Car Insurance is Up 19.5%. Here’s How to Find a Policy Without Breaking the Bank

There’s a price to pay for the freedom of the open road. From the cost of the vehicle itself to the fuel you put in it, driving doesn’t come cheap — and one of the costliest pieces of the equation can be auto insurance.

In fact, according to the Bureau of Labor Statistics’ June 2024 Consumer Price Index (CPI) release, the index for motor vehicle insurance has skyrocketed 19.5% since last year. That increase far outweighs the 12-month CPI bumps in many other costly categories, including medical care (whose index rose 3.3%), electricity (4.4%) and food away from home (4.1%).

While, fortunately, other road-related price indices have dropped over the same time period — including used cars and trucks (whose CPI is down 10.1%) and gas (down 2.2%) — the stark increase in car insurance will likely put a strain on drivers’ wallets.

But why is it happening in the first place?

Why is car insurance so expensive these days?

Driving a motor vehicle has always involved risk, both physical and financial. Insurance helps to ameliorate that risk by covering certain costs in the event of an accident.

But today’s vehicles bear only a passing resemblance to the cars and trucks of yesteryear, technology-wise. While computer chips have been used in certain car systems since the late 1960s, cars built more recently are often covered in cameras and sensors to power systems like Lane Keep Assist or Lane Departure Warning, among other advances. Even Tesla concedes that its Autopilot and Full Self-Driving features don’t make their vehicles autonomous, but these days, many automobiles are coming closer than ever to essentially driving themselves.

That kind of tech means that even a fender bender can rack up some costly repairs — a trend that’s also reflected in the BLS statistics. The CPI for motor vehicle repair and maintenance is up 6% since June 2023.

And while the CPI for new vehicles has fallen 0.9% over the course of that same time, the average cost of a new vehicle, per Edmunds data, still hovers well over $45,000. In fact, the average new car buyer finances more than $40,000 of the purchase, after putting down an average of over $6,500 up front, according to data from 2024’s second quarter.

So insurers, who are faced with larger bills when claims roll in, have increased their rates to match these high-value vehicles (and their high-price-tag repairs). While it may not be the only factor affecting auto insurance pricing, it’s almost certainly a major factor.

How to find the cheapest (and best) car insurance

With insurance rates on the rise category-wide, it’s unlikely you’ll remain completely unaffected. Even if your car insurance premiums stay the same, you may be one of the 72% of homeowners insurance policy holders who saw a spike in 2023.

However, there may still be ways to lighten the load — without skimping on critical coverage. (After all, as high as your insurance rates may be, in the event of an accident, your repair and legal costs could be orders of magnitude higher.)

Increasing your deductible is one way to lower your premium — though you’ll want to balance what would actually be affordable for you to pay out of pocket if you do suffer a loss. These days, some insurers also offer pay-as-you-drive or usage-based insurance premium prices, which could substantially lower your costs if you don’t drive far or often.

You may also be able to benefit from bundling discounts if you buy multiple policy types — like auto insurance and homeowners insurance, for example — from the same company.

And, of course, comparing car insurance quotes online can go a long way toward helping you find the cheapest car insurance company for the coverage you need.