A Korean-American driver who recently relocated from Alhambra to Los Angeles Koreatown was shocked when his car insurance bill nearly doubled, despite having a clean driving record. Upon inquiry, the insurance company explained that premiums vary by location due to differing risk factors. The unexpected financial burden forced them to cut back on other expenses.
Similarly, a Buena Park resident Kim added their teenage child to a new car insurance policy, only to see premiums skyrocket by more than 60%. Despite shopping around for alternative providers, the rates remained nearly the same, leaving them with no choice but to reduce family outings to afford the increased costs.
California auto insurance premiums surged by 48% last year, ranking as the third-highest increase nationwide. This sharp rise has placed a significant financial strain on drivers, making car insurance increasingly unaffordable for many.
A recent survey by driving-related app service provider Jerry found that eight in ten drivers believe auto insurance premiums are becoming unaffordable for the average person. Over the past three years, insurance costs have risen by more than 50% nationwide, leading to widespread frustration among consumers.
The primary driver of soaring premiums has been the rising costs associated with vehicle ownership. Although overall inflation has slowed, auto-related expenses continue to climb. Used car prices remain about 30% higher than pre-pandemic levels, while new car prices have increased by approximately 20% over the same period.
Repair costs, in particular, have jumped more than 50%, further straining drivers’ finances. A staggering 76% of respondents reported experiencing excessive repair charges, and 57% admitted to paying for unnecessary repairs.
Faced with rising premiums, many consumers are taking drastic measures to cut costs. About 27% of drivers reported increasing their deductibles, while 26% reduced their insurance coverage. Among those who reduced coverage, 63% admitted their policy was now insufficient. Alarmingly, nearly 10% of respondents admitted to driving without insurance at some point due to unaffordable rates.
To offset premium hikes, many drivers are cutting spending in other areas. The survey found that 32% reduced family vacations, 30% cut back on clothing purchases, and 26% spent less on groceries.
Experts predict that auto insurance rate hikes in 2024 may be less severe than last year, as new car prices stabilize and used car values decline. However, with premiums already at record highs, relief may not come quickly enough for many drivers struggling to manage costs.
The study was based on a survey of 1,000 U.S. drivers and an analysis of auto insurance and vehicle maintenance costs over the past three years.
BY WONHEE CHO [cho.wonhee@koreadaily.com]
