Car insurance rates set to jump 7% in 2023

New car prices may finally be starting to level off again after a year of supply shortages, but the rise in insurance rates is expected to continue, according to a new report.

Online insurance marketplace Insurify is forecasting an average car insurance increase of 7% next year following this year’s 9% spike.

That would bring the typical annual rate paid to $1,895.

“Our annual data reflects the state of the insurance industry, and our new report projects that higher driving rates, more severe accidents, inflation’s impact on vehicle repairs and medical costs, and the potentially increased frequency of wildfires and hurricanes will continue to be the key factors contributing to rate increases next year,” Insurify CEO Snejina Zacharia said.

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The study looked at 69 million insurance applications and found that 47% of policyholders had at least one rate increase this year, with nearly 20% reporting multiple hikes.

Oregon, Maryland and Virginia led the way, all seeing the average premium increase over 25%, but Michigan remains the most expensive state to insure a car in at $2,895, despite seeing just a 1% jump this year.

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Concerns about insurance prices rose from July to November as a decrease in gas prices meant people were worrying less about how much they were driving.

Hybrid and electric vehicle purchase consideration also dropped by 50% during the period.

Insurify suggests offsetting the higher insurance rates by taking common sense steps like choosing a more affordable vehicle that’s cheaper to insure, shopping around for the best policy price and remembering to check for any discounts that you qualify for.