• The prices of new and used cars have fallen, but the cost of car insurance has skyrocketed.
  • The increase is attributed to various factors, including complicated repairs, expensive components and supply chain issues.
  • According to one study, the average cost of comprehensive insurance has increased by 24% in the past year.

If your insurance premiums have increased, you’re not alone, as the U.S. Bureau of Labor Statistics announced that the Consumer Price Index rose 0.4% last month. Motorists were hit particularly hard, as petrol and vehicle insurance indices rose.

It wasn’t all bad news, however, as “used car and truck, recreational vehicle and new vehicle indices were among those that declined during the month.” Additionally, the new vehicle index fell a tenth of a percent on an unadjusted 12-month basis, while the index for used cars and trucks fell by 2.2%.

More: Used car prices fall 13.8%, but still above pre-pandemic levels

That’s great news, but virtually everyone faces higher insurance costs. The agency noted: “The auto insurance index rose 2.6 percent in March after rising 0.9 percent in February.”

That doesn’t sound like much, but insurance premiums have skyrocketed since 2022. In particular, car insurance costs rose 22.2% last year, one of the largest increases in nearly five decades.

Car insurance prices are rising by more than 20%, affecting the majority of drivers
Car insurance index

Reuters reports that the increases are due to a variety of factors, including “rising costs associated with repairing increasingly complex vehicles and more storm damage as a result of climate change.” In addition, accidents are increasingly causing cars to be totaled and problems have arisen in the supply chain. The latter, coupled with a shortage of mechanics, means insurance companies are paying more to place customers in rental cars when their vehicle needs repairs.

Citing Insurify, the publication said the average cost of comprehensive insurance has increased 24% in the last year and is now over $182 per month. Millions are also paying more as a survey found 63% of drivers will get a rate increase in 2023.

That’s a significant jump, and many new car owners have experienced sticker shock when purchasing insurance. Therefore, it is always good to shop around and keep your options open.