Why Car Insurance Rates Are Skyrocketing In The U.S.

Car insurance has gotten expensive. In the U.S. the average annual premium for full coverage car insurance rose 26% to $2,543 compared to last year, according to Bankrate. Fewer auto mechanics, a tighter supply of used vehicles and increased health care bills are fueling rising prices. Cars are also costlier to fix and American drivers are becoming more reckless. There were more than 6.1 million motor vehicle crashes reported to the police in 2021, according to the US. Department of Transportation.

0:00-2:16 Intro
2:17-4:26 Chapter 1 Rising costs
4:27-8:05 Chapter 2 Why rates are increasing
8:06-9:53 Chapter 3 Calculating costs
9:54-12:15 Chapter 4 Driving recklessly

Produced by: Shawn Baldwin
Edited by: Marc Ganley
Supervising Producer: Jeniece Pettitt
Animation: Andrea Schmitz
Additional Footage: Getty Images

About CNBC: From 'Wall Street' to 'Main Street' to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more.

Connect with CNBC News Online

#CNBC

Why Car Insurance Rates Are Skyrocketing In The U.S.

[MoellerGarage]

DO NOT Install a driving tracking device in your car!! They sell your data (your driving habits, distance, frequency, braking, acceleration, etc) to Lexus Nexus who then sells your risk data to all the auto insurers. You hard brake or accelerate beyond what they deem acceptable, you will permanently be penalized by nearly ALL insurers. They pitch it as a discount or training device, but they fail to tell you they will sell the data.

[americancapitalist]

My Home and Auto package went up 35% this year. No tickets, accidents, claims or credit drop. This is what you get for being responsible.

[DreamCloud]

Gov will never do anything about this. Politicians and lobbyists made sure this entire country was car dependent and now they take money from these insurance.

[glendeco]

When insurance companies have lobbyists, your complaints fall on deaf ears.

[cfay]

Car insurance is an absolute scam. You pay thousands each year, with claiming rates, and they make it as hard as possible to get paid out when needed.

[Zerobar.]

Biggest scam in America is insurance, be it auto, home or health.

[madboyreadynow]

FICO score should have NOTHING to do with your car insurance rate. Accidents and tickets or DUI should drive your insurance rate, not your credit score. This is something the government needs to tackle. Credit scores should be used when you need a loan. Apply for a credit card, home loan, or any form of financing. Not your water bill, utilities, or insurance.

[maranorth]

In places like Florida, at least 50% of drivers have no auto insurance. My elderly mother’s car has been crashed into 3 times and each time the driver drove off (bc of no auto insurance) and people had to help my mother. Police did NOTHING. Floridians now have to pay the crooked insurance companies a premium specifically if they are hit by an “uninsured” driver. So what does that tell you? The law abiding citizens are being screwed by insurance companies.
A month ago, my brother’s car was totalled by an uninisured driver who had multiple suspensions on his licence. Police did nothing. My brother has to buy a new car and, of course, his premiums went up. But the uninsured driver walked away with no consequences.

[quantx]

our entire families auto insurance doubled over the last two years. No accidents, no tickets. To say I’m livid is an understatement. Auto insurance industry needs to be investigated. I’m tired of this nonsense.

[colechapman]

It's so ironic because in the US cars were seen as extensions of freedom. Now they are the third largest form of debt with sky-high insurance rates even for people driving safe practical family cars with no accidents or tickets. What is more galling is the fact that everyone can't just not drive a car. We have such car dependency that you literally can't function without one

[vynnyloko]

The problem.... Are too many scams. My dad hit a woman's car so, but so soft that barely scratched her car. She came out screaming and making a scene. She got $15k for that. That's just ridiculous!

[davidanalyst]

THIS IS A SCAM. Someone ran into me 6 years ago. I called 3 different shops for repair estimates. Two of the companies were mad at me for asking for an estimate even though it was covered by insurance, and they refused to give me an estimate. This is how the scam operates. They charge my company 10k for a 15 minute repair, and then they whole system costs more for everybody. The entire system needs to be dismatled.

[vitalidoroshko]

The answer can be found here. Progressive's net income in 2023 was $3 billion 864 million, more than five times higher than in 2022. In 2022, their profits were $695 million. The situation is similar with other companies in the auto insurance industry.

CNBC will definitely tell you how much money the insurance companies paid, but never tell you how much their profits have increased😊

[MitchellEdelman]

Insurance is federally required and insurance companies are profit seeking. It's not rocket science why rates are going up

[neilwani]

Pure greed. Insurance companies, Home depot/Lowes, cable companies, just everyone.

[nevarran]

4 people 4 cars is a testament to the complete failure of urban planning in the US (and not only).

[kineticstar]

The auto insurance companies saw the health care insurance companies' profits and said to hold my beer.

[necrozim]

When there is no alternative to driving your car to get around, these insurance prices are a crippling punishment rather than an expense for freedom. Oh, and conveniently the dividend payouts are up again on the stocks for these insurers, so don't forget that in the "cost calculations".

[ed-edd-n-eddy]

Driving is such a pain these days. From distracted drivers, road rage, to LED headlights, I stay home as often as possible.

[tahirisaid]

Engaging with books has significantly elevated my perspective on investing. True wealth isn't built through mere savings; financial freedom stems from strategic investments. I've learned that accumulating wealth hinges on making prudent investment decisions.