rising medical expenses and more severe accidents. Property damage claims were somewhat more frequent, at 2.28 per 100 vehicles, with costs continuing to rise due to expensive vehicle parts and labor. Total loss claims, where vehicles are deemed beyond repair, also became more prevalent, particularly in severe collisions, reflecting the growing cost and complexity of modern vehicle repairs.

Inflation: Overall economic inflation has driven up the cost of services, including vehicle repairs and medical expenses. 

According to the latest reports, inflation has been showing signs of easing in many parts of the world, including the United States. While inflation is down from its peak, prices for many goods and services remain elevated compared to pre-pandemic levels. The rate of price increases has slowed, but prices themselves are still high. That is not expected to change in the near future, according to financial analysts.

Natural Disasters: More frequent and severe weather events have led to higher claims, particularly in areas prone to natural disasters.

Other things that impact car insurance rates include underwriting and loss adjustment/expense; types of coverage purchased and relative amounts of coverage purchased; increases in population density and disposable income of residents; rising crime rates and automobile theft; change in driving habits; tougher state laws; and more. 

Is there anyone drivers can complain to?

Drivers who are concerned about the rising cost of car insurance can file complaints or express their concerns to several organizations and authorities:

State Insurance Department: In Georgia, you can contact the Georgia Office of Insurance and Safety Fire Commissioner. This office regulates insurance companies operating in the state and can investigate complaints related to unfair rate increases or other insurance practices. Drivers can file a complaint online or contact them directly.

Consumer Financial Protection Bureau (CFPB): Although the CFPB primarily handles issues related to financial products, they also take complaints related to insurance. Filing a complaint with the CFPB can help bring attention to widespread issues.

Better Business Bureau (BBB): The BBB tracks complaints against businesses, including insurance companies. While they don't regulate insurance rates, filing a complaint can help drivers resolve disputes and alert other consumers to potential issues.

National Association of Insurance Commissioners (NAIC): The NAIC is an organization that helps regulate the insurance industry across states. They provide resources and can direct drivers to the state’s insurance department.

Elected Officials: Contacting state legislators or congressional representatives can also be an effective way to voice concerns about rising insurance costs. They can advocate for changes in legislation or increased oversight of the insurance industry.

Sources

Thanks to John Emil D'Angelo, owner of InsurancePM.com for sharing his expertise.