Posted on September 28th, 2022.

Annual car insurance rates in the US stand at $1,771 on average for a full year of coverage, according to Bankrate’s latest figures, but data obtained by the consumer financial services firm is pointing at rate increases across the country throughout 2022.

Auto insurance premiums are rising by an average of 4.9% nationally based on approved rate filling data between January 01 and May 18 from S&P Global Market Intelligence. If the trend continues, consumers could soon pay as much as $1,858 annually for the same coverage, Bankrate noted, adding that the price hikes are expected to impact more than 62.5 million policyholders.

The firm attributed the rise primarily to inflation, which the firm described as the “biggest driver of higher 2022 car insurance premiums.”

“Perhaps the biggest driver of [the rate increases] is the same thing that is driving up costs across the board — inflation,” Bankrate wrote in its analysis. “Between June 2021 and June 2022, the Consumer Price Index (CPI) rose 9.1%. This means that, on average, we are spending 9.1% more than we were a year ago for the same goods and services.

“While auto insurance is certainly not the most drastic increase — fuel, energy commodities, and airline fares take the top spots — the increase still has the potential to further strain consumers’ wallets.”

Bankrate added that other factors that have a direct impact on car premiums are also being “struck by inflation.” These include vehicle prices and the cost of healthcare.

“The price for new cars and trucks rose by 11.4% between June 2021 and June 2022, while the used car and truck market saw a 7.1% increase,” the firm explained. “Vehicles are also much more complex than they used to be, which adds to the overall cost of ownership. Even small accidents can cause hundreds or thousands of dollars worth of damage to delicate electronics that require specialized repairs.

The latest available data from the Centers for Medicare & Medicaid Services (CMS), meanwhile, has shown a 9.7% jump in healthcare spending in 2020, which indicates greater medical costs compared to previous years for someone injured in a vehicular accident.

The situation could prompt many motorists to opt for cheaper coverage, something that Bankrate warned against.

“You may be tempted to lower your coverage to save money, but insurance professionals advise against this strategy,” the firm cautioned. “Car insurance is designed to protect your finances in the aftermath of accidents and lowering your coverage could leave you with higher out-of-pocket bills. In an inflationary economy where nearly everything costs more, proper car insurance could help you hang on to more of your hard-earned dollars if you file a claim.”

How does a vehicle’s make and model impact car insurance premiums?

The type of vehicle a person drives is one of the biggest factors that affect auto insurance rates, Mark Friedlander, director of corporate communications for the Insurance Information Institute (Triple-I) in St. Johns, Florida, told insurance marketplace Insure.com.

“Insurers consider the cost of repairs for a new vehicle and its general safety record as well when pricing the risk,” Friedlander explained. “Individual rating factors also play a key role in determining your premium. In general, a cheaper new vehicle means your insurance will cost less than if you purchase a more expensive car.”

Insure.com added that car insurance providers prefer to cover vehicles that are deemed safe as these are less likely to result in expensive claims.

“A car with good safety ratings may save you money,” the firm noted. “Whereas cars that are newer, more powerful, smaller, and costly are more expensive to insure.”

Which types of vehicles have higher insurance costs?

For motorists looking to save on car insurance, experts advise against purchasing these types of vehicles:

Sports cars: These types of vehicles are built for speed. Naturally, people tend to drive them faster, increasing the risk of accidents and traffic infractions. Sports car drivers are often also younger and seen as more accident-prone, driving up premiums.
Luxury cars: These high-end vehicles come with exorbitant repair and replacement costs because of their expensive parts and costlier detailing.
Electric vehicles: EVs incorporate advanced technology that may require specialized repairs when damaged. Replacing an EV battery, for instance, can set owners back thousands of dollars. However, there are several car insurers offering discounts to EV drivers, so this may help offset the cost.
Theft-prone vehicles: The likelihood that a car will be stolen has a huge impact on the rates of comprehensive coverage. Higher premiums are often set to compensate for the increased possibility of theft.

What are the least expensive cars to insure in the US in 2022?

To find out which vehicle types have the cheapest premiums, Insure.com commissioned Quadrant Information Services to calculate the average auto insurance rates for 2022 models using data from seven of the country’s largest carriers – Allstate, AmTrust, Farmers, GEICO, Nationwide, Progressive, and State Farm – in 10 zip codes per state. Nearly 3,000 models were included in the study.

The premiums below are based on full coverage for a hypothetical single 40-year-old male motorist who commutes 12 miles to work each day and has a clean driving record and good credit history. Coverage, meanwhile, comes with policy limits of $100,000 for injury liability for one person, $300,000 for all injuries, $50,000 for property damage, and a $500 deductible on collision and comprehensive coverage.

These are the top 20 cheapest cars to insure, according to Insure.com’s research.

Rank

Vehicle make and model = Average annual premiums

1 Subaru Forester 2.5I Wilderness = $1,353

2 Hyundai Venue SE = $1,360

3 Honda CR-V LX = $1,366

4 Mazda CX-30 S = $1,379

5 Toyota C-HR XLE = $1,384

6 Toyota C-HR NightShade = $1,387

7 Mazda CX-30 S Premium = $1,388

8 Honda CR-V EX = $1,391 and Kia Seltos LX = $1,391

10 Honda HR-V EX = $1,398

11 Hyundai Venue SEL = $1,402

12 Ford Transit Connect XL = $1,405

13 Volkswagen Tiguan S = $1,406

14 Mazda CX-5 S Select = $1,407 and Subaru Outback 2.5I = $1,407

16 Honda HR-V Sport = $1,408

17 Subaru Forester 2.5I Sport = $1,412 and Toyota C-HR Limited = $1,412

19 Chrysler Voyager LX = $1,413

20 Jeep Wrangler Willys Sport = $1,415

Source: Insure.com

What other factors impact car insurance premiums?

The type of vehicle, however, is just one of the several factors that auto insurers consider when determining premiums. A person’s age, gender, residence, and credit score can likewise be the basis of their car insurance rates. But unlike these parameters, which are mostly beyond a driver’s control, the choice of vehicle is something they have complete control of.

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