Though the spike in auto insurance rates has been especially pronounced in Ohio, premiums are up across almost the entire U.S. In fact, the national average rate for full-coverage auto insurance jumped 16% from 2022 to 2023. Some of the reasons for rate increases are the same factors responsible for larger national trends, while others are more specific to car insurance in Ohio.
Car Repairs Have Gotten More Expensive
Insurance companies raise rates to account for increased financial risk in the places where they operate. One of the major costs that car insurers face is paying for repairs as part of insurance claims, and these costs have gone up significantly.
Based on data from the U.S. Bureau of Labor Statistics (BLS), the cost of car repairs and maintenance ballooned by 14.2% between January 2022 and January 2023. As a result, the average payout for repair claims increased alongside it. That means auto insurers are paying far more for covered repairs with each claim, translating into large cost increases.
The Price of Cars Has Skyrocketed
Insurance companies often pay current market value for a vehicle when it gets totaled in a covered loss. As with the price of car repairs, the cost of new and used cars has seen a dramatic increase in recent years.
Between January 2021 and January 2023, the average cost of a used car increased by 24.5%, according to consumer price index (CPI) data from the BLS. This means that the value of cars that are considered total losses has gone up significantly and so, too, have their payouts. In addition, the rapid increase in used car prices means that older policies may have been set based on a lower value than the car’s worth at the time of the total loss claim.
New cars have also seen a substantial increase in cost, with the CPI for new vehicles rising by 18.7% from January 2021 to January 2023. Since some auto insurers offer policies that provide the dollar value of a new car following a total loss, the cost of fulfilling these claims has soared.
Motor Vehicle Thefts in Ohio Have Increased
Motor vehicle theft is another major source of total loss claims in the insurance industry. Unfortunately for Ohio drivers, they’re a larger factor than in many other parts of the U.S.
According to the Insurance Information Institute (III), Ohio ranks seventh in the country for motor vehicle theft. Car theft is also on the rise in the Buckeye State. In 2022, Ohio recorded 29,913 vehicle thefts — a 6% increase from 2021, when the state recorded 28,107 car thefts.
More thefts means more claims for insurers to pay out. Stolen cars often are not recovered, resulting in a total loss. But even when they’re found, these vehicles are usually damaged and in need of increasingly expensive repairs.