Auto insurance premiums way up in Georgia, rest of U.S.

Costs of car repairs and labor, thefts, and losses from weather-related claims cited as reasons

Auto insurance premiums for Georgia drivers have been climbing, reaching an average of $2,610 a year, $67 higher than the national average, according to a report by Bankrate.

The state ranks toward the bottom of the nation in the effective cost of auto insurance — 35th — but its increases are being carried along with a national trend: the average cost of full coverage car insurance is up 26% from last year.

“There were a lot of events that happened in a short period of time,” said Shannon Martin, analyst for Bankrate, which offers online financial advice and rate comparisons. “Insurance companies are trying to recoup those losses.”

Many Georgia drivers will pay less, because they are not required to have that full coverage, which typically includes liability, collision, and comprehensive coverage for unexpected events. But for those that do have full coverage, that average premium in Georgia represents 3.58% of income, above the national average of 3.41%, Bankrate found.

That average auto insurance premium snatched the highest slice of income in metro Detroit, where drivers paid an average of $5,687 for insurance, nearly 8% of their income, Bankrate found. Seattle drivers had the lowest share, paying an average of $1,759 per year, or 1.65% of their income.

Higher charges come in the wake of surges in the price of car repairs, the number of vehicle thefts, the cost of labor and the number of weather-related claims, Martin said. “And that is only going to get worse.”

Theft also adds to rates, since companies often have to compensate owners.

Overall, there were 1,001,967 reported vehicle thefts in 2022, up from 937,976 in 2021, according to the National Insurance Crime Bureau. In Georgia, there were 26,612 thefts, the organization reported.

But the rise in repair costs is the single largest factor, according to Kelley Blue Book, an online site that provides vehicle pricing and other information. (Kelley is owned by Cox Enterprises, which also owns The Atlanta Journal-Constitution.)

Some of the escalation in repair costs was due to supply snarls during the pandemic, but much of it is pegged to the complexity of today’s vehicles, the reliance on electronics and higher labor costs.

Now, a vehicle alignment on average costs up to $193, a brake pad and rotor replacement up to $612, new spark plugs up to $417 and a fuel pump replacement more than $1,200, according to Kelley Blue Book.

But driving behavior matters, too.

After several months of near-empty highways in 2020, Americans returned to the road with ramped-up recklessness and a heavy foot on the accelerator. While more recent data is not available, national transportation agencies show Georgia’s fatalities up 20% between 2019 and 2022.

Even if you’ve had a perfect driving record and never made a claim, you might see higher premium because it may not be about you at all, according to Progressive Insurance.

“As unfair as it may seem, you may experience an auto rate increase due to insurance claims data in your ZIP code,” according to the Progressive website. “If your area has a high rate of theft, accident, or weather-related claims, it becomes riskier for an insurance company to cover drivers there.”

Advocates say a corporate money grab is a large part of the equation.

In 2020, when the pandemic dramatically depressed the amount of driving Americans did — along with the number of accidents and fatalities — insurance companies rebated about $12 billion to their customers, according to Douglas Heller, director of insurance at the Consumer Federation of America, a 56-year-old non-profit advocate and research group. “But they should have given back about $42 billion. That was the most profitable year in insurance history.”

Instead of giving more back to consumers, companies gave executives huge bonuses and shareholders larger dividends, he said.

Then, insurance companies saw climbing costs Heller said.

“Then, at the moment they had trouble, they dipped into our pockets,” he said.

Regulators should have been a little stingier about permitting the premium boosts, he said. “The state of Georgia requires every single driver to purchase this product to be on the road. They have a special obligation to make sure the rates are affordable.”

Companies often present arguments for rate hikes of 40% or more, said Bryce Rawson, spokesman for the Office of Insurance and Safety Fire Commissioner. “We try to bring them down to somewhere between 7% and 15%.”

Companies have pulled out of some states claiming regulators were too tough on them.

While there are now many insurers in the Georgia market, it’s the larger ones that provide coverage for most drivers. Consumers need to be protected, but regulators don’t want to chase away those companies, Rawson said.

“It’s all about balancing interests,” he said. “If big companies pull out — that’s when you’ve got to worry. It’s a realistic fear.”

A related concern is that higher rates will convince some drivers not to buy insurance at all.

Going uninsured is a violation of the law, but it happens and when uninsured drivers have accidents, that effectively raises prices for everyone else as companies spread the costs around. Estimates for the number of uninsured drivers are hard to come by. But 1-in-6 younger drivers operate without it, according to a survey by PolicyGenius, an online insurance site.

Driving a vehicle without insurance is a misdemeanor, but the penalties can include suspension of a license for months, up to $1,000 in fines and up to a year in prison.