Car insurance prices soar even as inflation eases. Which states have the highest rates?

Medora Lee, USA TODAY

Updated Tue, Feb 20, 2024, 9:43 AM 4 min read

If you think your food bill is high then look at your car insurance.

Bankrate estimates the national average cost of full coverage car insurance in 2024 increased by 26% to $2,543, up $529 from a year earlier. That’s six times faster than overall inflation and more than any food item at the grocery store, including eggs, over the past three years, according to insurance comparison site Jerry.

And the rise isn't over, analysts say.

“There is likely further pain ahead,” Jerry said in a report.

Which states have the most expensive car insurance?

According to Bankrate, the states with the highest average annual premium are:

◾ Florida: $3,945

◾ New York: $3,840

◾ Louisiana: $3,618

The states where people are spending the largest percentage of their income on car insurance, or what Bankrate calls the “true cost,” are:

◾ Louisiana at 6.53%, up 1.76% from 2023

◾ Florida at 5.69%, up 0.79%

◾ Michigan at 5.01%, up 1.51%

Note: Louisiana and Florida tend to rank high because both experience frequent catastrophic claims from extreme weather, Bankrate said.

Allstate began selling direct auto insurance again on Feb. 7 in California after receiving approval in December for a rate hike, but rates are up to 30% higher, it said in an earnings conference call last week.

Allstate, along with other insurance companies, had halted new direct auto insurance sales due to increased costs in California, partly due to weather patterns.

"Our payments to help customers recover from accidents and disasters have increased significantly over the last few years and we need to adjust rates to reflect the cost of providing the protection our customers depend on," Allstate said in a statement.

What should I pay? Compare car insurance quotes in February 2024

What states are the least expensive for car insurance?

By average annual premium, Bankrate says:

◾ Vermont: $1,353

◾ Idaho: $1,421

◾ Maine: $1,507

By true cost:

◾ Massachusetts: 1.76%, down 0.26% from 2023

◾ Hawaii: 1.79%, down 0.22%

◾ Washington: 1.80%, down 1%

Why are car insurance rates so high?

Car insurance rates depend on your location, age, driving record, credit history and type of vehicle. Electric vehicles tend to be costlier to insure because of high sticker and repair costs).

Other factors that have nothing to do with you count too.

The “drastic increase” in car crash fatalities, vehicle parts and labor costs, and extreme weather claims over the past few years have contributed to rising rates, said Shannon Martin, analyst at financial products comparison site Bankrate.

Not only does extreme weather cause damage to vehicles, but it can also create hazardous driving conditions that result in more accidents.

Meanwhile, the fatality rate during the first half of 2023 was 1.24 per 100 million vehicle miles traveled, up 16% from the same 2019 period, according to the National Highway Traffic Safety Administration.

Thefts are also soaring, topping 1 million in 2022 for the first time since 2008, according to the National Insurance Crime Bureau.

"Increased crime rates are going to translate to (paying) a higher premium for your vehicle," David Glawe, NICB president and chief executive, warned last year.

Why will premiums keep rising?

Vehicles, parts and equipment prices have stabilized or dipped slightly, but they remain elevated.

“Every major car ownership expense except gas is dramatically more expensive than it was just three years ago, including used cars and trucks (+24%) and new cars (+19%),” Jerry wrote.

Maintenance and repair costs are also expected to continue climbing “driven by the growing use of advanced, pricier technology in vehicles and a shortage of qualified technicians to service and repair that technology,” Jerry said. “This is a long-term problem.”

Martin noted, too, that “climate scientists predict that extreme weather will get worse, not better.”

You'll need to save for insurance, too: You finally can afford the car. Now, what about insurance? Why that could be a problem.

What can I do to keep car insurance costs down?

◾ Shop around. “You’ll see more insurers competing for your business, which generally equals more choices and competitive pricing for customers,” said Josh Damico, Jerry's vice president of insurance operations.

◾ Consider unbundling. Usually, you can get better pricing by bundling home and auto with one insurer, but that’ll “likely be more challenging in 2024,” Damico said. “The odds of finding a better policy by separating your home and auto are likely to increase.”

◾ Telematics, or collection of your mileage and driving habits: “Driving data could become the single most important insurance pricing factor of 2024,” Damico said. “More insurers will use telematics programs to attract drivers with an opt-in discount and qualify for additional discounts at renewal.”

Medora Lee is a money, markets and personal finance reporter at USA TODAY. You can reach her at mjlee@usatoday.com and subscribe to our free Daily Money newsletter for personal finance tips and business news every Monday through Friday morning.

This article originally appeared on USA TODAY: As car insurance cost climbs, a look at the state-by-state price

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