Key takeaways:
- The average cost of full coverage auto insurance has increased 13.7% from last year to $2,014 a year nationally.
- Drivers in some cities, such as Orlando, Tampa and Miami, are paying around $3,000 a year for coverage.
- The higher costs are a lagging effect of high inflation from the last two years, caused by labor and parts shortages.
According to Bankrate’s annual True Cost of Auto Insurance Report, released Monday, the average cost of full coverage auto insurance has hit $2,014 a year nationally, a 13.7% increase from last year. This comes as car buyers are facing higher interest rates on auto loans, while car prices have also inched higher.
The typical monthly payment for a new car is now $717, 37% higher than five years ago, according to Edmunds. Drivers in some cities — including Orlando, Tampa and Miami — are paying about $3,000 this year for coverage, Bankrate said.
Cate Deventer, Bankrate’s insurance analyst, explains that car insurance rates are reactionary, and that the higher costs are a lagging effect of high inflation from the last two years that resulted from labor and parts shortages, which in turn drove up the cost of paying insurance claims on car repairs and related insured expenses.
Though inflation may be starting to ease, drivers won’t see a break on their insurance this year, with the average cost of a policy rising almost 14%. Rates could climb even higher, depending on how inflation impacts the economy, said Bankrate analyst Cate.
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