What Is Behind the Spike? | Global News Avenue

car insurance It is a necessary fee for drivers, but the premiums are expensive. Factors contributing to rising car insurance policy costs include increasingly expensive repairs, risky driving trends and lawsuits.

How much have interest rates increased?

Car insurance prices increased by 12.7% last year, based on November 2024 Consumer Price Index (CPI) data. The average annual cost of car insurance in 2025 is expected to be $2,101.

What’s behind the rise?

• expensive car repairs: The parts needed to fix a new car with all its safety equipment, sensors and cameras are more expensive, and the labor required to repair the car will also go up. Inflation in parts and labor translates into higher premiums.
• Increase in risky driving: Risky driving behaviors such as speeding and increased accident rates. In 2022, 42,514 people died on U.S. roads, a 10% increase from 2020. Risky driving behavior means more car insurance claims and higher premiums.
• More lawsuits: According to the Insurance Information Institute, an increase in litigation related to auto accident claims is a potential factor in increasing premium costs. More lawsuits and payouts from insurance companies mean higher premiums for consumers. Advertisements for personal injury attorneys on television and billboards promising huge payouts to those injured in car or truck accidents take a toll on insurance companies’ profits, and as a result, we all have to pay more.

What can consumers do?

More and more drivers Shop for better prices. A report from J.D. Power found that 49% of auto insurance companies purchased a new policy in the past year. Consumers who switched insurance companies in the past five years earned a median annual savings of $461.

The driver can also potential discounts. Insurance companies may offer discounts when you bundle your home and auto policies. You can also find discounts based on your mileage, allowing the insurance company’s app to monitor your driving, or by signing up for a defensive driving course.

As a last resort, drivers can consider switching to public transportation, thereby eliminating the cost of car insurance entirely. However, 45% of Americans do not have public transportation as an option, and most may not be able to navigate their needs for work, school, or errands without relying on a personal vehicle.

bottom line

While prices are likely to stabilize in the future, premiums are expected to become more expensive in 2025. Factors such as more expensive car repairs, accident rates and lawsuits still come into play.

For consumers who need to drive, insurance remains a necessary expense. You might consider switching insurance companies and asking about potential discounts to find a better price.