Why Are Car Insurance Rates Going Up in 2023?

Several factors, like inflation, supply chain issues, and even climate change, have impacted car insurance rates nationwide in recent years.
Business woman driving car in city streets. Why Are Car Insurance Rates Going Up in 2023?

Over the past year alone, car insurance rates have increased by an average of 17%. You may have been asking, "Why has car insurance gone up?" or "Why is my car insurance going up?" The answer includes a number of different factors, such as inflation, climate change, the cost of car parts, and more. In this guide, we'll examine the specific causes of car insurance rates going up. 

Questioning, "Why do car insurance rates go up?" is common, especially in recent years. The good news is that an independent insurance agent in your area can help you find the most affordable car insurance rates available. But first, here's a breakdown of why car insurance rates are going up in 2023.

Did Car Insurance Rates Go Up in 2023?

You're not just imagining it — car insurance rates have indeed increased. Part of the reason for this is due to the rising increase in the price of auto parts and labor. In fact, the cost of vehicle repairs and maintenance reportedly increased by an average of more than 10% between October 2021 and October 2022. Repair costs and bodywork each rose by just over 13%. 

When asking, "Why is car insurance so expensive?" consider that some states have been hit worse than others. For example, in Florida, auto insurance rates have spiked by 30% compared to last year. 

This is largely due to the huge increase in reinsurance rates that auto insurers must pay. However, nationwide, the average rate of car insurance increase over the past year has been 17%. 

6 Reasons Why Your Car Insurance Went Up in 2023

If you've been wondering, "Why did my car insurance go up in 2023?" we'll break down a few specific causes next. Here are some key factors in the spike in car insurance rates this year. 

COVID-19 effects 

During the height of the pandemic, many workers who regularly commuted to work were suddenly forced to stay in and work from home. This led to a dramatic decrease in traffic, and with it, car insurance claims fell. 

However, in 2022, many workers started to resume their commutes, which caused traffic to resume its pre-COVID levels. With more traffic and traveling, accidents and other car insurance claims spiked. 


It probably comes as no surprise that inflation has played a major factor in the increase in car insurance rates as well. With the rise in inflation comes a rise in not only the sale price of new and used vehicles but also the cost of car parts and repairs. 

All of these increased costs create increased car insurance rates along with them. Car insurance costs must go up to be able to fully cover the cost of potential claims that may involve repairs.

Climate change

Perhaps a more surprising answer to, "Why did my car insurance go up?" could be due to climate change. Along with the changing climate comes an increase in the instances of natural disasters like wildfires, flooding, and other severe storms. This can lead to an increase in the risk of car insurance claims as well. 

States with a higher risk of natural disasters also have much higher car insurance premiums as a result. For example, Florida's current average cost of car insurance is a whopping $4,326 per year, partly due to the area's heightened risk of various natural disasters like hurricanes that can affect vehicles. However, in other states where the risk of severe weather is much lower, like Ohio, the average annual cost of car insurance is still much lower than that, at just about $1,112.

Theft increases

Auto theft and other related crimes, such as the theft of specific car parts, have skyrocketed in recent years. Catalytic converter thefts, specifically, have risen about 290% since 2020, and car thefts amounted to more than one million cases in 2022 alone. 

Theft is a peril covered under auto insurance policies that include comprehensive coverage. With an increase in the risk of theft-related claims, car insurance costs must go up as a whole. 

Supply chain issues 

With everything else affected by the pandemic, supply chains were no exception. So, another factor in why car insurance is going up is simple supply and demand. 

After the pandemic, global supply chains experienced much more strain than they did previously, which created more difficulty in finding auto parts due to their slowed production. As a result, the cost of car repairs and parts increased, leading to increased car insurance premiums.

Car price increases

The prices of new and used vehicles alike have risen dramatically over the past few years. As of 2023, the average price of a used car is about 44% higher than it was just five years ago, in 2018. Since cars are now more expensive to buy and replace, car insurance rates must be higher to compensate.

Additional Factors Why Car Insurance Rates May Increase

Other factors can also lead to an increase in car insurance rates. If you're still asking, "Did car insurance rates go up?" and why this might be the case, consider the following factors and how they may apply to you and your personal car insurance policy.


Where you live has a significant impact on your car insurance rates. Not only does the area's risk of severe weather affect your premiums, but so do local crime rates and car values. 

If your town's crime rate has risen recently, the cost of car insurance in your area has likely increased, too. The same goes for if your area's risk of severe weather has increased or if local auto sales prices have gone up. 

Age and gender

Your age and gender impact the cost of your car insurance. However, gender cannot impact the cost of car insurance in six states by law, including California, Hawaii, Massachusetts, Michigan, North Carolina, and Pennsylvania. 

Younger drivers tend to pay the most for car insurance nationwide due to their lack of experience and increased risk of accidents and other traffic violations. Car insurance rates for drivers decrease by their mid-20s; however, once age 65 is reached, car insurance rates tend to increase again.

Credit history

Your credit score also impacts car insurance rates. Trends have been discovered between poor credit behavior and poor driving behavior. 

As a result, customers with poor credit scores tend to pay more for their car insurance. If your credit score has worsened in recent years or months, your car insurance rates may increase as a result.

Driving record

Of course, your driving record plays an obvious role in your car insurance rates as well. The cleaner your driving history, the better your likelihood of paying cheaper car insurance premiums. 

However, once you have an accident, speeding ticket, or other traffic violation on record, you can typically expect your car insurance rates to go up quite a bit.

Car type

Another answer to "Why does car insurance go up?" is due to the increase in sales of electric vehicles. Though electric vehicles are bought and sold in the hopes of reducing emissions and slowing climate change, they're also more expensive than traditional vehicles. 

Electric vehicles not only have higher sticker prices, but they also cost more to maintain. As a result, car insurance costs are higher, too.

Coverage type

The amount and type of car insurance coverage you select for your policy also determines its cost. If you've added more coverage recently — either more types or a higher amount overall — you can expect your overall premium to also increase. 


Certain car insurance discounts can be lost over time. For example, if you used to earn a bundling discount but no longer have another type of coverage through the same carrier, you may have lost those savings. 

Likewise, if you previously had a safe driver discount but recently got into an accident, not only would your premiums increase after filing that claim for the accident, but you also would have lost your discount on top of that.


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How to Reduce Car Insurance Costs

Fortunately, there are still many different options available to help you reduce your car insurance costs. Consider these simple ways you might be able to lower your premiums.

Take a driving course 

There are many types of defensive driving courses and driver safety courses available. If you complete an approved course and submit proof to your insurance company, you may be able to score a discount on your car insurance.

Maintain a good credit score 

Improving your credit score can lead to lower car insurance premiums. If your credit score is already in the good range, keep it there.

Bundle your coverage

Most car insurance companies offer bundling discounts if you have at least two types of coverage through them, for example, auto insurance and homeowners insurance or renters insurance. If you've recently added another type of coverage through the same insurer, ask them about bundling discounts.

Ask about other discounts

Your insurance agent should automatically check for any discounts you may qualify for on coverage when you sign up for a policy. But just in case, contact your car insurance company and ask them about any discounts you may be eligible to receive that you're not already. If you know your credit score has recently improved, for example, you might ask them about specific savings you think you should be earning.

Work with an independent insurance agent

Independent insurance agents help you save the most money possible on car insurance. These agents shop and compare policies from multiple local car insurance companies for you to find the overall best blend of coverage and cost. 

They also help by adding any discounts you qualify for. Your agent can provide you with several quotes so you can select the policy that's right for you.

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