Car insurance rates are higher than ever, up 11 percent over past five years; A new national study by The Zebra uncovers how technology, driving behaviors, and major rating factors are impacting the current state of auto insurance and what consumers can do to save on premiums
AUSTIN, Texas — August 2, 2016 — The Zebra, the nation’s most comprehensive car insurance comparison marketplace, today distributed the findings of its first annual State of Auto Insurance Study, which provides an unbiased look at the key rating factors and drivers of change throughout the auto insurance industry, notably the who, what, where and how of driving.
The 2016 State of Auto Insurance: Rates at All-Time High
Using pricing data from the past five years, The Zebra explored millions of car insurance premiums as impacted by common variables such as state, age, gender, financial behaviors, and the vehicles themselves. Car insurance premiums are up nearly 11 percent over five years ago, and up 3.3 percent over 2015, though with volatility nationwide. From 2011 to 2016, for example, Massachusetts saw a 20 percent rate drop, though rates spiked and plummeted throughout the period, and Colorado premiums are 48 percent higher in 2016 than they were five years ago.
“For many of the 250 million American drivers, car insurance rates are going up, and unsurprisingly, people want to know why,” said Joshua Dziabiak, COO, The Zebra. "The modern car is loaded with new technology, from 360-degree cameras to self-driving safety features. Many people might assume that these innovations should be improving safety and therefore decreasing the cost of insurance. However, there are thousands of complex rating factors, personal attributes, and driver behaviors used to determine the price that you pay for insurance. Our research seeks to break down all those factors, clear up assumptions, and help educate consumers so they can make informed decisions regarding both their driving behaviors and their car insurance."
Tech Not a Risk Factor, According to Car Insurance Companies
- A DUI raises car insurance rates 3,200% higher than texting while driving does. Cell phone use and texting while driving have the least impact on auto insurance premiums nationwide, raising rates only 2 percent. In contrast, driving under the influence raises rates over $1,000.
- New vehicle safety technology won’t save drivers—money, that is. Despite plentiful new in-car safety technology, only electronic stability control (ESC) shows any reduction on average national rates -- though it saves just $5 per year. In fact, 17 states show no savings at all for safety devices including blind spot warning, collision preparation systems, lane departure warning, night vision, and rear-view cameras.
- Monitoring driving with telematics doesn’t benefit the drivers. Telematics devices, which drivers plug into their vehicles to record how (and how much) they drive and presumably help insurers better predict risk, only yield users an average of $9 (less than 1%) in annual savings.
What Actually Is Impacting Car Insurance Rates?
Who you are: Some folks pose more risk to insurers than others.
- Men, unmarried people, renters, and those with low education and low credit scores pay more for car insurance, respectively, than women, married people, homeowners, and those with higher education and higher credit scores.
- Teens pay more than double for car insurance than any other age group, with 16-year-olds paying nearly $6,500 annually. Average annual rates drop steadily each year until the driver turns 60; those in the 50-59 age group pay the least for their auto insurance premiums.
How you drive: Insurance companies have a particular concept of risky behavior.
- DUI violations remained the most expensive penalties for auto insurance premiums over five years. In 2016, one DUI raises car insurance rates 80 percent.
- Although DUIs increase average annual premiums the most nationally, 23 states cite racing as the costliest violation in terms of average annual premium increase, 16 cite DUI, and others cite reckless driving and at-fault accidents.
- Mileage hardly impacts car insurance rates at all; those who drive more than 15,000 miles per year only pay 6 percent more for car insurance than those who drive 0-7,500 miles per year.
Where you live: Regional weather, laws, and driving habits produce a broad risk spectrum.
10 Least Expensive States for Car Insurance:
- Ohio - $764
- North Carolina - $817
- Idaho - $919
- Maine - $937
- Iowa - $971
- Indiana - $996
- Virginia - $1,002
- Illinois - $1,003
- Massachusetts - $1,004
- Utah - $1,015
10 Most Expensive States for Car Insurance:
- Michigan - $2,087
- Delaware - $2,073
- Oklahoma - $1,990
- Kentucky - $1,925
- Texas - $1,762
- New Jersey - $1,746
- Louisiana - $1,741
- Florida - $1,690
- Rhode Island - $1,671
- Connecticut - $1,625
What you drive: Some assets are inherently more valuable or prone to risk than others.
Luxury cars are the most expensive vehicle types to insure, followed by “green” cars (hybrids, electric, etc.), trucks, sedans, SUVs, and vans. Rates dropped in 2013 and rose in 2016 for all vehicle types.
Of the most popular cars by annual U.S. vehicle sales, the 2016 Honda CR-V is the cheapest to insure at $1,232 annually. The lowest rates among popular 2016 models:
- Sedan: Chevrolet Cruze ($1,376)
- Truck: Toyota Tacoma ($1,363)
- SUV: Honda CR-V ($1,232)
- Van: Honda Odyssey ($1,260)
- Luxury car: Acura RDX ($1,429)
- Hybrid/electric car: Toyota Prius ($1,469)
See the full 2016 State of Auto Insurance report to explore all rating factors and premiums by state.
How Drivers Can Save on Car Insurance:
- Purchasing a policy at least 10 days before activation, and paying in full online can save drivers 10 percent.
- Increasing credit score by one tier can save drivers 17 percent, and an increase from a low to an excellent credit score yields 53 percent savings, or nearly $1,300.
- Maintaining continuous coverage can save nearly 8 percent after just one year, so drivers should shop around for insurance every six months (while still insured, but before policy renewal) to see if they are eligible for lower rates.
- Bundling an auto policy with homeowner or renter’s insurance can save about 7 percent.
- Buying a five-year-old car instead of a new model saves nearly 13 percent on insurance.
- Driving safely and avoiding any state’s most costly violation saves a minimum 40 percent increase in rates.
About The Zebra
The Zebra is the most comprehensive online car insurance comparison platform in the U.S. Since 2012, the company has sought to bring transparency and simplicity to car insurance shopping — “car insurance in black and white.” With The Zebra’s real-time, side-by-side quote comparison tool, drivers can identify insurance companies with the coverage, service level, and pricing to suit their unique needs. Headquartered in Austin, Texas, The Zebra compares over 200 car insurance companies and provides agent support and educational resources to ensure drivers are equipped to make the most informed decisions about their car insurance.