Americans Shop Around for Insurance More Than Ever as Costs Soar

Americans are seeking to change their insurance coverage more frequently than in the past, after a surge in premiums that’s squeezed household budgets, a new industry report shows.

For car insurance, so-called policy shopping rates — essentially the share of people with insurance who searched for quotes from a provider — jumped an average 16% from a year earlier in the second quarter of 2024, according to LexisNexis Risk Solutions, a clearing house for insurance data with access to more than 95% of the auto policy market. The figure climbed even higher in July, exceeding 30%.

The quest for money-saving alternatives reflects a rapid run-up in insurance premiums in recent years, driven partly by the rising cost of car parts and repairs. While the overall cost of living has climbed some 20% since the start of the pandemic in 2020, auto insurance bills have jumped by almost 50%.

Prices are “absolutely” driving the shopping activity in the market right now, said Chris Rice, an executive at LexisNexis, in an interview. That’s a change from past patterns, when it was usually some kind of life event like moving house, buying a new car or adding a teenager to a policy that caused consumers to shop for insurance, he said.

It’s not just the auto policy market that’s seen a big shift. Buyers of home insurance have been hit by rising costs and also changes in coverage that led providers to drop some customers.

In California, for example, more than 50% of homeowners said they or the area they live in has seen insurance prices increase from a year earlier, according to a survey conducted by Redfin in the spring. In Florida the rate was even higher, at 70%, while 12% of respondents reported being dropped by their insurance company.

One reason may be the growing threat posed by extreme weather and other climate-related risks.

“Mounting insurance costs and natural disasters are prompting some people to relocate,” according to the Redfin study. It found that Floridans who plan to move house in the next year were twice as likely as Americans overall to cite the higher price of insurance as a reason.

Rice said that recent increases in insurance premiums are “unprecedented” for the industry. He said the LexisNexis data shows that middle-aged and older Americans are especially likely to be shopping for alternative policies, potentially a sign of financial stresses among those age cohorts.

“We’ve definitely seen a marked increase among older people” that is “outpacing the other age profiles,” he said.

Top photo: Customers look at vehicles for sale at an AutoNation Honda dealership in Fremont, California, US, on Monday, June 24, 2024. The hack that’s disrupted business at thousands of car dealerships in North America is now in the process of getting resolved, the targeted software provider CDK Global said. Photographer: David Paul Morris/Bloomberg.