NEW YORK — Shopping around for a car? You’re in luck. Shopping around for a new auto insurance policy? Better buckle up. New, used and even rental car prices continue to slide while car insurance rates remain vastly elevated.
That diverging trend seems counterintuitive: If the price tag for a car has gone down, shouldn’t the cost to insure it go down too? If only it were that simple. In an aerial view, cars sit on the lot at the Howdy Honda dealership on March 18, 2024, in Austin, Texas. “It’s a mosaic of factors that impact auto insurance costs,” said Scott Shapiro, who leads KPMG’s US insurance division.
“While there is a general correlation between the price of the vehicle and insurance as it relates to physical damage, there are other factors beyond the price of the car that impact premium costs.” For instance, almost 41,000 people died in car crashes last year — 8,000 more fatalities compared to 2013, the National Highway Traffic Safety Administration estimated. That’s led to an increase in claims that are well above historical dollar amount averages because of their severity, according to LexisNexis Risk Solutions data.
Car insurance rates are up 18.6% for the 12 months ended in July, according to Consumer Price Index data released Wednesday. That marked the third-largest jump in prices over the past year across all goods and categories that CPI tracks.
Still, that’s an improvement from March, when car insurance rates were up 22.2% annually. The .