Imani Porter sits on her car in the Northern Liberties section of Philadelphia on Thursday, Jan. 18, 2024. She said a previous insurer wanted to increase her rate 35%, citing inflation.
Heather Khalifa/The Philadelphia Inquirer/TNS
PHILADELPHIA — When Imani Porter received the quote for her car insurance renewal in December, she was flabbergasted.
Geico, which had insured her and her fiancé’s Honda CR-V for the past year and a half, was going to charge the couple about $1,000 for the next six-month period.
“I did the math from a year prior and I noticed it went up by 35%,” said Porter, a 27-year-old project manager in the finance industry. “No reasoning. We didn’t have any accidents or tickets. We never even called them. The only communication we had with them was to pay our bills.”
Porter said she assumed the jump was due to the city’s surge in car thefts and reports of tires being stolen off Hondas in her Northern Liberties neighborhood.
When she called Geico, a customer service representative could only cite inflation.
Car insurance rates have actually outpaced inflation. Premiums increased nearly 20% over the past year, far higher than the broader rate of 3%, according to the latest federal data. U.S. consumers pay on average $2,542 a year for auto insurance, Bankrate found in its January report, with drivers shelling out anywhere from $62 to $212 per month depending on their level of coverage.
Several factors are to blame for surging premiums. While there are signs that new and used vehicle prices may be coming down, car prices remain higher than they were pre-pandemic, noted Greg McBride, Bankrate’s chief financial analyst, and newer, more technologically advanced cars are increasingly expensive to fix.
Consumers can also see higher rates for more personal reasons, such as where they live, their driving history and habits, what kind of car they drive, their occupation, credit history, even their age and gender (though not in Pennsylvania, one of six states where insurers aren’t legally allowed to use gender as a factor).
But these more individualized factors don’t account for the current spike, said Bob Passmore, department vice president for personal lines at American Property Casualty Insurance Association, the country’s main trade organization for home, auto, and business insurance.
“Whether you’re a good driver who has never had an accident or a ticket, or a bad driver who’s had accidents and tickets, everybody’s costs are going up,” said Passmore, though drivers that insurers deem riskier will see even higher rates as a result. “You’re seeing this in every state.”
Residents of cities such as Philadelphia may see higher premiums than drivers who live in the suburbs, but Passmore said rising numbers of car thefts are not as much of a factor as some consumers like Porter may think. Rates are higher in cities mainly because there are more collision claims there, he said, and car repairs, just like most everything else, tends to be more expensive in urban areas. Similarly, consumers who live in places that are more prone to flooding could pay more.
How to save on car insurance
Consumers shouldn’t bank on relief, at least not any time soon.
While there are indications that prices are increasing slower than they did a year ago, “the question becomes how much of those inflationary effects are going to ease over time,” Passmore said, “and how much are with us to stay.”
For example, cars aren’t going to start being made with less technology — even parts such as windshields have become more sophisticated, and therefore more expensive to replace.
McBride put it simply: “Short-term there aren’t a lot of indications that the pace of auto insurance increases are slowing down.”
Despite these projections, there are ways to save on car insurance — if consumers are willing to put in time comparing policies and reaching out to different insurers.
After shopping around, Porter, the Northern Liberties resident, switched to car insurance through Costco, where she was already a member. She said she paid $550 for her first six months.
“Every single time your insurance is up for renewal, always shop around and do your research,” Porter said. In retrospect, “I wish I did that in June of last year,” the last time her policy renewed.
