Car insurance rates are soaring nationwide, with premiums up nearly 50% since 2021, driven by rising repair costs, natural disasters, and new legislative changes.
Car insurance rates have surged dramatically since the coronavirus pandemic, defying earlier predictions that the increase would taper off by 2024. A recent report from Insurify revealed that full-coverage premiums for American drivers have risen by 15 percent in the first half of this year compared to 2023, with a total increase of 22 percent expected by the end of 2024.
Nationwide, drivers are now paying an astounding 48 percent more than they did in 2021, according to data from Fox Business. States like California, Missouri, and Minnesota are expected to experience some of the steepest hikes, with premiums possibly rising by more than 50 percent this year, partly due to natural disasters such as severe storms and wildfires.
Maryland tops the list for the highest insurance rates, where the average driver with full coverage pays $3,400 annually. The report attributes this spike to recent legislative changes that have increased insurers’ financial responsibilities, compelling them to raise premiums. A new law, effective July 1, mandates that auto insurers provide enhanced uninsured motorist coverage (EUIM), allowing policyholders to "stack" liability insurance with their personal uninsured or underinsured motorist (UM/UIM) coverage, leading to higher costs.
Other factors contributing to the rising premiums include lingering supply chain disruptions from the pandemic and a nationwide shortage of mechanics, which have driven up the cost of car repairs. According to the TechForce Foundation, there were 2.6 automotive technician jobs for every graduate of a postsecondary technical program by the end of 2023, with the number of graduates having dropped by 20 percent since the pandemic began. This shortage is expected to worsen, further exacerbating the challenges in the automotive industry.
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