Car Insurance Rate Increases Offset the Gradual Price Drops

Chris Teague
by Chris Teague

New car prices are slowly returning to reality, but the universe isn’t done torturing buyers. A new report from Reuters found that insurance rates are climbing just as the financial pain of buying a new car is easing.

Last year, auto insurance premiums jumped by the largest margin since the 1970s, while new car prices showed a decent decline during the same period. But, while expensive technology, high-priced repairs, and limited parts availability play a role, our driving habits have had an outsized impact on insurance rates.

Distracted driving, speeding, and other behaviors have contributed to more crashes – many fatal – since the pandemic kicked off. Some areas have it worse than others, of course, but COVID-19 brought a level of brazenness behind the wheel not seen before. There’s also the problem of climate change, and the more intense weather that comes along with it, making it riskier to insure cars in some parts of the country. It just so happens that many of those places are highly populated, driving up the averages for everyone.

Higher insurance rates hurt car owners, but they also hurt dealers and automakers, though it’s hard to crank out a tear for million-dollar businesses. The cost to cover a new car has grown so much that buyers are rethinking their purchases, which could slow sales, especially on higher-margin, more expensive models.

[Image: Photo Spirit via Shutterstock]

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Chris Teague
Chris Teague

Chris grew up in, under, and around cars, but took the long way around to becoming an automotive writer. After a career in technology consulting and a trip through business school, Chris began writing about the automotive industry as a way to reconnect with his passion and get behind the wheel of a new car every week. He focuses on taking complex industry stories and making them digestible by any reader. Just don’t expect him to stay away from high-mileage Porsches.

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10 of 106 comments
  • Dartdude Dartdude on Apr 13, 2024

    The costs of repairing expensive vehicles should be reflected in the owners policy. No repair parts or expensive parts for your Tesla should factored in insurance. Insurance companies are totalling vehicles out, instead repairing them is driving up costs. You wreck a $75,000 vehicle you should have to pay a premium to cover at 50% of the costs if it's your fault.

    • Lorenzo Lorenzo on Apr 14, 2024

      Totaling Teslas, and other EVs, is cheaper than repairing them, due to even a fender-bender damaging the battery beyond repair, with horrendous replacement costs. Wait until insurance companies start factoring in the danger of fires that cannot be extinguished!

  • Mike Bradley Mike Bradley on Apr 13, 2024

    Advertising, movies and TV, manufacturing, and car culture have all made speeding and crashing the ultimate tests of manhood. Throw in the political craziness and you've got a perfect soup of destruction and costs.

  • ToolGuy ToolGuy on Apr 13, 2024

    Not sure if I've ever said this, or if you were listening:

    Learn to drive, people.

    Also, learn which vehicles to take home with you and which ones to walk away from. You are an adult now, think for yourself. (Those ads are lying to you. Your friendly neighborhood automotive dealer, also lying to you. Politicians? Lying to you. Oh yeah, learn how to vote lol.)

    Addendum for the weak-minded who think I am advocating some 'driver training' program: Learning is not something you do in school once for all time. Learning how to drive is not something that someone does for you. It is a continuous process driven by YOU. Learn how to learn how to drive, and learn to drive. Keep on learning how to drive. (You -- over there -- especially you, you kind of suck at driving. LOL.)

    Example: Do you know where your tires are? When you are 4 hours into a 6 hour interstate journey and change lanes, do you run over the raised center line retroreflective bumpers, or do you steer between them?

    • Bkojote Bkojote on Apr 14, 2024

      Echoing this. Learn to effing drive. Put the phone away, Tanya.

  • Bkojote Bkojote on Apr 14, 2024

    Remember a month a go when Cleveland wanted to create a more walkable Cleveland and TTAC's 'BIG GOVERNMENT IS THE PROBLEM' dumbest and dullest all collectively crapped their diapers?

    Here's the thing- look on any American highway and it's littered with people who don't /want/ to be driving or shouldn't be. Look at every Becky on her phone during the morning commute in her Tucson, look at every Brad aggro driving his 84 month loan GMC. Hell look how many drivers nowadays can't even operate a headlight switch. You expect these people to understand a stoplight? In my neighborhood alone 4 people have been rear ended at lights from someone on their phone.

    Distracted driving over the past 10 years has spiked, and it's only going to get worse unless Becky has an alternative, because no judge is going to pull her license when 'she needs it to get to work!' but heaven forbid she not check fb/tiktok for 40 minutes a day.

    • See 3 previous
    • MaintenanceCosts MaintenanceCosts on Apr 15, 2024

      Growth is going to go somewhere. Should it go into the city, keeping commuter car traffic relatively flat, or should it go into ever-metastasizing sprawl, constantly growing that traffic?