Philadelphia, PA - With the current state of inflation and a possible recession looming on the horizon, it seems like the price of everything is going nowhere but up. This is particularly true of auto insurance -- carriers have declared their intent to raise premiums in 45 states by over 8%, a significant rate hike likely to hit motorists directly in the pocketbook. One notable exception to these price hikes has been Pennsylvania, where insurance rates have remained fairly steady over the last ten years or so. Even with the upcoming hikes, residents will likely still be able to find cheap Pennsylvania car insurance.
Auto Insurance Premiums in Pennsylvania
Not only have Pennsylvania's auto insurance premiums changed little over the past decade, but they've also actually gone down in some instances. To begin with, Pennsylvania's average yearly premium is $263 below the national average at $1266 per year. Kristine Lee at the Zebra has some even more surprising figures: the average yearly premium in 2012 was $1222, only 44 dollars less than premiums in 2021.
The state's average premium has undergone several fluctuations over the years, as compared to the steady rise that occurs in some states. The average premium dropped to its lowest in 2014 at $1061 and was at its highest in 2018 at $1480. The biggest jump in Pennsylvania car insurance was in 2017, at $209.
Of course, rates will always vary by city, and large urban areas will always cost more because of the myriad risks involved in driving dense urban areas. Pittsburgh, for example, has a yearly premium average of $1867, while motorists living in Philadelphia will pay a formidable $3315.
Premiums also vary by coverage -- with the rate hikes, Pennsylvania drivers with full/comprehensive coverage can expect to pay $2,040 in the coming year, while minimum coverage (liability only) will cost about $428 a year. There are a lot of other factors that will impact your insurance.
But rates are set to go up for everyone in Pennsylvania, and in response, the Pennsylvania Insurance Department has announced they are increasing the automobile accident surcharge threshold cap to $2100. State law in Pennsylvania requires the department to adjust this threshold cap every three years -- the cap rose from $1800 to $1900 in 2022, for example. This measure has been put in place to help protect policyholders from insurers imposing penalties on claims up to $2100.
Why Car Insurance is Going Up
So why are insurance rates going up so much to begin with? A few reasons.
First, the supply chain issues caused by the global pandemic continues to make life more difficult. Replacement parts are in short supply, to the point where there's an emergent black market for catalytic converters. This means repair and replacement costs have gone up, leading to bigger payouts when it comes to auto accident claims. A close cousin to this is the fact that more electric vehicles are on the road than ever -- they're more expensive to purchase and repair, and for the moment, cost quite a bit more to insure than gas-powered vehicles to insure.
Another reason is health care costs. It's no secret the cost of healthcare in the United States has exploded in recent decades. Many car insurance policies include coverage for bodily injury, and those costs make a big impact on the insurers' bottom line to make up the difference, which means passing on the cost to policyholders in the form of higher premiums.
A third reason can be chalked up, in part, to climate change. Research has shown 2010 to 2019 was an incredibly expensive decade for insurers. In 2019 alone, the country took $68 billion in damage from natural disasters and extreme weather events. Much as with health care costs, this has meant huge payouts for insurers, and those payouts are likely to only get bigger as wildfires, rising temperatures, and severe weather events become more and more frequent.
Finally, there's the matter of more motorists being on the road. Traffic eased up considerably during the height of the pandemic but has undergone a resurgence now that restrictions everywhere have been lifted. More drivers on the road means more opportunities for accidents, which translates to higher premiums.
How to Save on Car Insurance
Even though Pennsylvania might be spared the worst of it when it comes to rising premiums, there are some ways you can bring your insurance premiums down, or at least keep them from going up.
Don't be afraid to shop around and compare rates. You don't need to stick with the same insurance company forever. Ask your insurer about available discounts, take a defensive driving course, or install anti-theft technology on your vehicle. Most of all, strive to maintain a clean driving record and don't make the mistake of drinking and driving -- a DUI conviction will cost you big when it comes to insurance.
