New Report: Car Insurance Costs to Increase 7% in 2024 After 24% Hike in 2023

After a year of staggering rate hikes, drivers will see smaller, but still significant increases in 2024 as the insurance industry stabilizes.

Cassie Sheets
Written byCassie Sheets
Cassie Sheets
Cassie SheetsData Journalist
  • 9 years writing data-driven content

  • Lifestyle contributor to 30+ local news sites

Cassie Sheets has a background in home and garden and real estate content. At Insurify, she translates industry jargon into insights that empower insurance buyers.

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Tanveen Vohra
Edited byTanveen Vohra
Tanveen Vohra
Tanveen VohraManager of Content and Communications
  • Property and casualty insurance specialist

  • 4+ years creating insurance content

Tanveen manages Insurify's data insights, annual home and auto insurance reports, and media communications. She’s regularly featured in media interviews on insurance topics.

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Betsy Stella
Reviewed byBetsy Stella
Headshot of Betsy Stella, VP of Insurance Partnerships at Insurify
Betsy StellaVice President of Carrier Management and Operations
  • 20+ years of experience at Farmers Insurance

  • Featured as an expert source in notable outlets

Betsy has spent more than two decades in the insurance industry. She leverages her in-depth knowledge to empower insurance shoppers with clear and accurate information.

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Chase Gardner
Data reviewed byChase Gardner
Headshot of Chase Gardner
Chase GardnerData Insights Manager
  • Data expert on auto trends and driver behavior

  • University of Chicago graduate with statistics degree

Chase spearheads analytics for Insurify’s data insights team. With his deep expertise in insurance data, Chase is often interviewed on industry trends.

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Updated January 9, 2024

Car insurance rates set to increase by 7% in 2024

Car insurance rates have seen a tumultuous year, but prices are now stabilizing, with less severe increases in the coming months.

Car insurance premiums will rise an estimated 7% in 2024, according to Insurify’s latest projections. Insurify’s data science team based forecasts on its database of more than 97 million quotes sourced from partnering insurance companies.

Further rate hikes will likely reflect high insurer loss ratios that plagued the industry for much of 2023 — largely due to the skyrocketing price of auto parts and the increasing number and severity of claims.

“The supply chain slowdown, labor shortages, and inflationary trends that began to pressure the insurance industry during COVID-19 continued throughout 2023,” says Betsy Stella, vice president of carrier management and operations at Insurify.

Still, personal auto insurer losses have slowed as rate increases start to earn through and exceed loss trends.

“A bit of the pressure is lifting. Drivers can expect some industry stabilization as we enter the second half of 2024,” says Stella.

Low-income states hit hard by surging car insurance rates

Of the 15 states that pay the highest percentage of earnings toward car insurance, just four have median household incomes above the U.S. average. In Mississippi, the lowest-income state in the country, drivers pay an average of $1,718 per year for car insurance, making up 3.4% of the median household income of $50,700. 

In comparison, the average consumer pays $2,060, or 4.1% of the state’s median household income, for energy each year, according to Mississippi State University. 

In contrast, Utah residents pay only $47 more for car insurance, with an average rate of $1,765. However, the state’s median income is nearly double that of Mississippi — meaning drivers only spend 1.8% on car insurance.

Many insurance companies consider credit history when setting rates. On average, policyholders with excellent credit pay $178 per month for full-coverage auto insurance compared to $257 for drivers with poor credit. In areas where more drivers are struggling financially, poor credit could push up statewide rates.

StatePercentage of Income Toward Car InsuranceMedian Household IncomeAverage Annual Cost of Car Insurance
United States2.6%$76,967$2,019
Louisiana4.7%$59,905$2,792
Florida4.3%$68,181$2,917
New York4.3%$77,808$3,374
South Carolina4.2%$64,055$2,680
Kentucky4.1%$57,556$2,348
Nevada4.0%$74,428$2,975
Michigan3.7%$71,336$2,640
Mississippi3.4%$50,700$1,718
Arkansas3.4%$56,031$1,932
Georgia3.4%$69,491$2,351
Delaware3.4%$82,607$2,806
West Virginia3.3%$55,660$1,841
Texas3.1%$77,028$2,359
Rhode Island3.0%$80,408$2,452
New Mexico2.8%$60,087$1,669
Oklahoma2.7%$65,724$1,753
Washington, D.C.2.6%$105,463$2,756
Alabama2.5%$62,306$1,558
South Dakota2.5%$69,733$1,751
Missouri2.5%$74,381$1,879
New Jersey2.5%$93,817$2,304
Maryland2.4%$110,580$2,645
Connecticut2.4%$94,178$2,228
Colorado2.4%$94,247$2,222
Tennessee2.3%$67,864$1,572
Kansas2.3%$75,962$1,759
Arizona2.3%$76,315$1,793
Pennsylvania2.1%$73,654$1,548
Montana2.1%$76,191$1,629
Iowa2.1%$78,304$1,667
Illinois2.1%$80,049$1,656
Wyoming2.0%$76,452$1,528
California2.0%$88,200$1,725
Washington2.0%$93,812$1,853
Indiana1.9%$71,431$1,337
Virginia1.9%$88,832$1,716
Ohio1.8%$69,613$1,271
Vermont1.8%$75,150$1,330
Wisconsin1.8%$75,457$1,375
Nebraska1.8%$81,024$1,463
Utah1.8%$99,824$1,765
North Carolina1.7%$67,282$1,114
Idaho1.7%$74,975$1,296
Oregon1.7%$88,863$1,475
Minnesota1.7%$92,379$1,606
North Dakota1.6%$82,577$1,320
Maine1.5%$77,640$1,197
Hawaii1.5%$94,650$1,389
Massachusetts1.4%$95,421$1,383
New Hampshire1.2%$87,689$1,010
*Alaska is excluded due to insufficient data.

The 10 most expensive states for car insurance

The national average rate for full-coverage insurance increased to $2,019 per year in 2023, up from $1,633 in 2022. However, drivers in some states pay up to 67% more than the U.S. average for full coverage. Insurify analyzed all 50 states and Washington, D.C., to determine the most expensive places in the country to buy car insurance.

1. New York

Average annual full-coverage rate: $3,374

Percent higher than the U.S. average: 67%

New York drivers pay the highest full-coverage car insurance rates in the U.S., at an average of $281 per month. The Empire State is tied with Florida in paying the second-highest percentage of income toward car insurance (4.3%). New York is the seventh most densely populated state in the country, which can drive up rates due to a greater chance of claims. 

Recent legislation may also be contributing to higher auto insurance costs. New York’s new supplemental spousal liability law went into effect on Aug. 1, 2023. Spousal liability covers medical costs for the insured passenger if their spouse causes an accident that injures them. Drivers are automatically enrolled despite their marital status, adding an estimated $20 to $84 to annual premiums unless drivers opt out in writing.[1]

2. Nevada

Average annual full-coverage rate: $2,975

Percent higher than the U.S. average: 47%

Nevada drivers pay an average of $248 monthly for full coverage. The cost represents 4% of the median Nevada household income — over double the national average of 2.6%.

In a Nov. 1 public webinar forum on auto insurance rates in Nevada, Todd Rich, chief deputy commissioner of the Nevada Division of Insurance, described the state’s auto insurance market as “very healthy,” with more than 125 companies in operation.

However, Rich cited a perfect storm of factors causing Nevada rates to skyrocket, including an increase in severe accidents, expensive repairs for high-tech features, rising vehicle transaction prices, surging medical costs, parts and labor shortages, and fraud.

3. Florida

Average annual full-coverage rate: $2,917

Percent higher than the U.S. average: 44%

The average full-coverage insurance rate in Florida is $243 per month, influenced by severe weather events that strain the state’s insurers. In 2022, Hurricane Ian caused $109.5 billion worth of damage in Florida, making it the costliest hurricane in the state’s history, according to the NOAA.[2]

Already strapped insurance companies have struggled to stay profitable in the aftermath. The state now faces an insurance crisis, with multiple insurers increasing rates or halting new policies in the state. Among the companies that pulled back, Farmers exited Florida, affecting approximately 100,000 customers, and AAA declined certain policy renewals.

Rampant insurance fraud also drove up Florida rates in 2023. In March, Gov. Ron DeSantis signed into law HB 837, designed to reduce frivolous lawsuits and fraud under Florida’s no-fault system. The state legislature passed a bill in May to reduce auto glass fraud, which surged by 4,000% between 2011 and 2021, according to the National Insurance Crime Bureau (NICB).[3]

4. Delaware

Average annual full-coverage rate: $2,806

Percent higher than the U.S. average: 39%

Delaware drivers pay an average of just under $234 per month for full coverage. The state has the sixth-highest population density in the U.S., which could influence Delaware’s insurance rates. The odds of accidents and claims increase when more drivers pack onto busy roadways.

A major factor behind rising rates is debilitating loss ratios for insurers, according to Trinidad Navarro, insurance commissioner with the Delaware Department of Insurance. “Their loss ratio was an excess of 100%, meaning that they paid out more than they actually [collected] in premiums in Delaware,” Navarro told Delaware Public Media.[4]

5. Louisiana

Average annual full-coverage rate: $2,792

Percent higher than the U.S. average: 38%

Full-coverage insurance rates in Louisiana rose to an average of nearly $233 per month in 2023. Auto insurance costs represent 4.7% of the state’s $59,905 median household income, meaning Louisiana drivers pay the highest cost relative to earnings in the country. Like Florida, Louisiana has tropical storms and hurricanes, increasing the number of claims.

Louisiana also has a much higher fatal crash rate than average, at 22.2 deaths per 100,000 residents, compared to 14.2 nationwide, according to the National Safety Council (NSC). In 2023, the Louisiana Department of Insurance approved steep rate hikes for the state’s top five auto insurers, ranging from 10.4% for Progressive to 33.8% for USAA.[5]

6. Washington, D.C.

Average annual full-coverage rate: $2,756

Percent higher than the U.S. average: 37%

Washington, D.C., residents pay an average of just under $230 per month for full coverage. Car thefts in the district surged in 2023, which factors into insurer risk models. Police statistics from December 2023 show an 87% increase in vehicle thefts year over year, from 3,558 stolen cars at the same time last year to 6,666 in 2023.[6]

Washington, D.C., also has a higher population density than any U.S. state, and busy city streets add to the risk of car accidents. Fatal car accidents in Washington, D.C., increased by 49%, with 52 deaths in 2023 compared to 35 fatalities in 2022.[7]

7. South Carolina

Average annual full-coverage rate: $2,680

Percent higher than the U.S. average: 33%

The average monthly full-coverage rate increased to more than $233 in South Carolina. Residents pay approximately 4.2% of the state’s median annual household income of $64,055 toward coverage. South Carolina’s fatal crash rate is nearly 67% higher than the national average, NSC data shows.

Insurance fraud also contributes to South Carolina’s high rates. The state ranks 13th in the nation for questionable vehicle-related insurance claims, according to the NICB.[8] The South Carolina Department of Insurance estimates the average family pays up to $700 more per year in premiums (including auto and homeowners insurance) due to fraud.

8. Maryland

Average annual full-coverage rate: $2,645

Percent higher than the U.S. average: 31%

Maryland drivers pay an average of about $220 monthly for full coverage. Car insurance costs make up 2.4% of the state’s median household income of $110,580, but drivers pay an average of 2.6% nationwide. Maryland is the fifth most densely populated state in the U.S., increasing the risk of car accidents and claims.

A jump in car thefts could also account for Maryland’s surging insurance rates. Vehicle thefts increased by 229% in Baltimore in 2023, influenced by a viral TikTok challenge urging viewers to steal Kia and Hyundai cars. The “Kia Challenge” caused a 55% increase in insurance rates for targeted models, a 2023 Insurify investigation revealed.

9. Michigan

Average annual full-coverage rate: $2,640

Percent higher than the U.S. average: 31%

Michigan consistently ranks among the most expensive states for car insurance. Rates for full coverage now average $220 per month. Michigan has a no-fault system designed to speed up claims processing. However, critics of the system say no-fault laws contribute to fraud and drive up premiums.

The Michigan Catastrophic Claims Association (MCCA) raised its annual pre-vehicle assessment fees to address a deficit in the statewide fund. Fee hikes kicked in on July 1. Under the new structure, drivers with unlimited personal injury protection (PIP) pay $122, up from $86. Drivers with any other PIP option previously paid no fees but are now charged $48.

In a bipartisan vote, the Michigan Senate repealed cost controls for auto insurance medical care coverage in October. The two-bill package increases reimbursement rates for medical providers and lifts the 56-hour-per-week cap on payments for care provided by families of injured motorists.[9] However, Gov. Gretchen Whitmer, who opposed the plan, warns the legislation will raise rates.

10. Rhode Island

Average annual full-coverage rate: $2,452

Percent higher than the U.S. average: 21%

The average monthly full-coverage rate in Rhode Island is $204, which means drivers spend 3% of the state’s median household income of $80,408. Rhode Island saw a summer of severe weather in 2023, with tornadoes and heavy winds, followed by Pawtuxet River flooding in December. An increase in weather damage claims under comprehensive coverage could be contributing to higher rates.

Rhode Island is also the second most densely populated state in the country, which increases the odds of an accident. The state has a lower fatal accident rate than the national average but saw traffic-related deaths surge in 2023. The number of fatal accidents increased by 56% year over year as of October 2023, according to the Rhode Island Department of Transportation.

Drivers cut back on coverage as premiums surged

More than 63% of American drivers Insurify surveyed reported they saw their premium increase once (41%) or more than once (22%) in the last 12 months. Those who saw their premiums increase more than once might have had a six-month policy as opposed to a 12-month policy. 

Drivers are responding to price increases by lowering certain coverage limits, removing other types of coverage entirely, and increasing their deductibles. Another common way to save is switching insurers, but only 10% of drivers reported doing so to cut costs.

How Drivers Lowered Car Insurance PremiumsPercent of Drivers
No steps taken45.25%
Increased deductibles12.76%
Lowered coverage limits12.31%
Switched insurance companies10.29%
Removed drivers from their policies7.54%
Dropped full coverage5.31%
Other3.67%
Canceled all car insurance2.87%
Disclaimer: Table data sourced from real-time quotes from Insurify's 50-plus partner insurance providers. Actual quotes may vary based on the policy buyer's unique driver profile.

Slightly lowering your deductible and shopping around for a new insurer with a cheaper deal are efficient ways to lower the price tag on your car insurance. However, reducing coverage limits and doing away with certain coverage are riskier options that might leave drivers vulnerable to significant unexpected expenses.

“If you drop full coverage, you’re opening yourself up to paying out of pocket for damages to your car and property in the event of an accident,” Shawn Powers, Insurify’s Vice President of insurance sales, says. “You might be saving on your monthly premium, but if you get into an accident, you might have to shell out more than you saved, especially with increases in the price of auto parts. You could also violate your lender’s requirement to carry full coverage if you lease or finance your car.”

Although 63% of drivers surveyed saw their premiums increase at least once, 45% of drivers said they didn’t take any steps to reduce their premiums. Drivers might feel they don’t have better options, with 17% saying they “somewhat” to “strongly” disagree that multiple insurers offer policies that fit their budgets and coverage needs.

More drivers are also dropping coverage altogether. In the first half of 2023, 12 states saw a 30% or more increase in the share of uninsured drivers compared to the previous year, J.D. Power reported. South Dakota and New Hampshire saw 106% and 84% increases in uninsured driver rates, respectively. A higher uninsured rate can drive up costs for insured drivers. 

Full-coverage insurance shopping declined as drivers searched for savings

Fewer drivers were looking to buy full-coverage policies in 2023 compared to 2022, Insurify data suggests. Lenders and leasing companies generally require drivers to carry full coverage. However, drivers who own their cars outright can cut back to state-minimum liability insurance, which costs an average of 43% less than full coverage.

Using 2022 and 2023 quoting data, Insurify’s data science team identified the top states where drivers have pulled back on shopping for full coverage, favoring cheaper liability insurance instead.

StateDecrease in Full-Coverage Insurance Shopping (2022–2023)Average Monthly Cost of Full Coverage
Washington, D.C.-54%$230
Vermont-49%$111
Mississippi-49%$143
Washington-48%$154
New Mexico-48%$139
Disclaimer: Table data sourced from real-time quotes from Insurify's 50-plus partner insurance providers. Actual quotes may vary based on the policy buyer's unique driver profile.

Insurance companies continue to experience debilitating losses

The insurance industry has struggled with profitability since 2021 when property and casualty (P&C) insurers reported a $3.8 billion net underwriting loss following a $5.2 billion gain the previous year.[10]

Underwriting losses hit a staggering $26.9 billion in 2022, according to global analytics provider Verisk and the American Property Casualty Insurance Association (APCIA).

As 2023 came to a close, the industry showed signs of stabilizing. The net combined ratio will improve incrementally to 110.5 at the end of 2023, down from 112.2 in 2022, forecasts Dale Porfilio, chief insurance officer at the Insurance Information Institute (Triple-I).[11]

Numerous factors converged in 2023, driving billions in insurer losses and contributing to rate hikes.

Rising maintenance and repair costs dent insurer profits

The Bureau of Labor Statistics consumer price index for motor vehicle maintenance and repair has had double-digit surges since 2022. As of November 2023, costs were up 8.46% year over year. Heftier bills at the auto shop get passed on to insurers, who raise rates to keep up with increasingly costly claims.

Insurers are also paying for more frequent and severe accidents. Traffic fatalities surged during COVID-19 shutdowns, increasing 7.3% in 2020 and 10.1% in 2021, according to the National Highway Traffic Safety Administration (NHTSA).[12] Motor vehicle deaths are steadily declining but are still higher than pre-pandemic numbers.

As cars become increasingly high-tech, repairs are more expensive and complex. A simple windshield replacement can cost $1,000 or more in vehicles with embedded sensors for rain-sensing wipers, driver assistance systems, and adaptive cruise control, Kelley Blue Book (KBB) reported.[13] A windshield replacement costs about $300 to $600 on older vehicles.

Electric vehicles (EVs) also come with higher repair costs. Tesla, which makes about 60% of EVs in the U.S., designed batteries as a structural part of the cars in some models rather than a replaceable part. A minor accident could require replacing the entire battery, costing between $5,000 and $20,000 for the new part.

Tesla CEO Elon Musk announced plans to change the design and “minimize the cost of repairing a Tesla if it’s in a collision” in a January investor call. The company also launched Tesla Insurance in 2019 to offer lower rates than traditional insurers.

However, many Tesla Insurance policyholders have complained of months-long wait times for compensation, a Reuters investigation revealed.[14] The automaker is also facing class-action lawsuits that allege Tesla sensors produce false collision warnings that inflate premiums.

New and used vehicle prices have surged since the pandemic

Supply chain disruptions and worldwide labor shortages as a result of the COVID-19 pandemic continue to strongly affect the auto manufacturing industry, causing dwindling inventory and surging prices for new vehicles. New cars are now about 23% more expensive than in November 2020, with an average transaction price of more than $48,000, according to KBB.[15]

However, new vehicle prices are flat year over year as downward price pressure favors car buyers. Used vehicle prices also surged but have since fallen 3% since last October to an average list price of $26,533, KBB data shows. Still, inventory remains low, especially for the most affordable used vehicles.

Climate catastrophes cost billions in 2023

Weather events are playing a growing role in insurer losses. In the first half of 2023, severe convective storms (i.e., heavy rains, strong winds, hail, and tornadoes) caused insured losses of at least $29 billion in the U.S., according to the reinsurance broker Gallagher Re.[16]

Several states at high risk for climate catastrophes, including Florida, California, and Louisiana, experienced insurance industry crises in 2023. The U.S. experienced 25 weather or climate disaster events with losses exceeding $1 billion each in 2023, according to National Oceanic and Atmospheric Administration (NOAA) data as of Dec. 8.[17]

Costly climate-related claims have led to major insurers pulling back on coverage, declining renewals, and halting new home and auto policy sales in high-risk areas. As severe weather events become increasingly frequent, policyholders could see fewer options for coverage, likely at higher rates.

Navigating the road ahead

More than 60% of drivers reported one or more premium increases in 2023, and the average annual rate for full coverage surged to $2,019. A perfect storm of factors contributed to unusually high rate increases, including rising repair costs, labor shortages, higher vehicle transaction prices, and climate catastrophes.

Moving forward, severe weather events and costly repairs for high-tech and electric vehicles could play an increasingly important role in car insurance pricing.

Car insurance rates will continue rising in 2024, but hikes will slow as the insurance industry stabilizes, Insurify’s data science team predicts. With a 7% increase forecasted for next year, the 45% of surveyed drivers who didn’t take steps to lower their premiums in 2023 may seek new ways to save money.

Drivers looking to cut car insurance costs in 2024 have a few options, including increasing their deductibles, decreasing coverage limits, and comparing quotes from multiple insurers to find a better rate.

Policyholders can also check with their insurance companies to determine if they qualify for discounts. Common discounts include savings for vehicle safety features, defensive driving courses, bundling home and auto insurance, and setting up automatic payments.

Methodology

Insurify’s data research team examined more than 97 million rates from car insurance applications in its proprietary database over the past five years to find the insights presented in this report.

Insurify driver applications originate from all 50 states and Washington, D.C., and include information on the exact coverage specifications of each driver’s quoted policies. The premiums recorded on Insurify’s comparison platform are quoted via integrations with insurance companies.

Unless otherwise noted, the premiums in this report reflect the median cost of insurance for a driver between the ages of 20 and 70 with a clean driving record and average or better credit. Yearly prices in this report are also two-year rolling medians in order to manage extreme market volatilities over the past few years as insurance companies have deprioritized writing new policies in the face of rapidly rising costs.

Liability-only premium averages correspond to policies with bodily injury limits between state-minimum rates and $50,000 per person, $100,000 per accident; property damage limits between $10,000 and $50,000; and no additional coverage. Full-coverage premium averages correspond to the same bodily injury and property damage limits in addition to comprehensive and collision coverage deductibles of $1,000.

Median household income data comes from the U.S. Census 2022 American Community Survey, with 2023 estimates based on this data and the Bureau of Labor Statistics’ reported average weekly wage increase in each state from Q3 2022 to Q3 2023.

Additionally, Insurify conducted a survey of 1,900 drivers across America to source insights on car ownership, car insurance premium payments, and car-related spending habits.

View Insurify’s previous auto insurance reports

You can access Insurifys previous reports by clicking the links below:

2022 Auto Insurance Trends Report: Part II
2022 Auto Insurance Trends Report: Part I
Insuring the American Driver in 2021
The Insurify Annual Report 2020

Cassie Sheets
Cassie SheetsData Journalist

Cassie Sheets has more than nine years of experience creating compelling content for clients, brands, and local news sites. She started her career at Movoto Real Estate, where she transformed dry data into interesting insights for potential homebuyers. She’s since covered a wide range of topics, from pop culture news to home and garden trends.

Before joining Insurify, Cassie wrote engaging landing pages and blog posts for medical practices at MyAdvice. Now, she uses her knack for diving into the latest data and pulling out key details to empower insurance buyers.

Cassie holds a BFA in Creative Writing from Columbia College Chicago. In her free time, you can find her exploring the city with her dog, trying not to fall over in yoga classes, and petting cats at the shelter.

Tanveen Vohra
Edited byTanveen VohraManager of Content and Communications
Tanveen Vohra
Tanveen VohraManager of Content and Communications
  • Property and casualty insurance specialist

  • 4+ years creating insurance content

Tanveen manages Insurify's data insights, annual home and auto insurance reports, and media communications. She’s regularly featured in media interviews on insurance topics.

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Betsy Stella
Reviewed byBetsy StellaVice President of Carrier Management and Operations
Headshot of Betsy Stella, VP of Insurance Partnerships at Insurify
Betsy StellaVice President of Carrier Management and Operations
  • 20+ years of experience at Farmers Insurance

  • Featured as an expert source in notable outlets

Betsy has spent more than two decades in the insurance industry. She leverages her in-depth knowledge to empower insurance shoppers with clear and accurate information.

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Chase Gardner
Data reviewed byChase GardnerData Insights Manager
Headshot of Chase Gardner
Chase GardnerData Insights Manager
  • Data expert on auto trends and driver behavior

  • University of Chicago graduate with statistics degree

Chase spearheads analytics for Insurify’s data insights team. With his deep expertise in insurance data, Chase is often interviewed on industry trends.

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