What Affects Average Insurance Cost for Cars and Why They Will Rise in 2023?

average insurance cost for cars in 2023

As per studies conducted by our experts, the average comprehensive car insurance costs for 2022 cars are around $1,834.86 per year. This means that the average insurance cost for cars for full coverage has gone up by about $250 to $300 per year. Previously, on an average, drivers across the U.S. spent $1,592 on car insurance for a year.

At an individual level, the cost of insuring a vehicle may vary depending on various factors. And suppose you have a previous accident(s), low credit score, coverage lapse, multiple claims filing or DUI/DWI convictions leading to suspension of driver's license. In that case, you can expect your car insurance premium to be substantially high.

Why is There a Substantial Increase in Average Insurance Cost for Cars by State in 2022?

Auto insurance rates were on the upswing by about 9% in 2022, and they are expected to go up even in 2023. This is primarily because of the following parameters:

1. Increase in the Number of Accidents

In 2022, we witnessed a considerable rise in the total number of accidents in every state. Insurers found them expensive to cover, so they raised premiums substantially. So, even if you have a good driving record, your car insurance rates are likely to go up as well, which will ultimately affect the average price of car insurance.

2. 2022 Saw More Severe Accidents

According to records available from the U.S. Dept. of Transport, in the first quarter of 2022, as many as 9,560 drivers died due to car crashes. This is a 7% rise over the number of drivers that died in the first quarter of 2021. Consequently, to cover the increased costs, companies had to raise auto insurance rates.

3. Steep Rise in Car Parts/Labor Costs

With the substantial increase in the number of accidents during the year 2022, even car parts and components have become expensive to repair or replace post an accident. Add to that increased labor costs, which means that the premium is going to be higher, which will affect the average insurance cost for cars.

4. Rise in the Number of Uninsured Drivers

Many of you could still be wondering, “whats the average car insurance cost?” and why is it increasing so rapidly? Well, another major reason for this rapid rise in car insurance rates is that there is a big rise in the number of uninsured motorists getting involved in accidents. As a result, insurers have to dish out large amount of money for settling claims.

5. Rise in Accidents Involving Uninsured Drivers

As compared to accident rates in 2015, the year 2019 witnessed a significantly a greater number of accidents (over half a million) meeting with accidents involving insured cars.

6. Rise in Vehicle Robberies, Thefts, and Vandalism

During the years 2019 and 2020, carjacking and converter thefts increased by more than 325%, resulting in millions of dollars of payouts for insurers in the country. This has led to a steep rise in price of an average insurance for a car.

7. Considerable Increase in the Prices of New Vehicles

The average cost of new cars in 2022 is about $48,301, and this is substantially more than that of the previous year. The market value of the vehicle is an important factor in the calculation of insurance rates. Vehicles that are over 10 years old will cost much lesser to insure than new cars.

To learn more about why you can expect the likely trend of higher car insurance rates in 2023, talk to a ProspectsForAgents expert today!

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