A recent report from Insurify reveals that car insurance costs, after surging by 24% last year, are projected to increase by another 7% in 2024. This escalating cost of car insurance is outstripping inflation and is particularly burdensome for low-income drivers.
According to the report from Insurify, the anticipated rise in car insurance costs for 2024 is nearly twice the median annual increase. The average American now spends $2,019 per year on car insurance, which constitutes 2.6% of the median household income. For Californians earning the statewide median income of $88,200, they spend 2% of their income on car insurance.
As reported by The New York Times, car insurance costs are surpassing inflation rates, having risen more than 20% during the year ending in January. This 20.6% hike represents the largest jump in car insurance costs since 1976. Insurance companies argue that they have been compelled to raise premiums to offset higher liability costs.
The Insurance Information Institute (III) uses the term "social inflation" to describe the phenomenon of rising insurance costs that exceed overall inflation rates. According to III, "skyrocketing legal costs" are a primary factor driving social inflation. The institute states: "Data indicates that attorney involvement can increase claims costs and the time needed to resolve them, even while reducing value for claimants."
Sunnyvale Community Services highlights that California has the highest poverty rate in the country at 23.5%. The organization notes that low-income residents are finding it increasingly difficult to afford basic necessities due to these rising costs.
Insurify is an online platform enabling consumers to compare insurance policies as per its website description. Utilizing AI-powered technology, Insurify provides real-time quotes to consumers and has served over 4.6 million users seeking insurance coverage.