After a year that saw auto insurance costs increase 24%, rates are expected to grow more slowly this year. The amount to insure a vehicle in 2024 is projected to increase 7%, according to the insurance website Insurify.

What You Need To Know

  • Auto insurance rates are expected to increase 7% in 2024

  • In 2023, rates increased 24%, according to the insurance website Insurify

  • To help lower their costs, more drivers are opting to reduce or forgo coverage

  • Several states saw an increase in uninsured drivers last year

Nationally, the average rate for an annual full-coverage policy is projected to be $2,019 this year and require 2.6% of median household income. Drivers who opt for state-minimum liability insurance will pay a national average of $1,154 per year.

Drivers in New York have the highest auto insurance rates in the U.S., paying $3,374 per year for a full-coverage policy. The analysis cited the state’s dense population as increasing the likelihood of claims. Nevada, Florida, Delaware and Louisiana round out the top five.

Drivers in Louisiana pay the largest percentage of their incomes for car insurance (4.7%), followed by Florida (4.3%), New York (4.3%), South Carolina (4.2%) and Kentucky (4.1%).

Florida’s high insurance costs are largely attributable to severe weather, according to the analysis. In 2022, Hurricane Ian caused $109.5 billion of damage in the state, prompting many insurers to increase rates or stop issuing new policies.

The projections are based on Insurify’s analysis of 97 million policy quotes from partner insurance companies, many of which experienced higher loss ratios last year because of increased costs for auto parts and a growing number of vehicles experiencing more severe damage. Some of the losses are due to an increase in traffic crashes and escalating costs to repair and replace more high-tech vehicles.

“The supply chain slowdown, labor shortages and inflationary trends that began to pressure the insurance industry during COVID-19 continued through 2023,” Insurify vice president of carrier management and operations Betsy Stella said in a statement.

Now, “a bit of the pressure is lifting,” she said. “Drivers can expect some industry stabilization as we enter the second half of 2024.”

Still, auto insurance increases this year will be more than double the most recent 3.1% inflation rate. To help lower costs, drivers are increasing deductibles, lowering their coverage limits, switching insurance companies, removing drivers from their policies or dropping full coverage, according to Insurify’s analysis.

Drivers who increase their deductibles or find lower-cost policies from other insurers for the same coverage are taking less risk than those who opt to reduce coverage or get rid of it entirely.

“If you drop full coverage, you’re opening yourself up to paying out of pocket for damages to your car and property in the event of an accident,” Insurify vice president of insurance Shawn Powers said in a statement.

Because of increased rates, more drivers who own their cars outright are opting for state-minimum liability policies or forgoing coverage altogether.

In 2023, 72% of drivers searched for state-minimum policies — up from 37% in 2022 — while the number of drivers looking for full coverage dropped to 28% last year compared with 63% in 2022.

In the first half of 2023, a dozen states saw the number of uninsured drivers increase by at least 30% compared with the year prior, according to J.D. Power. Drivers in South Dakota and New Hampshire saw the largest increase in uninsured drivers.