Car Insurance Rates Keep Going Up
According to a recent evaluation of car insurance rates, car insurance rates never seem to decline. Houston car insurance rates and premiums always seem to go up. The landscape of American innovation has dramatically transformed since Gerald Ford’s presidency from the 1970s, and the founding of Apple by Steve Jobs and Steve Wozniak. Yet, one aspect that remains relatively unchanged is the swift rise of car insurance rates, including the areas of Houston and Harris County.
Recent Consumer Price Index data reveals that auto insurance premiums have surged by nearly 21% in the 12 months leading up to February. This magnitude of annual increase has not been witnessed since 1976, with the exception of January, which also experienced similar hikes.
This upward trend in auto insurance costs contributed significantly to the overall inflation rate of 3.2% last month, accounting for half a percentage point of the increase. This surge poses a considerable challenge to the Federal Reserve’s target inflation rate of 2% and exacerbates the financial strain on Americans already grappling with some of the steepest prices in recent memory.
Causes For The Rise in Car Insurance Rates
From listening to the insurance company advertisements, you may be inclined to believe that car insurance rates are declining. Yet, the reality is that car insurance rates are rising at an alarming rate. There are multiple factors that contribute to the rise in car insurance rates:
Escalated Costs of Car Repairs
Auto repair costs have risen by 6.7% over the past year, per CPI data. While this increase is slower than in previous years, the cost remains significantly higher than pre-pandemic levels. Tim Zawacki, a principal research analyst at S&P Global Market Intelligence, attributes this rise to the escalating prices of auto parts and higher wages for mechanics, spurred by labor shortages.
Increased Severity and Frequency of Car Accidents
The United States has seen a notable increase in traffic fatalities, with an approximate 7,000 rise in deaths in 2022, reaching 42,795, compared to pre-pandemic figures, according to the National Highway Traffic Safety Administration.
This uptick in accidents, particularly those of greater severity, has led to a surge in insurance claims, far exceeding historical averages. Data from LexisNexis Risk Solutions indicates that insurers incurred losses on 27% of collision claims in 2022, a three-percentage point increase from 2021. Riskier driving behaviors, such as speeding, texting while driving, and driving under the influence, have contributed to this rise, according to LexisNexis.
State-by-State Variability in Insurance Rate Increases
Auto insurance rate increases vary significantly across states, largely because insurers adjust their rates based on the losses they experience within each state. Robert Passmore, vice president for personal lines at the American Property Casualty Insurance Association, emphasizes this point.
For instance, Nevada experienced the most substantial increase in auto insurance rates—a 38% jump—of all states, with the exception of Wyoming, based on S&P data. Conversely, North Carolina saw the smallest increase, with a mere 5.5% rise over the same period. This discrepancy is partly due to North Carolina’s unique insurance rate bureau system, which agreed on a 4.5% average statewide increase for both 2023 and 2024.
Despite expectations for national trends to moderate, especially in the latter half of 2024, some markets may continue to face rate increases, according to Zawacki. This analysis underscores the complex web of factors driving the surge in auto insurance premiums, from repair costs and accident frequencies to state-specific regulatory environments.
How Molina Law Can Help
Insurance companies have teams of people who begin an accident investigation the moment an accident happens. If you are involved in an accident, you should have someone who looks out for your interests.
If you or a loved one has suffered a personal injury and need guidance, contact the Molina Law Firm at (281) 922-4300 for more information or to schedule a consultation. Their team of dedicated professionals is ready to provide expert advice and representation to help you seek the fair compensation you deserve.
