In just four years, car accidents have grown more dangerous and costly, according to a new report. That’s sending car insurance costs higher, says LexisNexis Risk Solutions. Rising costs may be feeding into a cycle where fewer drivers have adequate insurance to pay them.
“Since 2020, bodily injury severity has risen 20%, while severity for all material damage coverages has increased 47%.”
The data come from LexisNexis Risk Solutions’ annual Auto Insurance Trends Report.
Related: In Some States, 1 in 5 Drivers Are Uninsured
LexisNexis serves the insurance industry with “market intelligence,” including data on claims severity. The company was caught up in controversy recently when New York Times reporters found it one of several that collect data from some automakers and sell reports on individual drivers to insurance companies. General Motors ceased the practice, but some automakers continue selling the data, as do phone apps like the popular fuel price tracker GasBuddy.
States Require Little Coverage
Rising accident costs, the report says, mean many drivers today carry inadequate insurance. Forty-three states and the District of Columbia require drivers to carry just $25,000 or less of injury liability.
Property damage coverage is often no better. Yet the average new car costs over $48,000, and over a quarter of accidents since 2023 have totaled at least one car.
Related: Totaled Car – Everything You Need To Know
Car insurance costs have soared in 2024, rising by nearly a quarter in just one year. Soaring insurance costs have become a significant concern for economists. Federal Reserve Chairman Jerome Powell recently cited them as one reason the Fed keeps interest rates high.
Legal Costs Also a Factor
Today’s cars are expensive to repair in part because engineers place costly cameras and radar sensors that power many safety systems in vulnerable spots where they can be easily damaged.
However, the report finds other factors driving up costs. “Following an auto accident, 85% of claimants were approached by one attorney,” the researchers note. “About 60% heard from two or more.”
Hiring an attorney worked out for many. “Among the claimants who hired an attorney,” the report says, “51% received a higher settlement amount.”
