Let's dissect the data and examine the info to project how much car insurance will cost moving forward.
A handful of times in your life, you've probably looked at a bill and asked — or screamed — “why did that go up?” Car insurance is a common cause of this stress, thanks to its nasty habit of increasing in price even when you haven't filed a claim. Using what’s called a “rate increase,” car insurance companies justify raising premiums even in the absence of an incident. Let’s review the technical definition of a rate increase, why they exist, and other ways your insurer can raise your rates.
Typically, you can expect your car insurance premium to increase if you've had an at-fault accident, added drivers to your policy, moved your primary address, changed or upgraded coverage, or added a vehicle. If none of these events occurred and you're still trying to figure out what triggered your higher bill, you could be the victim of a rate increase. In order to fully understand rate increases, it’s important to know how insurance companies — home or auto — set your premium. Most of the information used by auto insurance companies is historical data used to predict what their future losses — or claim payments — could be.
Auto insurers don’t only use your information to create your profile. They also use information and trends related to you, based on your location, vehicle, age, and other factors. If you live in an area in which insurers experienced a higher loss-to-profit ratio than usual last year, you might experience a rate increase to account for the insurance company’s loss. Common triggers of a rate increase include:
Although it might seem unfair to suffer a rate increase without any claims, it's an unavoidable byproduct of how the auto insurance industry operates. Insurance companies need to maintain return-on-investment and minimize risk in order to stay viable. If they had to pay a greater number of claims than expected, they'll need to compensate for that with higher rates.
Insurance companies do sometimes enact "rate decreases," in which they lower rates for some customers after particularly profitable periods. While rate decreases don’t happen as frequently as their less-fun counterparts, they do occur occasionally.
While we can’t predict the future, we can use historical data to inform our predictions. Over the past seven years, car insurance prices have risen significantly. The table below shows average annual car insurance costs and percent changes from the previous year. For example, between 2012 and 2011, premiums rose to $1,276 from $1,194, an increase of 6.9%.
Average annual percentage change in insurance rates
|Year||Avg Premium||Percent Increase Year Over Year|
Looking at car insurance rates by region shows discrepancies based on geography. Some regions enjoyed rate decreases, while others endured significant rate increases — it all comes down to location.
Car insurance rate increases by region
|Region||2011 vs 2017 Percent Change||2016 vs 2017 Percent Change|
Looking at geography alone only paints a portion of the picture. Because car insurance is regulated at the state level and rated on a zip code-by-zip code basis, it's highly individualized. As there are more 50,000 zip codes in the US, our analysis sticks to specific states for the sake of brevity.
At the state level, the past six years have brought about some significant insurance cost changes. States that went through population growth and natural disasters such as Texas, Louisiana, and Florida, experienced considerable rate increases.
Car insurance rate changes by state, 2011-2017
|State||2011 vs 2017 % Change|
|District of Columbia||10.57%|
While it’s nearly impossible to track down specific rate changes for every insurance company, most major insurers factor rate increases into their premium calculations. Since rate increases aren't consistent across the industry, it's important to find the company that will increase your rates the least. The only real way to do this is to shop around to find cheap car insurance rates. And remember, the rate increase is dependent on the previous year’s return-on-investment — you'll need to consistently shop for car insurance every six months to ensure your premium doesn't go up.
Between September and December 2017, The Zebra conducted comprehensive auto insurance pricing analysis with its proprietary quote engine, comprising data from insurance rating platforms and public rate filings. The Zebra examined nearly 53 million rates to explore trends for specific auto insurance rating factors across all United States zip codes, averaged by state, including Washington, DC.
Analysis used a consistent base profile for the insured driver: a 30-year-old single male driving a 2013 Honda Accord EX with a good driving history and coverage limits of $50,000 bodily injury liability per person/$100,000 bodily injury liability per accident/$50,000 property damage liability per accident with a $500 deductible for comprehensive and collision. For coverage level data, optional coverage (that must be rejected in writing) is included where applicable, including uninsured motorist coverage and personal injury protection.
National property and casualty losses information is from the Insurance Information Institute and the NOAA National Centers for Environmental Information U.S. Billion-Dollar Weather and Climate Disasters report.
For vehicle make and model data, analysis referenced the most popular vehicles in the U.S. by 2016 year-end sales according to Goodcarbadcar.net’s automakers’ data.
Some rate data may vary slightly throughout report based on rounding.
If you've experienced a rate increase and are now looking for a new company, enter your zip code below to find a cheaper rate.