Top reasons behind a surge in Phoenix auto insurance rates

Bankrate: Average Arizona car insurance rates are $1,810 for full coverage
In addition to natural disasters, vehicles are just more expensive to repair, and insurance companies are passing those costs on through higher rates.
Updated: Sep. 19, 2023 at 5:45 PM MST
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PHOENIX (3TV/CBS 5) — Andy Anderson and his wife, Kris, say they’re safe drivers with no tickets and no insurance claims. So, the couple was absolutely shocked when their insurance premiums for their two vehicles jumped a whopping 53%. “No other changes. Good driving records. No claims,” Andy told On Your Side. “And then, just boom! It went up over a thousand dollars. And you just scratch your head.”

Andy’s policy went from $2,031 to over $3,114 a year for two cars. “As soon as I saw that number $3,000, I thought, ‘Geez, I hope this is a mistake.’” But it wasn’t a mistake. And one of his insured vehicles is a 20-year-old pickup. Turns out, Andy isn’t the only driver with sticker shock.

The U.S. Bureau of Labor Statistics indicates that auto insurance has gone up 17% this past year. So, what’s driving up auto insurance rates? For starters, natural disasters. “Well, it really is a collision of a number of remarkable events, not to mention more extreme weather,” said Mark Hamrick, the senior economic analyst with Bankrate.

Mark tells On Your Side that a number of natural disasters, including hurricanes along with wildfires, in the past few years destroyed countless automobiles across the nation. And it was more than insurance companies were expecting. “All of these things are causing more damage to automobiles,” he said. “Think about how a large flood can take out an entire community, and that can take out a whole lot of cars. We’re talking about a flash flood or a fast-rising river.”

In addition to natural disasters, vehicles are just more expensive to repair, and insurance companies are passing those costs on through higher rates. Mark said, “Think about how, for example, a rearview mirror that has a camera in it or some other sophisticated electronics cost a lot more to replace.”

And finally, when COVID-19 hit, more people worked from home, meaning fewer cars were on the road, which was good. Fewer cars led to fewer collisions, and that means fewer claims. Well, those workers are now back to driving, and their driving habits seem to have worsened. “It’s quite palpable how more dangerous drivers are behaving around here, and anecdotally, I hear that from family and friends elsewhere.”

But drivers like Andy say it’s not just right. Being behind the wheel with no tickets or claims should come with benefits like lower rates. Instead, insurance rates are spiking. Andy says in his last conversation with his insurance company, he was told this: “I’ve checked everything out. No records and no claims. But it is what it is. This is a general increase,” he remembers the insurance representative telling him.

Make sure you’re not paying too much for auto insurance. Every year, consumers should shop around and research how much other companies would charge. Also, make sure you’re not paying for things you don’t need. And finally, consider increasing your out-of-pocket deductible. A higher deductible equates to lower premiums.

On Your Side also reached out to the Arizona Department of Insurance regarding the spike in auto insurance rates. We asked if they knew of any proposed auto rate hikes by insurance companies and if the agency has to approve hikes. The agency replied:

2022 Motor Vehicle Premium Report

For general information on the Arizona Department of Insurance and Financial Institutions website about auto insurance.

Look up rate filings by insurance companies.

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