Auto insurance

2022 auto insurance rate increases and predictions

The inflation that complicates the lives of consumers also impacts car insurers. Across the country, auto insurers are filing rate changes, many of which are rate increases. According to data from S&P Global Market Intelligence, the average rate increase filing is around 4.9%. This means that with an average car insurance cost of $1,771 per year for full coverage, consumers could soon be paying up to $1,858 per year for the same coverage. To help you prepare for the increases ahead, Bankrate dug deep into the data to find out which states are most and least affected by rate increases.

key ideas

  • Minnesota approved the largest rate increase in 2022, at 14.0%.
  • Policyholders in New York, Louisiana and Nevada could experience the highest premium impacts after the rate increases take effect.
  • Rates will likely continue to rise in 2022 due to inflation and increased insurance claims.

Auto Insurance Rate Increases Approved

Throughout the year, auto insurance companies file their rating algorithms with each state’s Department of Insurance for approval. These algorithms include pricing increases, decreases or changes, or may include a combination of changes. To help consumers understand how their budget might be affected by auto insurance rate increases, we used S&P Global Market Intelligence to identify rate changes and analyzed average premium data from Quadrant Information Services to estimate the premium impact.

All rate change data represents rate filings approved between January 1, 2022 and May 18, 2022. It is important to note that while these rates are average, not all consumers will be affected equally. . Some companies may file rate cuts, for example, while other companies have filed large increases. Rate increases aren’t usually one-sided either, meaning they don’t apply to an entire policy or driver. Typically, rate filings are tied to specific coverage types and specific rating factors, including a driver’s claims history and the type of vehicle they drive.

It should be noted that Florida reports tariff filings to a different system; therefore, approved data was not available. Finally, California does not currently approve rate increases. Requests for rate increases have been made in California, but none have been approved.

States with the highest automatic rate percentage increases

Minnesota is, by far, the state with the largest increase in auto rates. Based on current rate filings in the state, nearly 2 million policyholders will experience an average rate increase of approximately 14%. Arizona and Louisiana are also hard-hit states, with average increases of more than 7%.

States with the lowest automatic rate percentage increases

Only Massachusetts has an overall decline in the average car insurance rate. Rate increases in Vermont and Colorado are less than 1% on average, but all other states have an average increase of 1% or more.

States with the largest premium increases

While knowing the average rate increase in your state can help you prepare for a possible rate increase, there is more to the story. States with high average premiums may experience large premium increases, even with a lower average percentage rate increase. Bankrate looked at the average cost of auto insurance in all 50 states and Washington, DC and analyzed what the average premium might be after applying the state rate increase. The following five states are on track to have the highest rates after the current rate increases take effect:

New York $2,996 +4.0% $3,116
Louisiana $2,762 +7.1% $2,958
Nevada $2,426 +6.7% $2,588
Michigan $2,345 +3.7% $2,435
Georgia $1,985 +5.8% $2,100

What will happen to auto insurance rates throughout 2022?

Current rate filings show that, on average, car insurance rates tended to increase in the first half of 2022. But what will happen in the rest of the year? Between January 1 and May 18, there were an average of 9.1 approved tariff increases per day in the country. This means that, for the remainder of 2022, there is a strong likelihood that rate increases will continue to be filed.

According to Greg McBride, chief financial analyst at Bankrate, “With inflation hitting 40-year highs, auto insurance premiums will also rise, partly reflecting higher vehicle repair and replacement costs.”

The increased costs for the insurance companies are then passed on to the policyholders. According to Mark Friedlander, director of corporate communications at the Insurance Information Institute,

“We expect to see significant rate action by many national and regional insurers in the second half of 2022 as auto insurers experience a sharp increase in the frequency and severity of auto accidents. Insurer claims have risen significantly because payouts are higher in part due to higher prices for auto replacement parts, which rose by double digits year-on-year due to chain disruption procurement, as well as rising labor costs.

Auto insurance companies often raise their rates to help replenish their claims reserves. While paying a higher premium isn’t ideal, it could mean a greater likelihood that a company will be able to remain financially sound enough to pay future claims.

The bottom line

Chances are auto insurance policyholders will see an increase in their 2022 insurance rates if they haven’t already. Knowing that rate increases are coming could help you plan your budget accordingly. It’s important to remember that not all rate hikes are created equal, however. Increases may only affect a certain type of cover or a certain driver profile, without affecting the other insured parties. For policyholders experiencing premium increases, it may be a good idea to shop around for a new policy or find ways to offset these increased costs with additional discounts, such as telematics discounts, if your insurer offers this option.

Methodology

Bankrate uses Quadrant Information Services to analyze 2022 rates for all ZIP codes and carriers in all 50 states and Washington, D.C. Rates are weighted by population density in each geographic region. Rates quoted are based on a 40 year old male and female with a clean driving record, good credit and the following full coverage limits:

  • Civil liability of $100,000 in bodily injury per person
  • Civil liability of $300,000 in bodily injury per accident
  • Civil liability of $50,000 in property damage per accident
  • $100,000 uninsured motorist bodily injury per person
  • $300,000 uninsured motorist bodily injury per accident
  • $500 collision deductible
  • $500 aggregate deductible

To determine minimum coverage limits, Bankrate has used a minimum coverage that meets each state’s requirements. Our basic profile drivers own a 2020 Toyota Camry, commute five days a week, and drive 12,000 miles a year.

These are sampling rates and should only be used for comparison purposes.

For private passenger auto rate filings, we have partnered with S&P Global Market Intelligence. S&P compiles rate filings from the System for Electronic Rate and Form Filing (SERFF). Some states, including Florida, do not report rate filings to this system and therefore data is not available.