Survey: Nearly 25% of Drivers Reduced Coverage Due to Rising Costs

A new survey reveals that nearly a quarter of drivers opted for less car insurance coverage than they wanted in 2023.

The national poll of more than 1,200 American drivers by Jerry, a car insurance savings app, found that rising car insurance premiums forced 22 percent of drivers to buy less coverage than they wanted in 2023, with 39 percent of Gen Z and 32 percent of millennials leading the way.

Just 38 percent of drivers surveyed shopped around for insurance.

“Elevated car-ownership costs prevailed in 2023. Car insurance expenses alone rose at an annual rate of 19.2 percent in October, the fastest increase since at least 1985, the earliest year for which data is available,” says Henry Hoenig, Jerry data journalist and study author. “But signs of hope are starting to show. Falling used vehicle prices and the promise of lower interest rates mean that the coming year will be at least a little bit easier for budget-stretched car owners.”

More than half of American drivers reported being open to their driving being monitored through a telematics program by their insurance company in exchange for a reduced premium.

A revealing statistic from the 2024 State of the American Driver Report is that just nine percent of those surveyed were familiar with the concept.

Nearly a quarter (24 percent) of respondents with a monthly car payment spent more than 20 percent of their household’s take-home pay on car payments in 2023, while nearly two-thirds (63 percent) spent more than 10 percent.

More than half (58 percent) of American drivers cut spending in other areas—such as restaurant meals, clothing and groceries—because of the high cost of owning a car. That included 80 percent of Gen Z and 69 percent of millennials.

Josh Damico, vice president of insurance operations at Jerry, shared his predictions for 2024:

• As inflation declines and insurers see increases in their average premium, loss ratios should start to meaningfully decline. California, for example, is a state where some insurance companies stopped or extremely limited policy sales. As more insurers become confident in their rate levels and re-enter the market, we should see a return to a normal and healthy marketplace environment, which generally equals more choices and competitive pricing for customers.

• Driving data could become the single most important driver pricing factor. More insurers will use telematics this year to attract drivers with an opt-in discount and qualify for additional discounts at renewal.

• Rising car insurance rates hit a four-decade high in October 2023. It rose at an annual rate of 19.2 percent, the fastest increase since at least 1985, which is the earliest year for which data is available. The rise is expected to continue pace upward this year.

• Bundling home and auto with the same insurer will likely be more challenging in 2024; the odds of finding a better policy by separating your home and auto are likely to increase.

• For the drivers looking for added financial relief: Shopping around for better rates on car insurance can save drivers a significant amount of money without compromising coverage quality. By mid-2024, the market will for the most part be open with most insurers properly priced and looking to grow. Car owners will continue to see large renewal rate increases due to the cost in doing business for insurance companies. This dynamic is expected to cause record levels of shopping and switching.