US Auto Insurance Premiums Set for Record Increase in 2024

The year 2024 is shaping up to be financially challenging for American drivers, with auto insurance premiums expected to rise by an average of 12.6%. This increase, reported by ValuePenguin.com, a LendingTree subsidiary, marks the steepest rise since 2018, following a significant 11.2% hike in 2023. ValuePenguin’s State of Auto Insurance report reveals that every U.S. state will experience at least a 3% increase, with Nevada leading at a staggering 28%. Other states like Washington, Arizona, Connecticut, Louisiana, and Georgia are also facing hefty hikes, ranging from 16% to 18%.

This escalation means the average annual cost for auto insurance will reach approximately $1,984. States like Michigan, Florida, and Nevada will bear the brunt of the highest premiums, while Maine, New Hampshire, and Idaho enjoy the lowest rates. The report also highlights a concerning trend for motorists with traffic violations, who are expected to see a 52% average increase in their premiums. This is especially severe in North Carolina, California, and Hawaii, where penalties for violations could lead to premium increases exceeding 90%.

Additionally, the report touches on the cost of insuring electric vehicles, noting that while it’s becoming more affordable, it’s still 23% higher than traditional gasoline-powered cars. Tesla models, particularly the Model X, 3, and Y, are among the most expensive to insure. Conversely, the Honda CR-V and Ford F-150 are the most economical options.

The rising premiums are a significant burden for Americans, with 54% of policyholders struggling to afford coverage. Divya Sangameshwar, an insurance expert at ValuePenguin, suggests that these rate hikes are more severe than in the previous year, disproportionately impacting Gen Z drivers who face a 188% increase compared to older drivers. The driving forces behind these premium increases include the rising costs of car repairs and replacements, severe weather-related insurance claims, and a notable increase in car thefts, including a dramatic rise in catalytic converter thefts since 2019.