Auto Insurance Costs Skyrocket Just as Car Prices Start Settling Down

Car prices, both new and used, are finally coming down as pandemic-related challenges are drifting further in our rearview mirrors. Unfortunately, customers aren't able to enjoy that reduction in prices as much as they should, since insurance costs are getting quickly out of hand.

Obviously insurance costs vary per person, as expensive new cars have much higher premiums than old beaters with very low-cost, low-coverage plans, and personal history is a big factor, too. However, new cars are the ones doing the most damage in terms of soaring insurance costs, which jumped 22% since this time last year, according to Reuters. That's the largest insurance cost increase since the 1970s. Insurance now represents more than a quarter of a new compact car's total cost of ownership (which includes the cost of the car, fuel, routine maintenance, depreciation, and insurance) in 2024, at 26%, per data cited from Kelley Blue Book by Reuters. That's up from 16% in 2019. For compact SUVs, that cost percentage will likely crest 20% this year.