The Big Number: $1,280

In the popular imagination, owning a car symbolizes freedom. The freedom to hit the road, roll down the windows, blast the radio — and pay a hefty sum for car insurance. In 2023, the average 12-month premium was $1,280.

Here’s how it got so high →

Dominic Kesterton

That $1,280 is up from $1,072 in 2019, before the pandemic, according to the Insurance Information Institute.

And the Bureau of Labor Statistics reported that the price of car insurance rose more than 22 percent over the year through April, the fastest since the 1970s.

David Zalubowski/Associated Press

One reason for the soaring prices is a matter of simple cause and effect: Cars are more expensive these days, 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, usually 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 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.

Micah Green for The New York Times

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.

Pete Marovich for The New York Times