Car Insurance Costs Rose 20% in the US Last Year…What Gives?
Freshly reported Bureau of Labor Statistics data reveals a large jump in consumer car insurance costs in 2023 over 2022. What’s going on?
There could be several factors at play here. Primarily, more drivers and higher inflation.
The number of licensed drivers in the U.S. vaulted
In 2023, a projected 243.4 million people possessed a driver’s license. This is 4.8 million more than in 2022 and indicates that 89% of U.S. adults 25 or older are licensed drivers.
More drivers, of course, mean a higher risk of fender benders. According to Statista, in 2020, the number of drivers involved in property damage crashes was the lowest recorded since 1995. Collected data shows that 6.2 million drivers experienced some kind of vehicular event resulting in damage.
In 2019, the number was 8.4 million drivers, the highest yet recorded. The reason for this sudden dip in car accidents? Why, COVID-19, of course. As the pandemic woes subside, we can expect the number of property-damaging accidents to hike back to its normal year-over-year bumps.
Inflation is hitting car ownership hard
According to the Consumer Price Index released this month, car ownership costs increased notably over 2022:
| Category | 2023 change over 2022 |
| Motor vehicle maintenance and repair (overall) | + 7.1% |
| Motor vehicle body work | + 4.1% |
| Motor vehicle maintenance and servicing | + 5% |
| Motor vehicle repair | + 10.3% |
| Motor vehicle insurance | + 20.3% |
Headlines about the gripping prices of new and used cars have been trending this month, with frustrations mounting in regard to EV infrastructure, affordability, and reliability. Inflation certainly takes aim in this sector, with car repair costs rising 10% year-over-year.
More drivers are on the road, operating costlier machines that are more expensive than before to fix. It makes sense, then, that car insurance premiums would jump to cover the gaps.
Sources: Hedges & Company, U.S. Bureau of Labor Statistics
