PHOENIX — Driving in and around Phoenix just got a lot more expensive.
"So this is really driven by the inflation we experienced in 2022," Cate Deventer said.
Deventer is an insurance analyst at Bankrate.com. The company studied annual car insurance premiums nationwide and found 2023 prices are rising.
"Phoenix was one of the highest metros in the country in terms of year-over-year increase," Deventer said. "It did go up about 17%. In Phoenix, the average income is actually fairly high; it's a bit higher than the national average at about $70,000. So Phoenix drivers spend about 3% of their income on car insurance."
Their study shows Phoenix sits in the second top spot for the largest price-hike of any large city. The first, they say, is Orlando, Florida.
"That could mean the cost of living in Phoenix has gone up," Deventer said. "It could mean that 2022 saw a lot of accidents, and maybe the insurance companies are just doing it as a more at-risk area. Anything that's really raising the risk is going to cause that insurance to raise."
Inflation, though, is also a significant factor.
"What happens is the claims start to get more expensive, so the cost of the vehicle repairs, parts, labor, medical care in the aftermath of an accident. All of that is impacted by inflation and starts to rise, car insurance companies notice that and have to request permission to increase their rates to compensate for higher costs."
In Phoenix last year, the average driver spent about $1,845 on car insurance. This year, it's about $2,165. However, as prices rise, Deventer said there are ways to save.
"The best long-term play is to maintain a clean driving record," she said. "That won't have an immediate impact, but it'll help keep premiums steady over time."
Deventer also said it's also a good idea to compare auto policies.
"Every car insurance company uses its own algorithm to determine your rate," she said. "So shopping around can find the most competitive premium."
While you can't negotiate your auto insurance premium, you can ask your agent or company if discounts are available and if you qualify. Deventer said most officer discounts (like if you bundle home and auto, or for young drivers, etc.).
The news that costs are sky-high isn't great, but Deventer said there's light at the end of the tunnel.
"We do think we're going to see rates rise at least for part of 2023 as companies catch up, but inflation cools, we might see some decreases happening," she said.
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