The Cost of Car Insurance Rose More Than 22% Through April to $1,280

In the American popular imagination, owning a car symbolizes freedom. The freedom to hit the road at a moment’s notice, roll down the windows, blast the radio — and, as of late, pay a hefty sum for car insurance.

According to a new report from the Bureau of Labor Statistics, the price of motor vehicle insurance rose more than 22% over the year through April, the fastest pace since the 1970s. The trade group Insurance Information Institute put the average 12-month premium for car insurance at $1,280 in 2023, up from $1,072 in 2019.

One reason for the soaring prices is a matter of simple cause and effect: Cars and trucks are more expensive, so the cost of insuring them is higher, too. From there, it gets a bit more complicated. When insurers want to raise their costs, they first must appeal to state regulators and make a good case, relying on data from the past couple of years and projections for replacement costs and profits.

But during the pandemic, when driving patterns were disrupted, insurers could no longer use the past to predict the future, and rates froze for months. When insurance companies finally did submit new filings to regulators to raise premiums, it was in the second half of 2021, as drivers were emerging from monthslong COVID lockdowns and getting into more car accidents. At the same time, state regulators were wading through a vast backlog of insurer filings, leaving insurers to temporarily absorb the higher costs.

Insurance premiums will probably keep rising. The backlog has begun to diminish, but insurers are still looking to increase prices to make up for those lost years. That could be bad news for interest rates, too: The spike in insurance premiums is a contributor to inflation, and until inflation comes down further, the Federal Reserve is likely to keep interest rates high.

c.2024 The New York Times Company. This article originally appeared in The New York Times.