The inflation that is making life difficult for consumers is also impacting car insurance companies. Across the nation, auto insurers are filing rate changes, many of which are rate increases. According to data from S&P Global Market Intelligence, the average rate increase filing is about 4.9 percent. This means that, with the average cost of car insurance at $1,771 per year for full coverage, consumers could soon pay as much as $1,858 annually for the same coverage. To help you prepare for the coming increases, Bankrate dug deep into the data to find out which states are the most and least impacted by rate increases.
- Nearly 2 million policyholders in Minnesota may experience the highest rate hike approved in the U.S.
- New York, Louisiana and Nevada policyholders may experience the highest premium impacts after rate increases take effect.
- Rates will likely continue increasing in 2022 due to inflation and increased insurance claims.
Approved auto insurance rate increases
Throughout the year, car insurance companies file their rating algorithms to each state’s Department of Insurance for approval. These algorithms include rate increases, decreases or underwriting changes, or may include a combination of changes. To help consumers understand how their budget might be affected by car insurance rate increases, we utilized S&P Global Market Intelligence to identify rate changes and analyzed average premium data from Quadrant Information Services to estimate premium impact.
All rate change data represents approved rate filings between January 1, 2022, and May 18, 2022. It’s important to note that, although these rates are average, not all consumers will be affected equally. Some companies may file rate decreases, for example, while other companies filed large increases. Rate increases are also not usually unilateral, meaning they don’t apply to an entire policy or driver. Typically, rate filings are pinpointed to specific coverage types and specific pricing factors, including a driver’s claims history and the type of vehicle they drive.
It should be noted that Florida reports rate filings to a different system; therefore, approved data was unavailable. Finally, California is not currently approving rate increases. Rate increase requests have been made in California, but none have been approved.
States with the highest auto rate percentage increases
Minnesota is, by far, the state with the highest auto rate increase. Based on the current rate filings in the state, nearly 2 million policyholders will experience an average rate increase of about 14 percent. Arizona and Louisiana are also hard-hit states, with average increases of over 7 percent.
|State||Percentage rate change||Number of policyholders affected|
States with the lowest auto rate percentage increases
Only Massachusetts has an overall average car insurance rate decrease. Rate increases in Vermont and Colorado are lower than 1 percent on average, but all other states have an average increase of 1 percent or more.
|State||Percentage rate change||Number of policyholders affected|
States with the most impactful premium increases
While knowing the average rate increase in your state can help you prepare for a potential rate increase, there’s more to the story. States with high average premiums may experience a big jump in premiums, even with a lower average percentage rate increase. Bankrate reviewed the average cost of car insurance in all 50 states and Washington, D.C. and analyzed what the average premium might be after the state’s rate increase is applied. The following five states are poised to have the highest rates after the current rate increases take effect:
|State||Average annual full coverage premium before rate changes||Percentage rate change||Estimated average annual full coverage premium after rate changes|
What will happen with auto insurance rates throughout 2022?
Current rate filings show that, on average, car insurance rates have trended upward in the first half of 2022. But what will happen in the remainder of the year? Between January 1 and May 18, there were an average of 9.1 approved rate increases per day in the country. This means that, for the rest of 2022, there is a high probability that rate increases will continue to be filed.
According to Greg McBride, Chief Financial Analyst at Bankrate, “With inflation running at 40-year highs, auto insurance premiums will also be pushed higher, in part reflecting the higher costs to repair and replace vehicles.”
Increased costs for insurance companies are then shifted over to policyholders. According to Mark Friedlander, Director of Corporate Communications at the Insurance Information Institute,
“We expect to see significant rate actions taken by many national and regional insurers during the second half of 2022 as auto insurers are experiencing a large spike in the frequency and severity of auto accidents. As a result, insurers’ loss costs have increased substantially because claim payouts are higher due in part to the escalating prices of auto replacement parts, which have increased by double-digits year-over-year due to supply chain disruption, as well as the rising costs of labor.”
Car insurance companies often increase rates to help rebuild their claims reserves. Although paying a higher premium is not ideal, it could mean a greater likelihood that a company will be able to stay financially healthy enough to pay future claims.
The bottom line
There is a good chance that auto insurance policyholders will see an increase in their 2022 insurance rates if they haven’t already. Knowing that rate increases are coming could help you plan your budget accordingly. It’s important to remember that not all rate hikes are created equal, though. Increases may only affect a certain coverage type or a certain driver profile, leaving other policyholders unaffected. For policyholders experiencing premium increases, it may be a good idea to shop for a new policy or find ways to offset these increased costs through additional discounts, like telematics discounts, if your insurer offers that option.
Bankrate utilizes Quadrant Information Services to analyze 2022 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Rates are weighted based on the population density in each geographic region. Quoted rates are based on a 40-year-old male and female driver with a clean driving record, good credit and the following full coverage limits:
- $100,000 bodily injury liability per person
- $300,000 bodily injury liability per accident
- $50,000 property damage liability per accident
- $100,000 uninsured motorist bodily injury per person
- $300,000 uninsured motorist bodily injury per accident
- $500 collision deductible
- $500 comprehensive deductible
To determine minimum coverage limits, Bankrate used minimum coverage that meets each state’s requirements. Our base profile drivers own a 2020 Toyota Camry, commute five days a week and drive 12,000 miles annually.
These are sample rates and should only be used for comparative purposes.
For private passenger auto rate filings, we partnered with S&P Global Market Intelligence. S&P compiles rate filings from The System for Electronic Rates & Forms Filing (SERFF). Some states, including Florida, do not report rate filings to this system, and therefore, data is unavailable.