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Car Insurance Premiums to Experience the Highest Increases in Six Years

January 26, 2024

Florida, Michigan, California, and Louisiana have the highest car insurance premiums in the country.
Your credit score greatly affects your car insurance premiums.
Shopping around and reviewing your policy can help you reduce your premiums.

Get ready American drivers. Your gasoline-powered and electric car insurance rates are on the rise – again. According to the latest reports from LendingTree and ValuePenguin, car insurance premiums are expected to rise by 12.6% in 2024.

In all 50 states, the average annual insurance premium is a few bucks under $2,000. And those rates are only going to increase.

What is Driving the Increase?

Car prices, credit scores, and driving records are driving the rate increases. Car repairs are becoming more expensive. More natural disasters are forcing gas and electric car insurance companies to total vehicles damaged by floods and fire, and more drivers live in areas with high crime and uninsured drivers.

The Shocking Numbers of Car Insurance

2024 isn’t the first year that car insurance premiums are rising by double-digit percentages. Premiums increased by 11.2% in 2023. In some states, car insurance is actually becoming difficult to find. If you live in where car thefts, vandalism, or natural disasters are common, affordable gas or electric car insurance is practically non-existent.

Florida has the most expensive car insurance premiums, with annual averages over $2,500. Rates have increased by over 23% since 2021. Other expensive states include Louisiana, Michigan, Delaware, and California. If your state has no-fault insurance, you will automatically see higher rates because this type of insurance protects drivers from expensive lawsuits.

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The least expensive states include Ohio, Maine, New Hampshire, and Idaho. According to the latest research, drivers in every state will see at least a 3% increase, while drivers in Nevada will see the highest increase of 28%. If you live in Nevada and you pay $1,000 for your car insurance, you could see a rate increase of at least $280.

Monthly Car Insurance Premiums for Popular Vehicles

Around the United States, the most expensive vehicles to insure are the Tesla models. The least expensive include the Honda CR-V and Ford F-150 (not the Lightning EV). On average, the Tesla Model Y costs $350 per month, while the Honda CR-V is $219 monthly. The Tesla Model X is the most expensive electric car insurance at $466, and the Kia EV6 averages $260 per month.

How Can You Protect Yourself from Extreme Car Insurance Premiums?

Fortunately, drivers can take several steps to keep their insurance premiums at a reasonable price.

Follow Traffic Laws and Avoid Accidents

Drivers with traffic violations see the highest premium increases. You can avoid these by driving safely and within speed limits.

The average penalty for points on your license is a rate increase of 52%. However, if you live in California, Hawaii, or North Carolina, your insurance premium will double! Do not drive drunk, as DUI violations raise insurance premiums more than any other traffic violation.

Buy or Lease an Electric Car for Cheaper Car Insurance Rates?

Electric car insurance rates are dropping, but remember that they started high. As electric cars are more likely to be totaled than gas-powered vehicles, it’s difficult to get cheap rates, but they are showing signs of dropping.

I live in Michigan and have four insured vehicles including a Plug-in Hybrid (PHEV) and an EV. Interestingly, our 2021 Jeep Wrangler 4xe PHEV is the least expensive vehicle on our car insurance policy, while our 2023 Kia EV6 GT-Line has the most expensive premium. Our two gas-powered vehicles – a 2021 Honda Civic Hatchback EX and a 2022 Kia Forte GT (driven by my two Gen-Z college-age kids) – are in the middle.

Opting for a lease can offer lower monthly payments, according to Motley Fool, compared to buying a new EV. For instance, consider a new Volvo C40 Recharge (MSRP $53,600). If you make a $12,000 down payment and secure a 48-month auto loan at 7% APR, your monthly payment would be $996. In contrast, leasing starts at $483 per month.

Leasing also eliminates concerns about EV depreciation. You enjoy the latest EV technology and batteries, and you’re not responsible for maintenance, repairs, or depreciation as the EV transitions from “new” to “used.”

Furthermore, leasing comes with the advantage of no repair costs, as maintenance and repairs are typically covered by the dealership. However, it’s important to note that you’ll still need to purchase auto insurance separately.

Improve Your Credit Score

While it seems like your driving record should be the driving force behind your gas-powered or electric car insurance rates, it’s really about your credit score. People with the highest credit scores have the lowest insurance rates. Unfortunately, a poor credit score can raise your insurance premiums by 80% compared to those paid by people with good credit.

Shop Around For Better Car Insurance Rates

If you shop around for better rates, you’re likely to find them. You might save money if you let your current insurance company know you’re shopping around. Some insurance companies lower rates for people who work in some professional industries. For example, teachers in Michigan have their own insurance company. The rates are lower because teachers tend to be responsible people with good driving records and credit scores.

You can also save money by bundling your insurance in one place. Many companies will insure electric vehicles, electric bicycles, motorcycles, apartments, and homes. Ask your agent if bundling will reduce your rates, and you might end up saving quite a bit.

Ask for Discounts

Many insurance companies offer discounts, but you’ve got to ask for them. For example, our insurance company reduces my children’s insurance premiums if they get good grades. So, every semester, we submit their report cards. Yes, school does pay off!

You might save money by installing a telematics device, a dash cam, or an anti-theft device. We also save money by having a policy with AAA for roadside assistance. Many companies give a discounted rate if you pay every six months as opposed to monthly.

Review Your Car Insurance Policy at Every Renewal Period

Every time your policy renews is the perfect time to review your policy. If you own your car outright, it might be time to move to liability insurance, which is significantly cheaper than full coverage.

You can also reduce your rates by increasing your deductible. A policy with a $1,000 deductible will be less expensive than one with a $500 deductible.

If you have a car loan, check your vehicle’s value versus what you owe. Many new car owners add gap insurance at the point of purchase. This type of insurance covers the difference between the value of your car and what it’s worth if you crash and total your car. Talk to your agent about gap insurance and any policy extras that could lower your premiums.

Park Your Car in a Garage

Kia and Hyundai vehicles and vehicles with catalytic converters are still the most frequently stolen. Fortunately, Kia and Hyundai EVs are not on the frequently-stolen list – thus reducing insurance premiums. Regardless of the vehicle you drive, ask your insurance agent if parking in a garage can lower your insurance premiums.