In 2023, vehicle owners experienced a surge in their expenses due to escalating insurance costs. This price hike has been particularly burdensome for low-income drivers who are already grappling with the cost of basic necessities.
According to Insurify, the expense associated with car ownership increased by 9% last year. The factors contributing to this rise include increasing insurance costs, inflation, and maintenance expenses. As a result of these escalating costs, approximately 10% of drivers are contemplating selling their cars. Furthermore, nearly a quarter of drivers admitted that they postponed buying a new car in 2023. The report highlighted that car insurance is the primary expense in owning a vehicle, with drivers shelling out an average of $2,076 annually for coverage.
The California Budget and Policy Center reported that Californians with the lowest incomes are being disproportionately affected by inflation and rising costs. Among California households earning less than $35,000 annually, over 60% stated they struggled to meet the costs of basic necessities such as food and shelter. Forty-six percent of households earning between $35,000 and $74,999 also reported difficulties affording basic needs. Additionally, financial hardship in covering necessities was reported by 54% of black households in California.
According to the American Tort Reform Association (ATRA), one factor propelling insurance costs upwards in California is excessive litigation. The ATRA report indicated that inflated tort costs are causing prices to soar for both businesses and consumers. It suggested that California residents are effectively paying an additional "tax" amounting to hundreds of dollars each year to cover the cost of these lawsuits. This price increase is primarily due to insurance companies transferring the cost of increasingly expensive litigation onto consumers.
Insurify is an online platform that allows consumers to compare insurance policies. According to its website description, it employs AI-powered technology to offer real-time quotes to consumers. To date, around 4.6 million users have used Insurify to find insurance coverage.