Automobile insurance rates have jumped nearly 20% prior to now yr, making the common annual cost over $1,700 and increasingly pushing vehicle ownership out of reach for middle-class Americans.
Apart from depreciation, automotive insurance is often the second-largest driving-related expense for the standard driver, in keeping with a latest report from the auto club AAA on ownership and operation costs.
Automobile insurance accounts for over 16% of the full cost of driving a latest vehicle in 2024, which comes out to $10,642, assuming you drive 10,000 miles per yr, in keeping with the report.
A few of the other major costs of car ownership include depreciation (about $4,280), fuel ($1,490), finance charges (about $1,330), maintenance (about $1,010), and license/registration/taxes ($815).
Auto insurance costs have been soaring since 2022 attributable to high vehicle prices and dearer automotive repairs. Insurers have also cited a rise in dangerous driving, which has led to more claims. In lots of cases, automotive insurance firms try to pass these higher costs of fixing and replacing vehicles along to their customers.
How much does automotive insurance cost?
In line with AAA, the common annual cost of automotive insurance is $1,715 in 2024, which represents a rise of greater than $500 since 2019.
Inflation in auto insurance tends to lag the remaining of the economy: Before insurance firms can charge higher premiums, they need to undergo state regulators and wait for drivers’ policies to return up for renewal.
That is why automotive insurance is the one major spending category still showing double-digit annual inflation in the patron price index (CPI), whilst inflation for many other items has abated.
The July CPI showed the price of motorized vehicle insurance was up 18.6% prior to now yr. Of the 200-plus items tracked in the federal government inflation index, this annual increase in automotive insurance was surpassed only by the worth hikes for eggs and frozen non-carbonated juices.
Cost of automotive insurance by vehicle type
The associated fee of automotive insurance depends upon what kind of automotive you drive, together with other aspects like your driving record, age and placement.
Here’s the common annual cost of automotive insurance based on vehicle type, in keeping with AAA:
- Small sedan: $1,510
- Medium sedan: $1,583
- Subcompact SUV: $1,684
- Compact SUV (FWD): $1,723
- Medium SUV (4WD): $1,831
- Midsize pickup: $1,527
- 1/2 ton/crew cab pickup: $1,764
- Hybrid vehicle: $1,643
- Electric vehicle: $2,059
Knowing how much other drivers pay for automotive insurance can show you how to tell when you’re overpaying.
It’s advisable to shop around no less than once per yr. And do not hesitate to modify when you find a greater deal. You can too bundle insurance policies and lift your premium to get a lower automotive insurance premium.
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