A large number of drivers purchase multiple car insurance policies, for good reason: Many insurers have been increasing prices aggressively, so there may be better deals out there.
Auto insurance premiums are soaring due to rising vehicle prices and repair costs, as well as an increase in serious claims, often caused by dangerous driving behavior.
Allstate executives, for example, said in a recent earnings call that the brand raised rates by 16.4% in 2023 following a 16.9% increase in 2022. In 2024, they hope to secure further rate increases rates in 10 states where the company says its prices are not adequate.
As auto insurance prices rise in 2023, a new report from LexisNexis found a surge in purchasing activity. “Overall in the first months of the year the volume of purchases and new business exploded,” while in the fourth quarter activity increased significantly again, the report said. It’s evidence that motorists are “not resigned to higher fares” and will look for cheaper options, according to the report.
From October to December, auto insurance purchases increased 4.7% compared to the last quarter of the previous year.
In addition to the increase in the purchase of new policies, the report also documents an even greater increase in the number of people actually switching auto insurance. In the fourth quarter, year-over-year growth in new policies was 7%.
Why more and more drivers are buying car insurance
When drivers are hit with large premium increases at renewal, it can be the motivation to look into other companies’ rates. Looking for a new policy is a classic strategy people use to try to lower their auto insurance premiums.
This is a key factor behind the increase in purchases, but it is not the only reason. According to LexisNexis, insurance companies are stepping up their marketing efforts, which is also contributing to the trend of increased purchases.
After winning approval from state regulators to raise rates in recent months, some insurance companies are now stepping up their efforts to attract new business.
“Insurers gave up on new customer acquisition efforts over the summer, leading to a short-lived decline in purchases in the third quarter,” the report said. “In the fourth quarter, activity picked up, thanks to elevated rates and increased market efforts, creating prime conditions for a hot market.”
Last year, 41% of households with auto insurance purchased coverage at least once, a high number, according to the report.
In general, experts say everyone should look for car insurance every six months to a year. It’s best to get quotes from at least three companies to ensure you pay a reasonable price.
According to an August report from AAA, the average annual cost of full coverage auto insurance is $1,765. This is an increase from an average of $1,194 in 2019.
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