Explainer

Why your car insurance went up

It is almost never one thing. Premiums are re-priced on a cycle, and several cost inputs moved at once. Here is what actually got more expensive, and which parts you can influence.

1. Physical repair costs

Modern vehicles are significantly more expensive to repair. Sensors, cameras and radar are often mounted in bumper covers and require calibration after a collision — a repair that used to be cosmetic now includes a diagnostic procedure. Insurers pay those bills and pass the cost through the risk pool.

2. Total loss frequency

When repair cost approaches vehicle value, insurers write the car off. Higher write-off rates mean higher average claim severity, which raises everyone's rate in the same pool.

3. Litigation and settlement size

In several states, the size of bodily injury settlements has climbed well ahead of general inflation. Those states show up at the top of the cost table for exactly this reason.

4. Reinsurance

Insurers buy insurance for themselves. When catastrophe losses are heavy, reinsurance renews at a higher price, and that cost is spread across policies — including in states that had no catastrophe at all.

5. What is NOT usually the cause

Despite what you may be told, your premium generally did not rise because you "got a ticket you don't remember" or because of a single soft factor. Rate increases of the kind seen in 2023 were filed at the state level and approved by regulators. Your individual file mattered less than the statewide filing.

What you can actually control

DeductibleMoving $500 → $1,000 is the fastest lever for most people.

Coverage mixDropping collision on an older car is rational. Check the value first.

Household bundlingMulti-policy discounts are real but rarely as large as advertised.

Re-shoppingNew-customer pricing is systematically different from loyalty pricing.

None of these are exotic. The reason people don't do them is that it takes an afternoon. That afternoon is usually worth several hundred dollars.

The checklist →

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