At the start of 2022, New York was the only state in which full coverage auto insurance exceeded $3,000 per year. Now there are two.
Florida premiums jumped by $421—the largest yearly increase of any state—placing its annual coverage costs at $3,183, just above New York’s $3,139. However, New Yorkers allocate a larger percentage of their income to auto insurance, which the report referred to as the “true cost.”
Florida’s burgeoning population could be to blame, said Cate Deventer, the report’s author and a Bankrate analyst
“More cars on the road means a greater risk of accidents—so it could be partially due to Florida’s population growth,” Deventer told The Epoch Times, while adding that it’s likely a mixture of several factors.
Of the 25 largest cities in the country, three of the four most expensive were Floridian metropolitan areas, specifically Miami, Tampa, and Orlando. The annual cost for full coverage in Miami is $3,447, representing 5.51 percent of residents’ average household income, the highest metropolitan “true cost” nationwide.
To gather data for their report, Bankrate created a hypothetical 40-year-old couple with a clean driving record to estimate prices using online tools. “Full coverage” was defined to include $300,000 for personal injuries and $50,000 for property damages, among other benefits.
Premiums declined in just two states, New Jersey and Massachusetts. Maine maintained the most favorable auto insurance rates in terms of their “true cost” and nominally at $941 per year, the only state average below $1,000.
Many of the key macroeconomic ailments that have afflicted the post-pandemic economy are to blame for the soaring rates.
The double-digit price increases were “due in part to inflation, supply-chain disruptions, and labor shortages,” Deventer said. “These factors all individually increase the cost of claims, and when combined, drove up the cost to repair or replace vehicles significantly.”
Higher repair costs meant insurers needed to hedge against costly accidents, Deventer added.
“Car insurance companies increased rates to help ensure they had enough money to pay these higher claims costs. However, because each geographic area has different risks and costs of living, the cost for car insurance varies across the nation.”
The insider—an anonymous Twitter user who goes by the name “CarDealershipGuy”—spoke with The Epoch Times in December to illuminate the irresponsible auto -ending practices taking place at big banks. Many lenders are allegedly ignoring red flags and extending loans to borrowers who are underwater—who owe more than the value of their car—on previous loans.
“Some of the big household names that you and I know are participating in this,” he said over the phone.
According to CarDealershipGuy, many underwater borrowers are attempting to purchase additional vehicles, despite having unpaid auto debt. Under these circumstances, banks would normally refuse the loan, but the anonymous dealer told The Epoch Times that 65 percent of his associated lenders are issuing loans anyways.
“I’ve been in the business for a decade and this is completely unprecedented,” he said.
Higher auto insurance costs could impact the creditworthiness of many borrowers and hinder their ability to pay back loans, potentially increasing the likelihood of a massive default wave.
Bankrate does not expect premiums to come down anytime soon, either. “We expect rates to continue to rise in 2023,” Deventer said, expressing concern about the consequences of high premiums.
“Higher rates could prompt more drivers to forgo coverage, or carry state minimum limits, which often aren’t enough to cover the cost of injuries and property damage after an accident.”
