The Deadly Reason Your Car Insurance Bill May Rise This Year

People have been driving less in the pandemic, and cars are safer than ever. Even so, America's roads are more deadly than they've been in a decade.

Beyond the obvious concerns about life and death, experts say the spiking fatality rate on U.S. roads will result in higher car insurance rates for drivers.

According to the most recent report from the National Highway Traffic Safety Administration, an estimated 31,720 people died in car crashes during the first nine months of 2021. That figure represents a 12% increase over the same period in 2020 — which also saw an abnormally high number of road fatalities, despite the lower levels of traffic due to America's widespread shift to lockdown and remote work.

The 12% increase in road fatalities is the largest year-over-year rise ever recorded by the agency, and the projection of nearly 32,000 deaths on U.S. roads is the highest for any January-September period since 2006. For the sake of comparison, in the first nine months of 2011 there were just under 24,000 traffic fatalities. In 2019, there were fewer than 27,000 deaths.

It's not simply a matter of more drivers being out on the roads. The traffic fatality rate — based on the number of deaths per 100 million vehicle miles driven in the U.S. — was usually around 1.10 to 1.15 before soaring to 1.35 in 2020 and 1.36 in 2021.

Why car insurance prices are rising

Why U.S. roads have become more dangerous is hard to fully explain, though some research indicates that as roads became less congested during pandemic shutdowns, drivers were more likely to speed and operate vehicles under the influence of alcohol or drugs. The accidents caused by these drivers were disproportionally more severe than typical collisions.

What we know for sure is that the roads are more deadly, and as a result, auto insurance companies are being forced to pay out more money in claims when accidents occur. And when that happens, it's inevitable that insurers will pass along their higher costs and hike premiums for drivers across the board.

Early in the pandemic, auto insurance companies were giving customers rebates because of the perceived increase in safety due to fewer cars on the roads. Yet as it became apparent the traffic fatality rate was on the rise, industry experts began saying last summer that an increase in auto insurance rates was coming.

Indeed, some data shows that car insurance rates have ballooned. According to Insurify, an online marketplace for insurance, the average annual cost for an auto insurance policy in 2021 was $1,633 — a 12% increase over 2020. Insurify is projecting a further increase of 5% for 2022, meaning the average policy would cost $1,707 this year.

"Both inflation and increased levels of dangerous driving are contributing to this jump in prices," Insurify explained in a statement emailed to Money. "It is certainly possible that should fatalities continue to spike this year, the increase in premium costs could also rise."

On the other hand, The Zebra, an insurance comparison and shopping site, estimates that car insurance rates have risen at a slower pace — up about 3% from 2020 to 2021. It expects higher prices in the future thanks to the increase in car crashes, traffic deaths and claims paid out by insurers.

"More claims equal more losses, and more losses equal raised rates for everyone, not just the drivers involved in accidents," Allie Byers, insurance expert for The Zebra, said in an email to Money.

Even as rates rise, drivers can take steps to save on car insurance, including classic strategies like switching to a higher deductible and periodically shopping around for a cheaper policy.

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