How this affects drivers
Insurance industry disruptions are significantly affecting drivers in 2023, and policyholders are looking for more affordable options as premiums rise.
“Vehicle repair and maintenance costs have outpaced inflation and show no signs of slowing, leading insurers to increase auto insurance prices to keep up with the cost of higher claim payouts,” says Allie Feakins, Insurify’s SVP of insurance. “Given the lag between regulator approvals and actual rate increases, consumers can expect rates to increase over the next 12 to 18 months. It’s more important now than ever to comparison shop.”
51% fewer drivers are buying full-coverage insurance
In the first half of 2023, the number of drivers looking to buy full-coverage auto insurance dropped 51%, according to data from Insurify’s platform. Instead, the number of drivers looking to buy liability-only coverage increased 86%.
This data suggests that drivers are opting out of buying more coverage in order to save as car insurance costs rise.
A full-coverage policy provides more protection than the minimum liability coverage most states require drivers to carry. A full-coverage policy also costs about 62% more than the minimum liability coverage, with an average price of $2,064 compared to $1,272.
As more drivers drop coverages to get a cheaper policy, they become more exposed to out-of-pocket costs in the event of theft, vandalism, collisions, damage from falling objects, and damage from weather events.
Lenders and leasing companies often require comprehensive coverage, which is usually included with full-coverage policies. Drivers who are trying to save money on premiums could violate their leasing or financing terms by downgrading coverage.
Drivers are searching for answers to high car insurance costs
Drivers are feeling the financial strain of rising rates and are turning to Google for answers. Google Trends data, compiled in the graphic below, shows interest over time in the search term “car insurance cost.” Interest reached an all-time high in May 2022 with 22,200 searches and spiked again in March 2023 with 33,100 searches, according to Google Keyword Planner data.
Google searches for “car insurance cost”
Source: Google Trends
Searches for “affordable car insurance” are also on the rise in 2023, with Mississippi, South Carolina, and Georgia residents showing the most interest in the term.
These trends suggest drivers are searching for cheaper car insurance options, potentially after seeing their rates increase dramatically with their policy renewal notices.
Some drivers will have fewer options
Higher insurance rates are driving policyholders to shop around, but certain drivers may have fewer options. Influenced by record losses and climate catastrophes, insurers are limiting operations in some states and exiting others, like Louisiana, Florida, and California, entirely.
As insurers struggle to remain profitable, companies will prioritize lower-risk drivers. Rates for drivers with an accident, ticket, or DUI on record will be significantly higher, and in some cases, insurers may refuse to provide coverage to high-risk drivers.