Some Americans’ Auto Insurance Is About to Go Up by 30%
Auto insurance premiums go up a bit every year, but state regulators keep them from going sky high…until now. Drivers in several states may be in for a shock next time they see their rates: regulators are allowing Allstate to increase insurance prices by 14.6% in New York, 20.0% in New Jersey, and 30.0% in California.
The past 18 months have seen steep increases in insurance rates for many drivers. The average auto insurance rates went up 17.8% between July 2022 and July 2023. The highest annual rate increases were in New Jersey (34%), Nevada (36%), and New Mexico (38%).
But that wasn’t enough to make ends meet at Allstate. Unfortunately, states such as California and New York normally cap how much an insurer can increase rates. Allstate’s CEO was especially worried about New York, New Jersey, and California.
“If we don’t get price increases this year, or approved this year, in those states, we’re going to move from just not taking on new businesses to having to say goodbye to existing customers. We don’t want to do that. I think the regulators would prefer we not do that. We are not threatening anybody. We are just saying we can’t afford to lose that much money in those three states.”Tom Wilson, Allstate President and CEO
In mid-December, all three states greenlit the price hikes. So when will drivers see these rate increases? Jess Merten, All State’s Chief Financial Officer revealed to investors, “We expect to implement these rates in December with effective dates through February 2024. The rates are expected to raise annualized written premiums by approximately $1 billion.”
There are several reasons we are seeing such extreme insurance rate increases: Because of inflation the costs of driving are higher. In addition, the number of extreme weather events is increasing and thus the number of damaged vehicles is increasing. Both auto theft and pedestrian accidents are surging. Finally, there are simply more cars on the road (overall mileage is up 30% since 2020) and thus there are more accidents.
Next, find out how much less cars cost in Canada or learn more about why insurance rates are skyrocketing in the video below: