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What’s happening with auto insurance in 2023: And what it means for you

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Who's ready for 2022 to fade into the rearview mirror behind us? 2022 brought with it some good things (new Taylor Swift music? The world's oldest tortoise turning 190?). However, it also brought: record heatwaves, hurricanes and rampant inflation around the world. These are all things that have affected the insurance industry, and those effects don't dissappear with the turning of the calendar page. You can expect to see insurance rates rising in 2023.

This is not new news really. Insurance rates tend to go up every year. Minus a small dip in 2020 when rates dropped (due to the COVID pandemic beginning and people driving far less), they have gone up every year in the last decade. That said the jump is a bit higher than usual this year. The average American is paying $1,759 for auto insurance, and that number will likely continue to rise into 2023. 

On average a driver in the United States paid $1,759 for car insurance in 2022.

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Where are rates rising and falling?

That scarily high number above represents the average cost for car insurance across the entire United States. However, you likely don’t care about the average driver in the U.S. What you want to know is what the rates are doing where you live. (After all, how else will you know if you're overpaying or have a good deal?)

Insurance rates vary widely based on a number of rating factors and where you live is one of them. Insurance companies try to predict how many claims will be submitted in the area, down to the specific ZIP code, to price their products accordingly. 

As the map below indicates, rates went up in all but three states in the past year. Rates went down slightly in California and Louisiana and stayed roughly the same in Mississippi. 

 Untitled U.S. Map

Why are rates rising?

Unless there's another global event that gets everyone to simultaneously stop driving at the same time again (which, insurance rates notwithstanding: we really hope not), don't expect a dip again any time soon. People are back on the road which means more accidents and more insurance claims. 

There were also a number of expensive natural disasters this year. Hurricane Ian alone caused more than $100 billion in damages. The greater amount that insurance companies have to pay out due to losses, the greater money they will have to take in to remain profitable.

However, perhaps the biggest driver of why you are paying more for insurance is the same reason you are now paying more for everything else in your life right now: inflation. Because the cost of car parts and repairs is increasing, insurance companies have to pay more when people do file claims.   

What this means for you in 2023

We can’t predict the weather or the economy, but we can predict that in 2023 rates are continuing (and will continue) to rise. People are still driving more and insurance companies are raising rates to account for increased losses. If you do see your rates rising outside of your budget, now might be a good time to consider car insurance discounts or compare rates to make sure you're getting the best deal. 

What demographic factors affect your rates?

So you’ve seen that where you live is a huge factor in what you pay for car insurance. But for people in many states, this is only one piece of the puzzle in what decides your personal rate. Many states allow insurance companies to also consider demographic factors including your age, gender, credit score, education level, marital status and occupation. 

Here are a few fun facts about how who you are can affect your insurance:

  • Men and women pay different rates for insurance. Nationally, this distance is tiny (about 0.4%). Some states are phasing this out. In Hawaii, Massachusetts, Pennsylvania, North Carolina, California and Montana insurance companies cannot consider gender as a rating factor. Of the remaining states, women pay more than men in 25 states and pay less in 21 states.
  • While some states have outlawed it as a factor, in many places credit score can make a big difference in your rate. Improving your credit score one tier can save an average of 17% on car insurance. 
  • Getting married can save you on insurance. The average cost of car insurance for a married driver is $116 per month. By tying the knot, the average driver can save about $8 per month on auto insurance — or $96 per year.
  • Age is also a big factor in how much you pay. 16-19 year olds pay the most of all age groups in every single state, and teen boys pay more than teen girls.

What this means for you in 2023

While obviously many of these demographic factors are things you can’t change — or likely won’t change just based on the insurance savings — there are some work-arounds. For example, if you have a particularly responsible teen driver on your policy, you could use a telematics device so that their actual driving is taken into account, not just the numbers of candles on their last birthday cake.

How does what you drive affect your rate?

There are a number of factors that go into what you choose to drive. But while the insurance cost might not be top of mind when choosing your next ride, it can absolutely affect how much you will pay. 

  • How old it is: A used car is cheaper to insure than a new car. Nationally, auto insurance drops about 5% for each year your car ages. In 2021, a 5-year-old model could save an average of 27% a year on car insurance.
  • Vehicle type: Vans have the lowest premiums of all car types, and cars are the most expensive. 
  • Vehicle make and model: Currently the most expensive car to insure is the Maserati Quattroporte, which costs an average of $419 per month — or a whopping $5,024 annually. That's 239% more than the national average premium for auto insurance. 

Do you have any anti-theft devices on your car? They might help keep your car from getting stolen, and in 12 U.S. states your insurance company is required to give you a discount for having one. 

What this means for you in 2023

Car insurance savings can add up significantly over time and factors like the age of your vehicle will always affect what you pay. If buying a new (or new-to-you) car is in your plans for 2023, you should consider how your new ride will affect your insurance rates as part of its total cost of ownership.

What are some ways to save on car insurance?

And now the most salient question. If car insurance rates are rising in many places and for many people: what are some methods for bringing them back down for you personally?

Always check with your car insurance company for any discounts that might apply to you. You can also save by purchasing your policy in advance and sometimes for paying online. If you’re a homeowner, you can also often save 5-10% by bundling your auto policy with your home insurance policy. And you can also often save by maintaining continuous coverage and not letting it lapse even for a day. 

But the biggest thing to remember about how to save money on car insurance? Compare auto insurance rates and shop around. If you don’t periodically look at your options, you might well be missing out on a lower rate from another carrier.

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