Lower Bucks Today

Soaring rates of inflation caused Pennsylvania drivers to pay more for car insurance in 2021.

In the past year, the average annual cost for minimum coverage car insurance in the state of Pennsylvania was $374, while the average annual cost for full coverage was $1,372, according to Coverage.com. The most-recent report from Bankrate shows similar numbers, listing the average annual cost for minimum coverage car insurance in Pennsylvania as $427 and the average annual cost for full coverage as $1,476.

The Wall Street Journal recently announced the adjustments car insurers are making in response to the country’s rising inflation rates. Industry executives and analysts report that many car insurance companies are raising premiums 6 to 8% or by double digits.

"I've seen premium increases in the range of 5%, 10% and even 15%," Doug Heller, insurance expert with Consumer Federation of America said, according to Marketplace. "That throws a huge wrench in the budget of people who are really just struggling to get by."

Allstate, a home and auto insurer, is raising rates by an average of 7.1% in 25 states, according to Wall Street Journal. The company also confirmed that more increases are coming.

Some consumer activists are against the increases because they say that insurance carriers recorded profits during the COVID-19 lockdowns. Carriers argue that they temporarily reduced programs and other premiums in response to the pandemic.

Rising rates of car insurance are being driven by rising rates of inflation. On Jan. 12, the U.S. Bureau of Labor Statistics released the consumer price index (CPI) data for the month of December. The data showed a 7% annual increase, which is the largest increase in 40 years, since 1982.

The consumer price index is a measure of inflation, which takes into account the cost of dozens of common consumer goods.

The CPI also rose 0.5% from November 2021, signaling that rising inflation is a trend and has continued to grow on a month-to-month basis.