Car Insurance Rates Are Rising Fastest In These 5 States, Per New Report

As if car ownership in the United States wasn't expensive enough already (thank you, interest rates and rising car prices), car insurance premiums are on the rise. According to Insurify, full-coverage premiums rose by 24% in 2023, with 2024 on track for even more expensive coverage. In fact, when looking at data from the first half of the year, full-coverage premiums have already increased 15%, with rates estimated to rise by as much as 22% by the end of the year. These numbers leave many already cash-strapped Americans dealing with yet another price increase on yet another necessary consumer product.

While the average cost of full-coverage car insurance in the U.S. increased by 28% between June 2023 and June 2024, it's important to realize that rate hikes can be even worse in certain states. In fact, some drivers are experiencing rate increases of more than 50% year-over-year. This is pushing more and more consumers to either lower their coverage in an effort to save money or even shop around for different carriers.

Doug Heller, director of insurance for the Consumer Federation of America, told NPR, "We often, I think, are suckered into the belief that if we change insurance, we might lose our so-called 'loyalty discount.' Or we've bought this insurance but we've never had a claim, so we feel like the insurance company wins if we don't stick with them." With that in mind, while it's obviously important to shop around when looking for coverage, drivers in some states might have far fewer affordable options than they'd like.

According to Insurify's report, five states have the fastest-increasing car insurance rates: Minnesota, Missouri, North Carolina, Illinois, and California. Drivers in Minnesota and Missouri have seen their auto insurance rates increase by over 50% in the 12 months between June 2023 and June 2024. The other three states, meanwhile, have experienced 45%-46% rate increases in the same time frame. It's worth mentioning that many of these states have experienced an increase in extreme weather events, which can wreak havoc on insurance prices (especially with homeowners insurance rates) due to the uptick of claims that generally happen as a result.

However, even though auto insurance rates in these states are increasing the quickest, that doesn't necessarily mean these are the states with the most expensive car insurance premiums or even the states with the largest projected increase in rates in 2024. In fact, none of the previously mentioned states are even included in the five top U.S. states with the most expensive premiums; that would be Maryland (with an annual full-coverage car insurance rate of $3,748 for the year), South Carolina, Georgia, Louisiana, and Nevada.

When looking at the total projected increase in rates for 2024, Minnesota, Missouri, California, Maryland, and Massachusetts top the list. Minnesota, in particular, is projected to experience a 61% rate increase in 2024 while Missouri is expected to see a 55% increase. California and Maryland, which are already among the most expensive states for car insurance, are expected to experience increases of 54% and 41%, respectively.

Insurance companies are primarily pointing the finger at the higher value of cars, and their more advanced technology and physical parts, as the primary reason for their rate increases. According to the Bureau of Labor Statistics, overall vehicle maintenance and repair costs increased by as much as 14.2% in early 2023, since cooling slightly to an increase of just 4.6% from July 2023 to the same time in 2024. Greg Smolan, vice president of insurance operations at AAA Northeast, explained to The Associated Press, "The severity is really the thing that has influenced rates more over the last two years than anything. A fender bender in the past didn't have all the sensors and cameras."

Yet, while repair costs might be higher, and these costs might even serve as a convenient excuse for rate hikes, it's important to realize that most insurance companies are making considerable profits off of their rate increases. For example, Progressive's profits jumped a whopping 50% in 2023 while its revenue increased by almost 18% (for a total of $62.1 billion for the year). Even worse, as insurance companies' shares and profits hit record highs, Wall Street anticipates an 80% increase in profits in 2024 and a 14% increase in revenue.

In addition, U.S. consumers could also face increasing difficulty with other insurance products, as insurance companies increasingly don't want to offer certain coverages. This shift could leave many Americans struggling with not just increased car premiums but also homeowners and even health premiums.