Inflation Causes Drivers to Switch Car Insurance Carriers

Image of a red car placed between someone's hands.

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In a recent survey from CarInsurance.com, more than half of drivers (57%) claimed their car insurance rate went up in the last 12 months. In fact, 32% of these drivers claimed their rates increased by at least 10%, leading many to shop around and buy insurance from a different carrier. About a quarter of respondents left Allstate, 22% left Geico and 21% left Progressive.

Forty-three percent of drivers believed the increase in auto insurance rates was due to inflation. Auto insurance rates, according to the Consumer Price Index, have risen 14.7% from January 2022 to January 2023, and rates are predicted to keep going up. Currently, according to Bankrate, full coverage car insurance costs an average of $2,014 per year, or $168 on a monthly basis. In their 2023 First Quarter Report, Progressive says they are “re-evaluating our rate plans and intend to be aggressive with raising rates over the remainder of the year."

Aaron Stevens, senior finance lecturer at Boston University’s Questrom School of Business, told CarInsurance.com that “the cost of a car insurance policy depends on the expected value of losses." He stated, “As the prices for new and used cars, as well as replacement parts and labor, have increased, it makes sense that the expected value of losses paid by insurance claims would increase in tandem. Thus, as the costs associated with insurance claims rise, so should the policy premiums.”

As rates continue to rise, more people will likely be shopping around to get the lowest rates on car insurance available. Here’s how many people saved by switching insurers, according to data from CarInsurance.com

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Policy savings	Percentage of customers who saved by switching insurers
5%	18%
10%	26%
15%	29%
20%	19%
Other	8%

You can use our tool, in partnership with Bankrate, to compare car insurance quotes today.

Stephen Crewdson, senior director of insurance business intelligence at J.D. Power states in a recent study that “auto insurance customers are starting to shop for insurance like they shop for gas. They are taking a much more active stance in seeking out plans that fit their needs and their budgets, which could have a serious long-term effect on carriers that have been working for years to build lifetime value through bundling and other initiatives.”

These are the insurance companies customers are switching to get better rates.

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Company	Percent of respondents who switched to the company
Allstate	31%
Progressive	22%
Geico	19%
State Farm	17%
USAA	12%

Erin pairs personal experience with research and is passionate about sharing personal finance advice with others. Previously, she was a freelancer focusing on the credit card side of finance, but has branched out since then to cover other aspects of personal finance. Erin is well-versed in traditional media with reporting, interviewing and research, as well as using graphic design and video and audio storytelling to share with her readers.

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