By Smartencyclopedia with Agencies

Arizona drivers are paying more than ever for car insurance, with the average metro Phoenix household shelling out roughly $2,770 annually—$226 more than the national average, according to a recent analysis by Bankrate. Despite being just below the national average, Arizona still ranks as one of the most expensive states for car insurance.

A Rapid Rise in Rates

Nationwide, the average cost of full-coverage car insurance has surged by 26% in 2024, reaching $2,543, according to Bankrate. That’s a staggering $529 increase from last year—six times faster than the overall rate of inflation and outpacing the rise in food prices.

Bankrate’s analysis found that Arizona had the fifth-highest “true cost” of car insurance in the U.S., a metric that factors in the percentage of household income spent on premiums. The average Phoenix household spends about 3.34% of its income on car insurance, slightly lower than the state average of 3.40%, but still close to the national average of 3.41%.

Why Is Insurance So Costly in Arizona?

Several factors are driving up car insurance premiums in Arizona:

1. Increased Car Crash Fatalities: A rise in fatal crashes has pushed up the cost of claims.
2. Higher Vehicle Repair Costs: The cost of parts and labor has skyrocketed, as the auto industry grapples with supply chain issues and a shortage of qualified technicians.
3. Extreme Weather Events: Arizona has seen more frequent extreme weather, contributing to a rise in claims.
4. Vehicle Thefts: Car thefts are soaring, topping 1 million nationwide in 2022, the highest level since 2008. Higher theft rates lead to higher premiums, as insurance companies account for increased risk.

Shannon Martin, an analyst at Bankrate, noted that these factors have contributed to the “drastic increase” in Arizona’s insurance rates.

A Look at the National Landscape

Compared to other states, Arizona’s insurance costs are high but not the highest. Florida, for example, leads the nation with residents spending 5.69% of their income on car insurance, paying an average premium of $3,945 annually. Other states with steep insurance costs include Arkansas (3.95%), Alabama (3.68%), and Georgia (3.58%).

Will Car Insurance Rates Keep Rising?

While vehicle and parts prices have stabilized or slightly decreased, experts warn that car insurance rates will continue to climb. Insurance comparison site Jerry points out that all major car ownership expenses, except gas, have risen significantly over the past three years. Used cars, for example, are 24% more expensive, and new cars are up by 19%.

Advanced technology in vehicles and a shortage of qualified technicians are also driving up repair and maintenance costs, which, in turn, affect insurance premiums.

“This is a long-term problem,” Jerry’s analysis warns, suggesting that the price hikes may not ease anytime soon.

What Can Arizona Drivers Do to Save?

Despite the rising costs, there are ways to potentially reduce your car insurance premiums:

1. Shop Around: Compare quotes from multiple insurers to find the best rate. “You’ll see more insurers competing for your business, which generally equals more choices and competitive pricing,” says Josh Damico, vice president of insurance operations at Jerry.
2. Consider Unbundling: While bundling home and auto insurance policies often leads to savings, in 2024 it may be more beneficial to separate them. “The odds of finding a better policy by separating your home and auto are likely to increase,” Damico noted.
3. Use Telematics: Many insurers now offer discounts based on driving habits tracked by telematics, which monitor factors like mileage and driving behavior. “Driving data could become the single most important insurance pricing factor of 2024,” Damico said.

As Arizona drivers navigate rising costs, exploring these options could offer much-needed relief from escalating car insurance expenses.