Yes, car insurance rates are still rising. This is why, and what you can do about it.

Inflation is driving up car insurance rates

Everything has gotten more expensive since 2021. Gas prices passed $4 per gallon for the first time in 15 years and peaked at more than $5 per gallon. Food prices climbed 11.4% in 2022 compared to 2021. And auto insurance rates have increased 17.1% over the past year, according to the U.S. Bureau of Labor Statistics’ consumer price index.

Part of that increase is because cars have become more advanced, with features like backup cameras and anti-lock brakes. And more advanced cars mean more expensive car repairs: Vehicle repair costs were up almost 20% this May compared to the previous year, according to the consumer price index.

The average cost of a used car is 44% higher than it was five years ago, according to a 2023 Edmunds used vehicle report, and new car prices are up as well. More expensive vehicles, combined with higher repair costs, mean insurance claims are more expensive too, which affects insurance premiums.

A survey from J.D. Power showed that 31% of auto insurance customers saw their rate increase over the past year. And as you might expect, customer satisfaction numbers dropped 12 points year over year — the biggest decline in the survey in 20 years.

“It seems so much worse because it is much worse than we’ve seen in a long time,” says Douglas Heller, director of insurance at the Consumer Federation of America. After the pandemic caused a spike in inflation, insurers had to reassess their pricing.

Other factors are also increasing insurance costs

It’s easy to see your rates increase and blame it on inflation. But that’s only one piece of a larger puzzle. Other factors causing car insurance rates to go up include:

• Pandemic aftermath.

• Climate change.

• Reinsurance (insurance for insurers) cost increases.

Effects of COVID-19

One of the larger factors affecting insurance rates is the lingering aftermath of the pandemic, particularly in how the cost to repair cars affects insurance claims.

After people started going back to work in late 2020 and 2021, there was a significant increase in the number of accidents on the road in the U.S. The National Highway Traffic Safety Administration reported a dramatic increase in fatal accidents from 2020 to 2021, including the largest jump over a six-month period ever recorded (18.4%).

Combining more accidents with higher repair costs means that insurance claims cost more overall. “A huge part of why this period feels different for people is because costs are up across the board,” says Kristine Pokrandt, an independent agent for Goosehead Insurance in Highwood, Illinois. “Supply chain delays are still very prominent, and so the time it takes for that repair is now stretching . . . They have to spread those costs somewhere.”

Effects of climate change

Traditionally, if a company expects more claims in the near future, they’ll raise rates to cover them. When wildfires or floods damage a lot of vehicles, the affected areas become more expensive to insure, and insurers increase rates to compensate for that.

So far, 2023 has seen nine major weather- and climate-related events causing over $1 billion in damage, according to the National Centers for Environmental Information. As climate disasters increase in certain states, insurance rates will keep going up in those areas. And in some cases, insurers have even stopped offering new policies in those states altogether.

See: State Farm cracks down on California wildfire insurance. What it means for all homeowners.

Effects of reinsurance

There’s an entire industry called reinsurance that helps insurers pay claims. In exchange, insurers pay reinsurance rates just like you pay for car insurance. And the cost of reinsurance is going up.

For example, Florida-based insurance companies are seeing big reinsurance rate spikes, which could directly impact Floridians. And Florida auto insurance rates are already 30% more expensive than they were last year.

“Home insurance and auto insurance are well-regulated,” Heller says, but the reinsurance industry isn’t. This leads to wide pricing variation among insurers and by state, and that change in price is passed along to policyholders.

Related: The 9 things that are most likely to affect your auto insurance rates

So what can you do to keep your rates low?

Let’s be honest: Your insurance rates probably aren’t going to go down on their own. Not in 2023, and maybe not ever. But you can still look for other opportunities to save.

For starters, make sure you’re getting every available discount. A few easy ways to save are bundling multiple policies, signing up for automated payments and opting into paperless communication. You may even qualify for other discounts that you don’t know about.

“One of the biggest favors people can do for themselves is connect with an insurance professional,” Pokrandt says. Insurance agents know the ins and outs of the industry. They can help you get the right coverage, even if that means shopping for a new policy. And if there are discounts or options available to you, an insurance agent will be able to help you find them.

Also, don’t make the mistake of lowering your coverage or dropping insurance to save money. If you’re involved in an accident and have to make a claim, you’re going to need coverage. “Cheap insurance is only good if you don’t need it,” Pokrandt says. “You really want to look at insurance as a tool . . . So it’s really making sure you understand your policy and that you’re leveraging the bells and whistles that are available in it.”

From the archives (Dec. 2021): These are the cars that cost the most and least to insure

Inflation, climate change, reinsurance rates and the aftermath of a pandemic are outside your control. But by working with an insurance agent to review your options, you can keep the coverage you need at a price that’s more affordable.

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Drew Gula writes for NerdWallet. Email: [email protected].