Inflation may be starting to ease, but drivers won’t see a break on their insurance this year, with the average cost of a policy rising almost 14%, according to a new analysis.
The price of full coverage car insurance jumped to $2,014 a year in January, up 13.7% from a year earlier, according to a Bankrate study. Drivers in some cities — including Orlando, Tampa and Miami — are paying about $3,000 this year for coverage, Bankrate said.
The higher insurance costs come as car buyers are facing higher interest rates on auto loans, while car prices have also inched higher. The typical monthly payment for a new car is now $717, 37% higher than five years ago, according to Edmunds.
Rates could climb even higher, depending on how inflation impacts the economy, said Bankrate analyst Cate Deventer.
“Car insurance is a really important part of your financial health,” she told CBS MoneyWatch. “If you know your rate is going to be higher, even if nothing changes in your coverage, you can prepare your budget for that a little bit better.”
The Bankrate study examined the nation’s 25 largest cities to determine where drivers pay the most in car insurance, as a share of their annual income. It found that motorists in Boston and Seattle pay the least, at around 1.3% and 1.4%, respectively. Drivers in Miami and Tampa, Florida, face the steepest car insurance costs, at 5.5% and 5.2% of their earnings, respectively, according to Bankrate.
In general, a driver’s car insurance rate is based
