Car insurance costs rise sharply as consumers increasingly shop around

Jackie LoVerme Vice President of Strategic Partnerships | Insurify

Car insurance prices have surged, leading to a significant increase in consumers shopping for better deals. Insurify's report indicates that car insurance costs have risen by 42% over the past two years, with Maryland, New York, and Washington, D.C., being the most expensive areas.

Chris Rice from LexisNexis Risk Solutions highlighted at a recent webinar that nearly half of auto insurance policyholders have shopped for coverage in the last year. "A lot of those rate-driven shoppers are people who haven’t shopped for insurance in 20 or 30 years," he said.

Increases in car insurance rates are a major factor driving this trend. Insurify data shows significant rate hikes in states like Arizona, Georgia, Florida, and Texas during 2024. By mid-2024, these states had comparison shopping rates exceeding 50%.

John Leach from Insurify explained that drivers can save up to $1,025 annually by comparing quotes. "It makes sense that more drivers are reshopping for car insurance to lower their rates," he noted.

Insurify forecasts a slowdown in rate increases for 2025 but expects Florida, Georgia, and New York to experience rapid cost rises.

David Blades from AM Best emphasized the importance of strong customer service and claims handling. "All insurance is a promise to pay," he stated. He believes insurers who respond empathetically will retain customers despite higher rates.

Home insurance rate hikes also contribute to increased auto insurance shopping among customers bundling policies. Chris Rice mentioned that non-renewals on homeowner policies drive this trend as well.

Blades predicts frequent auto insurance shopping could become standard behavior due to an aging population facing financial constraints. Rice observed a shift towards shorter policy durations as consumers seek better deals amid rising costs.

While it's uncertain if this will fundamentally change the industry model, it is clear that insurers are taking note of these developments.