Is Car Insurance Getting Worse in 2023?

Key Takeaways:

• Car insurance costs are expected to continue rising through 2023.
• Customer satisfaction is suffering due to slower car repairs and claims processing.
• Insurance companies have been accused of pressuring repair facilities to cut corners.

Are drivers feeling increasingly frustrated with the auto insurance industry in 2023? Factors like rising premiums, slower claims processes and the suspicion that insurers may be hindering the repair process could all contribute to a general sense of wariness. While there’s no actual proof that car insurance is getting worse in 2023, many motorists seem to believe so.

In this article, we at the Guides Auto Team will examine a few of the key problems facing drivers and insurers in 2023. We’ll also recommend a few of the best car insurance companies in the hopes that better times are ahead for the auto industry as a whole.

Many drivers paid higher-than-average auto insurance premiums last year and they’re likely to face more of the same in 2023. The price of car insurance is rising due to factors that are often completely out of auto insurers’ control.

Car Repair Costs Have Soared

Even with inflation cooling a bit, the cost of car insurance keeps going up due to increased repair costs. Stubborn supply chain problems are also making things difficult and much pricier. Add in a labor shortage in the auto repair market and it’s no surprise that big rate increases are expected as 2023 progresses.

Factories and trade routes are still struggling from the effects of the COVID-19 pandemic. Auto manufacturers are recovering from the resulting microchip shortage, and parts are harder to come by in repair shops across the U.S. Repairs that used to take days may take weeks now.

“The insurance industry as a whole is raising rates,” says Nathan Weller, an insurance staff writer for Fit Small Business and a licensed claim adjuster in 13 states. “There are several factors, but all of them come down to the high loss ratio companies are experiencing. Since the end of the [COVID-19] lockdown, supply chain issues and backed-up shops have caused the costs of all claims, including minor claims, to skyrocket.”

The J.D. Power 2022 U.S. Auto Claims Satisfaction Study℠ paints a bleak picture of the current car insurance climate. Overall satisfaction with the auto insurance claims process fell seven out of 1,000 points from the 2021 study, while satisfaction with the repair process is down by nine. It’s not hard to see why, as J.D. Power reports that the auto repair cycle has gone from a pre-pandemic average of 12 days to nearly 17.

Can Car Insurers Improve the Claims Process?

The J.D. Power study shows that customer satisfaction scores plummet when the repair cycle takes longer than three weeks. However, the score jumps significantly when customers are given an accurate estimate for the repair time upfront. Auto insurers may be able to boost satisfaction by being transparent about how long repairs will take and by providing updates to customers as needed.

Car insurance companies can also do better with communication throughout the claims process. In the J.D. Power study, satisfaction rates were lowest when customers had to interact with three or more representatives. Streamlining the claims approval process could be key to keeping customers happy in 2023 and beyond.

Along with rising coverage rates and repair costs, it’s worth considering the possibility that insurers could be meddling in the repair process. Insurance companies using their own repair networks and pressuring facilities to use generic parts aren’t new tactics, but they’ve become more common in recent years. Paying less on claims is one way that underwriting companies can boost profits without hiking insurance premiums too much.

This issue led to the proposal of House Bill 5366 in the Connecticut General Assembly last February. State legislators considered the bill, which would have prohibited insurer influence over collision repair decisions at auto repair facilities. One example of potentially negative influence from an insurer on a repair shop would be the pressure to use an aftermarket or recycled part rather than an original equipment manufacturer (OEM) part. While this bill could have stopped car insurance companies from exerting pressure on repair shops, it failed to pass.

While you may feel that car insurance is getting worse this year, that’s no reason to skimp on coverage. Nearly every state requires minimum coverage and insurance experts recommend optional types like collision and comprehensive coverage to protect your personal finances.

Below are a few of the most common types of auto insurance across the U.S.:

• Liability coverage: Almost every state requires at least some form of this auto  insurance type. It includes bodily injury liability and property damage liability protection, so it will cover other drivers’ medical bills and car repairs after an at-fault accident.
• Collision insurance: Collision coverage pays for repairs to your own vehicle after an accident, regardless of who is at fault. Damages caused by hitting a guardrail or a road hazard such as a pothole will also be covered.
• Comprehensive insurance: This coverage type protects you from vehicle damages caused by theft, vandalism and natural disasters. Combining comprehensive coverage with liability insurance and collision coverage is known as full-coverage car insurance and is required by most auto lenders.
• Personal injury protection: Known as PIP, this coverage helps to pay for your medical bills and those of passengers after an accident. It’s required in the 12 states with no-fault insurance systems and is also mandatory in Puerto Rico. Along with medical expenses, PIP covers certain child care costs and lost wages due to injury.
• Medical payments coverage: Commonly called MedPay, this is another insurance policy that helps to cover medical bills after an accident regardless of who caused it.
• Uninsured/underinsured motorist coverage: This protects you from injuries and vehicle damages caused by an uninsured motorist or a driver with insufficient coverage.

Minimum-Coverage Laws Vary by State

Each state sets its own minimum-coverage standards, so it’s important that you find out how much insurance is required where you live. Due to differing risk factors and car insurance laws, prices vary widely by state even if two people have the same driving history.

While it’s far from the only factor, strict coverage requirements are one reason that car insurance prices are worse in certain states. You can expect to pay steep auto insurance premiums in the following states:

• Florida
• Louisiana
• Michigan
• New York

While rates tend to be more affordable in California and Illinois, you’ll often find the cheapest prices in Vermont, Maine, Wisconsin and Ohio. Not all of these states have the most basic requirements, but they’re typically easier to comply with than the rules in states where insurance is expensive like Michigan or New York.

The average cost of car insurance keeps going up and drivers are waiting longer than ever for needed repairs. That’s a recipe for diminished customer satisfaction during challenging economic times. It’s gotten tough to argue that car insurance isn’t getting worse in 2023.

Top-Rated Car Insurance Companies

Regardless of the auto insurance market’s current state, there are providers that still offer quality coverage at competitive rates. As you compare car insurance quotes, we recommend that you look carefully at State Farm, USAA and Geico.

State Farm: Editor’s Choice

We give State Farm our Editor’s Choice award due to its variety of coverage options, affordable rates and large number of car insurance discounts. The company offers an extremely generous good student discount that can save young drivers up to 25% on their policies. State Farm’s Steer Clear^® program helps young drivers to improve behind the wheel and unlock additional discounts at the same time. The company has been in business since 1922 and serves all 50 states, though it’s not accepting new policyholders in Massachusetts or Rhode Island.

Read more: State Farm insurance review

USAA: Low Rates for Military

The main caveat with USAA auto insurance is that it’s only available to members of the military, veterans and their immediate families. If you’re eligible for a USAA auto policy, though, it’s tough to beat the company’s combination of low rates and top-quality coverage. USAA offers add-ons such as rideshare insurance, accident forgiveness and gap coverage, which takes care of the remainder of your auto loan in the event of a total loss.

Read more: USAA insurance review

Geico: Affordable for Most Drivers

As the second-largest car insurance provider in the U.S., Geico offers affordable rates to drivers nationwide. Geico also ranked above average for most regions in the J.D. Power 2022 U.S. Auto Insurance Study℠ as well. The company offers up to 25% off for insuring multiple vehicles and up to a 15% discount for good students.

Read more: Geico insurance review

Our Methodology

Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies. We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the insurers that scored the most points topping the list.

Here are the factors our ratings take into account:

• Cost: Auto insurance rate estimates generated by Quadrant Information Services and discount opportunities were both taken into consideration.
• Coverage: Companies that offer a variety of choices for insurance coverage are more likely to meet consumer needs.
• Reputation and experience: Our research team considered market share, ratings from industry experts and years in business when giving this score.
• Availability: Auto insurance companies with greater state availability and few eligibility requirements scored highest in this category.
• Customer experience: This score is based on volume of complaints reported by the National Association of Insurance Commissioners (NAIC) and customer satisfaction ratings reported by J.D. Power. We also considered the responsiveness, friendliness and helpfulness of each insurance company’s customer service team based on our own shopper analysis.

Our credentials:

• 800 hours researched
• 45 companies reviewed
• 8,500+ consumers surveyed

*Data accurate at time of publication.