Over the past year or so, used and new vehicle pricing has finally begun to decline after reaching record levels – month after month – for the better part of three years. This is obviously good news for those in the market for a new vehicle, though as Ford Authority recently reported, the percentage of monthly payments above the $1,000 mark continues to set new records, regardless. However, now, it seems as if new car buyers are getting hammered with yet another rising bill – this time, pertaining to skyrocketing insurance costs, according to Reuters.
While the Consumer Price Index (CPI) rose by 3.5 percent in March 2024 versus March 2023, automotive insurance costs grew by a whopping 22.2 percent over that same time period, which is the largest increase since the 1970s. Things have gotten so bad, in fact, that it seems as if consumers are passing on buying new vehicles solely due to insurance rates. “We’re hearing from a number of shoppers that they’re declining to buy a car – or returning one – because they can afford the car, but not the insurance for it,” said Sean Tucker, a senior editor at Kelley Blue Book.
According to data from Insurify – an insurance shopping site – the average cost for full auto insurance coverage in the U.S. rose by 24 percent in 2023, reaching $182 a month. However, it predicts that rates will rise another seven percent in 2024, regardless, and perhaps even more. This also means that the insurance is accounting for more of the total cost of ownership – according to KBB, insurance costs make up around 13-16 percent of total vehicle costs now, but are expected to grow to around 20 percent this year.
The reasoning behind this growth can be attributed to a few factors – for starters, the fact that vehicles are becoming more complicated and chock full of pricey parts like those used in ADAS systems and batteries in EVs and hybrids, which has led to more vehicles being totaled rather than repaired. Coupled with ongoing supply chain issues making for longer repair times, and it seems as if insurance costs are primed to continue to rise for the foreseeable future.
We’ll have more on automotive insurance costs soon, so be sure and subscribe to Ford Authority for continuous Ford news coverage.
Comments
Well, yeah, have you seen the inflated prices for replacement parts? I think I saw around $1800 for a Bronco Sport headlight assembly.
My insurance went up 30%. Time for a gouging investigation.
Mine did also
Not just new car buyers. Old car owners are also getting hammered. Dropped collision and comprehensive on my older Mustang but still high. What else can I do but pay through the nose?
This article is incredibly timely. My auto carrier tried to increase my auto and homeowners coverages by $125/mo or $1500/year. Just my wife and I with two Subarus, both retired, no accident history, and no business miles. No matter what I said to my agent it had no effect. I took our business elsewhere and priced it actually lower than last year with another named carrier. Don’t penalize me as I did not contribute to the problem!