The JD Power Insurance Intelligence Report is here with more unwelcome news for motorists. According to the research firm, more and more vehicle owners are choosing to forgo auto insurance due to rising premiums. The August Consumer Price Index report put auto insurance premiums rising at 19% year-over-year. Almost in response, J.D. Power data shows that nationwide, in the first six months of 2023, the percentage of households who own at least one vehicle and report having no insurance on it increased from 0.4% to 5 ,7%. The latest data from the US Census Bureau counts 123.6 million households in the United States, 92% of which, 113.7 million, own at least one vehicle. Data from J.D. Power indicates that the number of uninsured households increased by 460,000 households, from 6.03 million to 6.49 million. That increase is similar to every household in Detroit, Michigan and Nashville, Tennessee canceling their auto insurance plans.
As you might imagine, regional differences in uninsured rates make a difference, but not where you’d expect. J.D. Power did not provide information on which state has the highest overall number of uninsured, but survey responses ranked South Dakota as having the largest statewide increase in uninsured. At the end of 2022, 3.3% of the state’s drivers were driving without coverage. By the middle of this year, that number was 6.8%, an increase of 106%. Based on a population of 895,376 residents, J.D. Power says there are more than 30,000 additional uninsured drivers on South Dakota roads, in the entire city of Aberdeen, SD. Behind South Dakota, New Hampshire showed the largest increase in uninsured drivers, at 84%. Among the states with the highest increase in uninsured, New Hampshire – the “Live Free or Die” state – also showed the highest overall uninsured rate, at 7.9%. The overall rate of those without auto insurance in Indiana stood at 7.5%, a number that rose 36% from the end of 2022 to mid-2023.
On the other side of the equation, the Intelligence Report states that “the costs of repairing and replacing damaged vehicles, medical expenses, and all other costs associated with an auto insurance claim have increased substantially.” Payouts have become so high that the auto insurance industry as a whole spent more on claims and other costs in 2021 and 2022 than it collected in premiums. A piece in Washington Post cited the Bureau of Labor Statistics as saying that vehicle repair costs have increased 14% since July 2022, a Washington, D.C. mechanic explains, “It’s more expensive to diagnose newer vehicles…The parts aren’t very more expensive, but the frequency of repairs is greater than in the past. If an airbag fails, it costs thousands of dollars: a new car might have eight airbags in it.
Unstable weather has also contributed, with more extreme events occurring throughout the year. THE WaPo The article noted that auto insurance premiums in Colorado increased 52% year-over-year as of July 2023 and 88% year-over-year in Florida. Even worse, some insurers refuse to write policies in states, such as Farmers Insurance exiting the Florida, Louisiana and California markets.
What should a driver do? J.D. Power recommends adopting policies annually and notes that 12.5% of respondents said they do just that, a record high. Customers should also talk to their insurer about ways to reduce premiums by changing coverage limits or deductibles, or asking for discounts and eligible payment plans. And based on all this news, customers would be wise to check their uninsured motorist coverage, too.