Drivers Slapped with Record High Insurance Rates: 'It Is Devastating'

Americans are crumbling under the pressure of their high-cost car insurance premiums. So much so that many have decided to abandon their insurance altogether.

Roughly 45 percent of young Americans say they've thought about going without auto insurance because of the cost, according to a new Deloitte report. And about one in five, or 17 percent, of those surveyed between the ages 18 and 34 say they're already driving uninsured.

In 2023, insurance companies across the board hiked prices and drivers are feeling the fallout.

The average cost of car insurance stands at a whopping $2,019, according to a recent Insurify report. And that's a 24 percent increase since last year, altogether representing 2.6 percent of America's median household income.

Single mom Tyann Williams, who lives in Kansas City, Missouri, said she can no longer afford both her car insurance and car payment at the same time.

"Many Americans may begin to choose less than quality insurance to save money," Williams told Newsweek.

After having her car struck three different times at no fault of her own, Williams said she is forced to pay exorbitant fees.

"The first two times, the vehicle was parked," Williams said. "The third time, I was driving and my car was shot up by a gang. All this happened in less than a three-year time frame."

After the third hit, Williams was dropped by the insurance company and now pays "skyrocketing" prices for coverage in addition to paying for the vehicle's lease.

Another driver, Roger Campe, who lives in Georgia, said his insurance surged from $1,990 in 2022 to $2,900 this year.

"It is devastating to my financial health," Campe told Newsweek.

At 73 years old, Campe said he lives paycheck to paycheck.

While he was involved in a car accident in 2022, it was a hit-and-run, with the other driver fleeing. Despite the fact it wasn't his fault, the accident likely contributed to Campe's nearly $1,000 increase.

"It's definitely had a big impact on me," Campe said, adding that he already cut his coverage benefits nearly in half in 2022.

"A driver drove right into me when I was simply making a left-hand turn onto another street. He sped off never coming back to the scene. Even though I was not at fault, I am fairly certain that incident also increased my rates. As others have done, it's just a matter of time that I will have to lower my coverages again."

Younger Americans often see the hit of high insurance premiums the most, as insurers regularly charge young and newer drivers more due to the anticipated higher risk levels.

Financial advisor and Houston First Financial Group president Chris Hensley said this is one of the few areas where age discrimination is permitted.

"While this practice can result in lower rates for older drivers, it places a heavy burden on young adults who are good drivers but still face high premiums," Hensley told Newsweek. "As most young people are just starting out in the world, these high rates can be particularly daunting and unfair."

Why Are Insurance Rates Increasing?

According to Betsy Stella, Insurify's VP of Carrier Management and Operation, the auto insurance price hikes come down to various factors.

The insurance industry saw a supply chain slowdown during the pandemic, coupled with labor shortages and inflation. At the same time, theft rates have been consistently high and more driving incidents happened once Americans returned to the office in the aftermath of the coronavirus. This led to more vehicle repairs and higher prices.

"As insurance costs have risen, we are seeing larger numbers of drivers searching for liability-only insurance," Stella told Newsweek, adding that many insurance companies will begin to offer discounts as a way to offset the increasing rates.

"Drivers who have an anti-theft system may be eligible for a reduced premium," she said.

To get the best rate, Stella encourages drivers to compare insurance costs from multiple companies and consider usage-based insurance if they aren't behind the wheel often.

Despite the Deloitte report, if more Americans choose to go without car insurance, they're playing a risky game. Without collision coverage, one accident could take away their access to a car entirely. In cities without public transit, those repercussions could be severe.

Choosing to forego car insurance also has significant implications for the rest of the drivers on the road.

"The future in auto insurance seems very murky," Christopher Fong, the CEO of Arizona-based Smile Insurance Group, told Newsweek. "The increasing number of uninsured drivers is alarming because it has the potential to cause premiums to go even higher for those who choose to have auto insurance."

In 2024, car drivers can expect a 7 percent increase in their insurance prices, the Insurify report found.

"That could change things," Peter Niebling, a dealer principal at Redlands Mazda, told Newsweek. "More people may ditch their cars for car sharing or public transit. Some might stop driving altogether. That will hit car companies hard, fewer sales and less service needed."

To navigate these changes, the entire auto industry might be forced to adapt, potentially with more flexible financing, insurance partnerships and cost education, Niebling said.

"It's a wake-up call to innovate," Niebling said. "We need to make owning and driving accessible and affordable for everyone."