Car Insurance Spikes as Americans Struggle to Pay Bills

As American consumers deal with financial pressures caused by rising inflation, they face pressure from increasing costs for car insurance.

The latest inflation data from the Consumer Price Index (CPI) report shows car insurance rising by 19.2% year-over-year as of November, putting a crunch on family budgets during the holiday shopping season.

The report issued December 12 says that while overall inflation remains in line with economists’ predictions of a 3.1% annual rate, core inflation, which excludes food and energy prices, the increase in insurance rates has accelerated.

Rising vehicle prices, increased claims, and shifting driving patterns during COVID-19 contribute to the rising cost of insurance premiums.

The Insurance Information Institute says Americans paid $2,008, or $167 per month, this year for full-coverage insurance, while minimum liability was much cheaper, averaging $627 per year, or $52 per month.

While insurance costs are rising for consumers, for insurers, the severity of claims and increased litigation mean that costs are outpacing premiums. Some insurance companies are considering pulling out of heavily regulated markets in California, New Jersey, and New York unless those states approve the rate increases.

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