‘Skyrocketing;’ New study shows how much people spend on car insurance, why prices are rising

Car insurance prices are rising nationwide, and the average American is spending more than $2,500 on car insurance each year.

That price is up 26% from last year according to a Bankrate report.

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“Car insurance rates have been skyrocketing. A lot of that has to do with the rising cost of cars and also parts and labor,” Bankrate official Ted Rossman said.

Nationwide, Bankrate finds most of us are spending just over 3% of our yearly income on insurance. But a new study shows those rates can differ greatly on where you live.

Across the country, Florida ranked as having some of the highest insurance costs, with drivers spending more than 5% of their yearly income on coverage. Meanwhile, Massachusetts Drivers spent the lowest, 2% of their income on car insurance.

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Here in Ohio, we pay less than the national average, paying an average of 2.3% of our yearly income on insurance.

Analysts say many factors contribute to the increase, including inflation, higher repair costs, and extreme weather.

“People don’t always think of hurricanes and car damage, but it’s true that when a lot of cars get flooded and lost, it leads to higher prices for everybody,” Rossman said.

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If you are planning to add a teen driver to your car insurance policy, be prepared to pay extra. The cost to insure a teen increased more than 20 percent in the last year, to about $5,400 a year.

If you are hoping to save some money, there are several factors influencing your rate that you can control. The report found your driving history, credit history and the type of car you drive can have a big impact on how much you pay.

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