More Americans Considering Shopping For Auto Insurance As Costs Rise

US auto insurance owners say they are feeling the pinch of rising prices and a higher percentage plan to switch insurance providers. While only 6% say they’ve changed in the past 12 months to save money, twice that proportion (12%) say they plan to change in the next 12 months, according to a new survey from NerdWallet.

About half of car insurance owners (57%) say their insurance premiums have increased in the past 12 months. Over the same period, 12% of policyholders (defined as those who have insurance outside of health insurance) report postponing a major purchase because of the cost of their insurance.

The survey of more than 2,000 American adults conducted by The Harris Poll found that Americans are feeling the effects of higher car insurance ratesbut they haven’t changed in large numbers yet to try and save money.

Rising prices

THE average cost of comprehensive car insurance is $2,148 per year, nationally, according to NerdWallet’s analysis of pricing from pricing analytics firm Quadrant Information Services. Comprehensive insurance includes liability insurance (for damage you may cause to other people or their property) and coverage for damage to your car.

And the costs for drivers are rising. Auto insurance rates jumped 16.9% in the 12 months ending June 2023, according to the Bureau of Labor Statistics.

NerdWallet’s survey found that 31% of Americans with auto insurance expect their rates to increase over the next 12 months due to factors beyond their control. While auto insurance rates depend on factors like an individual’s driving history, age, location, and car model, they are also affected by insurance company costs and losses.

For example, the North Carolina Rate Bureau, a group that represents the state’s insurers, has filed for a 28.4% increase in auto insurance rates statewide in 2023. If the rate increase is accepted by state regulators, North Carolina drivers will be subject to increases regardless of their individual driving records.

It’s no surprise that less than half of car insurance owners (45%) think their car insurance premium is fair.

Change is still relatively rare

While Americans aren’t universally in love with their insurance rates, it hasn’t yet prompted a massive shift to new insurers. In the past 12 months, only 6% of auto insurance owners said they switched to save money, the survey found.

Of all insurance owners (including auto, home, life, etc.), about 3 in 10 (28%) say they have made insurance product comparisons in the past 12 months. This is slightly higher for millennial owners (27-42), where 39% say they have shopped. In comparison, 27% of Gen Z (18-26), 23% of Gen X (43-58), and 24% of Baby Boomer owners (59-77) say the same.

Although activity has been relatively weak, an increase in comparison buying could be on the horizon. About 1 in 5 car insurance owners (17%) say their rates have not only gone up, but have gone up a lot over the past 12 months.

These increases and the fear of future increases could be behind the increase in the number of those who are considering switching providers.

Plans for shopping

According to the survey, about 1 in 8 car insurance owners (12%) say they plan to switch insurance providers to save money in the next 12 months. This skyrockets for millennials, with nearly 1 in 4 (23%) saying they are considering switching. That’s more than any other generation (with Gen Z at 14%, Gen X at 11%, and Baby Boomers at 5%).

NerdWallet’s rate analysis revealed big differences in the cost of a policy depending on the insurance company and other factors. A driver shopping around will see many different fares.

For example, looking at the four largest U.S. auto insurance companies — State Farm, Geico, Progressive, and Allstate — national average annual rates for full coverage range from $1,431 to $3,110, according to NerdWallet analysis. That means the only way to know if you’re getting the best deal is to compare auto insurance rates.

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