The Brief

It's not only car prices that are giving drivers sticker shock these days — it's also happening when they open their car insurance bills.

The cost of auto insurance jumped more than 19% during the year ending in August, while overall inflation was 3.7%, according to the Labor Department Wednesday.

On a monthly basis, car insurance prices rose 2.4% between July and August, contributing to a larger than expected jump in core inflation for the month. Inflation was also fueled in August by rising rents and gasoline prices.

Here are four reasons driving the spike in car insurance prices — and what car owners can do to save money.

Drivers have gotten a lot riskier during the pandemic

Insurance premiums actually fell in the early, locked-down stage of the pandemic when many cars sat parked for weeks.

By they time they returned to the roads, however, many drivers seemed to have forgotten how to drive safely.

"People picked up some risky habits," says Sean Kevelighan, CEO of the Insurance Information Institute. "And we haven't seen those risky habits go away, even though we have more people on the road."

The number of fatal auto accidents jumped sharply in late 2020 and early 2021, according to the National Highway Traffic Safety Administration.

While accident rates have since declined, they remain higher than they were before the pandemic, which contributes to the rising cost of insurance.

The Farmers Insurance logo is displayed outside company headquarters in Woodland Hills, Calif., on Aug. 29, 2023. Insurance companies are having to raise their auto premiums for several reasons including a rise in natural disasters and the rising cost of repairs and parts replacements.

(

Mario Tama

/

Getty Images

)

Repairs and parts replacements are proving costly

The cost of repairing or replacing a car that's damaged in an accident have also jumped sharply, thanks to snarled supply chains, parts shortages and a tight labor market that's led to rising wages for auto mechanics.

New and used car prices have begun to fall in recent months, but repair costs are still climbing.

"As much as we're beginning to see month over month decreases in inflation, which is good news, we also have to set in there that we have seen pretty significant price increases overall that have taken place over the last three years," Kevelighan says.

Natural disasters are also driving up insurance costs

In addition to car crashes, natural disasters — fueled in some cases by climate change — are also contributing to higher insurance premiums, and not just in states prone to hurricanes or wildfires.

"We see a lot of hail damage," says Grace Arnold, who oversees Minnesota's insurance market as the state's Commissioner of Commerce.

Arnold says the costs of weather occurrences can quickly add up.

"We consistently have billion-dollar storms in Minnesota, even if they don't have the 24-hour hurricane watch ahead of them," she adds.

Insurance regulators have to strike a balance

Regulators like Arnold have dual role: trying to keep insurance premiums low enough for drivers to afford them while also keeping insurance companies solvent, so they can keep paying claims.

"We in general have found that the rate increases are justified" she says, by the higher costs that insurance companies are facing.

The Insurance Information Institute says auto insurers paid $1.12 in claims last year for every dollar they collected in premiums. This year, that ratio is expected to be $1.09.

Insurance companies typically count on investment proceeds to cover that shortfall.

"What people really don't understand is that insurance companies make most of their money by investment of our premiums," says Harvey Rosenfield, the founder of Consumer Watchdog in California. "When they run into trouble, they have a scapegoat system set up where they blame something else for the fact that they need to raise their rates because they want to offset their investment losses. That's how the industry works."

So what can you do?

Most states require drivers to carry auto insurance, but there are ways for drivers to lower their costs.

"The very first thing you've got to do is shop around," Rosenfield says. "There are often better deals to be had."

Many companies offer a discount for drivers who bundle their auto and home insurance, as TV commercials seem to tout all the time.

Others will lower the premium for drivers who agree to install an app on their phone, allowing the company to track their driving habits.

Opting for a higher deductible can lead to lower premiums, though Arnold cautions against gambling with too little insurance.

"I find it helpful to think through a couple of examples," she says. "If I had my car stolen, what would that mean for me? If I were in an accident, what would that mean? The last thing you want is to be surprised."

Arnold says her office gets some complaints about the jump in auto insurance premiums. But more often she hears from people who are unhappy with what they see as a skimpy payout when they file a claim.

Geffen Playhouse Artistic Director Tarell Alvin McCraney won the Academy Award for Best Adapted Screenplay for the movie Moonlight, but don't expect to see him at this year's Oscars ceremony.

"I tend to stay away from the awards show," McCraney said. " I think I might have PTSD."

McCraney is referring to the viral moment from the 2017 Oscars ceremony, where La La Land was mistakenly announced as the Best Picture winner instead of Moonlight.

McCraney isn't new to theater. In fact, you could consider it his original home before his play In Moonlight Black Boys Look Blue launched him into the Hollywood spotlight. But when the Geffen Playhouse asked him to be their artistic director two years ago, it called him back to the stage in a different way. Tapping a screenwriter for the position was a first for the theater, but McCraney said the roles actually overlap in more ways than one.

 "The job of the screenwriter most times is to make sure that everybody is understanding where the story is going and what the 'action' of the piece is," McCraney said. "So it's not that much different than being an artistic director.  My job here is to set the artistic goal for the organization. [To] point out its virtues and pitfalls, the dangers and the obstacles, and then move collectively as a single storyteller towards that goal."

McCraney said one of the great things about living in Los Angeles is its nuanced racial and ethnic communities, and he rides his bike around the city to better experience them.

"The landscape is constantly shifting and changing," McCraney said. "For example, Westwood has drastically changed over the past 15 years and will change irrevocably with the coming of the new train station down on Wilshire. It will change again with LA28 happening."

Just like Los Angeles, the Geffen Playhouse has had multiple transformations over its more than 30 year existence. Their world premier show, Silvia Silvia Silvia, is playing until March 8. Dragon Mama, starring Sarah Porkalob, begins March 4.

"Sarah is an incredible singer and writer and has created this incredible arc through a family that is both powerful and witty, but also deeply nuanced," McCraney said. "She's sharing that family with us, and family is our first community. They are the people we learn the most from. We learn unconditional love. We learn collective bargaining. Investigating family, investigating why we stay together and how we stay together through dire circumstances is a critical investigation for us right now."

When it comes to this year's Oscars ceremony, McCraney said he's rooting for all the nominees.

"It's been an incredible season," he said. "But Sinners is an incredible film that I've seen three or four times, so I'm really excited to see how it does."

The Long Beach Community College District has agreed to pay $18 million to more than 1,450 part-time professors to settle a class-action lawsuit that alleged they were forced to work unpaid hours outside the classroom, grading papers and tests, meeting with students, preparing lessons and other duties.

The settlement, which the district board quietly approved last month, still needs the judge overseeing the case to sign off. A hearing on the matter is scheduled for July 1 in Los Angeles County Superior Court. It’s likely that Judge Stuart Rice will approve the deal. Last year, he ruled that the part-timers, commonly called adjuncts, were entitled to the pay they sought, writing he found “a myriad of problems” with the district’s claims that its practices did not violate state law.

The case has made “a major impact throughout the state already,” as some districts have begun negotiating contract terms to give adjuncts what they’ve long sought — pay for time they spend prepping and grading, not just for class time, said the plaintiffs’ lawyer Eileen B. Goldsmith, in an interview. (EdSource published an investigative series in the issue, Gig By Gig At California’s Community Colleges, in 2022.)

The Long Beach district recently set aside $20 million for the settlement and associated costs, its spokesperson, Stacey Toda, told the Long Beach Post in an email. “Resolving this matter allows the District to avoid prolonged litigation and manage risk responsibly, consistent with standard practices across public higher education,” Toda wrote.

The settlement “is a big deal, it is tremendous,” said John Martin, chair of the California Part-Time Faculty Association, and a community college adjunct professor in Shasta and Butte counties.

Martin, a long-time advocate for better pay for adjuncts, is also the plaintiff in similar ongoing lawsuits, including one against the state Community College system.

In legal papers filed in the Superior Court, Goldsmith wrote that the proposed settlement, if approved, will result in 1,456 class members receiving more than “$11,000 — a very meaningful result for these class members, particularly given the novel issues in this litigation.”

The Long Beach Post contributed to this story.