What’s behind the ‘outrageous’ rise in WA car insurance rates

Since the beginning of this year, auto insurance rates across Washington have been spiking, leaving drivers confused and angry.

“How much more am I supposed to bear?” said Seattle resident Steve Giliberto, 59, a self-employed technology consultant whose insurance on a 2014 BMW rose by 24% to $133 a month.

Over the past two years, Giliberto said his rate jumped three times from $660 to nearly $1,600 a year. Within that time, he moved to Beacon Hill from Belltown, but otherwise, nothing has changed.

“There’s no sign of any limit to what I will face in the next six months,” he said. “As a consumer, where am I supposed to go?”

This year’s hike comes after the state Office of the Insurance Commissioner approved a nearly 25% average premium increase for auto policies. Puget Sound residents have been seeing typical increases of 20%-25%, according to insurance industry sources.

Those unexpected increases are taking a toll on family budgets.

Retiree Laura Walker of Silverdale, Kitsap County, was puzzled when she discovered in March that her premium for liability insurance was increasing 22% to $207 monthly to insure a 1997 Chevrolet Blazer and a 2002 Honda CRV.

She said she gets a small discount for taking a safe-driver course every two years. Walker and her partner are retired and rarely drive, other than the odd trip to the coast where Walker likes to take pictures.

“We looked around at other insurance companies thinking we might be able to save some money, but they’re even more expensive,” she said. “We haven’t had any accidents or tickets or anything like that, so it just seems really outrageous.”

Outrageous may also describe the hike of 57% that Seattle resident Nathan Davern saw in his January auto insurance premium.

Davern was bewildered when his insurance company debited his bank account $309 instead of $197 for the month to cover the family’s two hybrids.

Davern, 38, lives in South Seattle’s Hillman City neighborhood. He and his wife had made no claims. He checked his full-coverage policy to make sure nothing was added and called the company for answers.

“I said, ‘I think something’s wrong,’” Davern said. “Did I miss a payment? Is there a penalty on here?”

“I was just told in Washington state our premiums had gone up rather significantly and that was it,” he said. 

What’s going on

Companies must file detailed financial paperwork with the insurance commissioner’s office to justify a rate change, which is then subject to a lengthy review. Insurance companies apparently had multiple reasons for increasing the rates this year.

“The big driver is the increase we saw in severe accidents and more expensive cars, which basically made claims more expensive for insurance companies to pay out,” said Aaron VanTuyl, public affairs manager for the state Office of the Insurance Commissioner.

“Companies have reported an increase in serious-bodily-injury and fatal-auto-accident claims over the past couple of years,” he said. “Those claims are more expensive to pay out, and so the expenses get factored in, and that’s one of the reasons they’re having increased rates.”

Kenton Brine, president of the NW Insurance Council, an insurer-funded trade organization, named several reasons why insurance companies are charging higher premiums. Among these reasons is high inflation.

Repair and replacement costs of cars and trucks are increasing. Repair shops are charging more as their labor costs rise, parts are more expensive and have been in short supply and cars are sitting in repair lots longer waiting to get fixed.

“In the greater scheme of things, insurers are just simply responding to costs that they are incurring for paying out claims,” Brine said.

“It’s harder to get replacement parts, it takes longer to get those parts and the collision-repair industry has seen, like other industries, employment-related issues,” Brine said. “So, there’s a labor shortage, there’s a supply chain issue, and all those things lead to higher costs for the repair of automobiles.” 

Technology advancements have also made cars and trucks more expensive and harder to fix. Most cars are loaded with computer chips and complex components, like the sensors found on the windshields and bumpers of some cars. Once simple repairs now require specialist technicians.

The 24.7% average increase approved last year was unusual for Washington. The last hefty increase to auto rates in Washington came in 2017 when the state approved an average 7.1% premium increase. The average was 2.8% in 2022, after auto rates declined 3% in 2020 and remained unchanged in 2021. These percentages represent the weighted average base rate change among 20 companies writing 77% of the auto insurance policies in Washington, VanTuyl said.

Where can you find cheaper insurance?

Daniel Holst, executive vice president of the Independent Insurance Agents and Brokers of Washington, said that in a market where all insurance companies are raising premiums, it is hard for brokers to shop around to find lower prices.

“I talk to our members all the time, and if I had a nickel for every time one of them said, ‘I’ve never seen a market like this before,’” Holst said. “Insurance companies are, in some states, really looking forward to getting out of the market because they’re losing a lot of money.”

Paula Parker of Woodinville said she unsuccessfully shopped around with several companies for cheaper insurance when she learned in March of a nearly 30% increase to her family’s auto premiums on three cars. She and her husband split their time between Woodinville and Palm Desert, Calif., insuring two vehicles while suspending the insurance on a third vehicle when it’s not being used.

But aside from dealing with higher auto premiums, Parker said the company insuring their second home in California recently dropped them. They may have to leave that property uninsured.

“It’s not because we filed a claim or anything, it’s just they’re leaving California,” Parker said. “They’ve also been doing that with auto. If you don’t have a policy or if you let a policy lapse, they’ll just drop you because they’re pulling out.”

Ryan Bettinger, principal at Bellevue’s Paravene Insurance Partners, said insurance companies aren’t pulling out of Washington but are shedding riskier policies. Drivers with multiple tickets or claims are more likely to get dropped or refused coverage.

“A lot of companies used to be able to handle someone with maybe two tickets in a three-year period or two accidents in a five-year period,” Bettinger said. “Now they say, ‘Nope, we’re not going to do that anymore.’”

The double whammy of higher premiums and stricter underwriting by insurers could lead to more uninsured drivers on the roads.

Bettinger said the numbers of uninsured drivers, particularly those 25 and under, will likely rise in Washington this year.

“When the premiums are extremely high or they can’t get insurance or are having a hard time, then I could see that happening,” Bettinger said.

Faced with higher insurance bills, some lower-income families will have to make hard choices, like cutting back on food or paying part of the rent late, said Marcy Bowers, director of Statewide Poverty Action Network, a Seattle-based advocacy group.

“We know that food is often one of the first things that people cut back on, but I think there’s a real risk to everyone if prices get so out of reach for lower-income consumers that they really won’t buy into the system at all, which puts everybody at risk with uninsured motorists.”

Bowers noted that many lower-income families support themselves with several part-time jobs at different locations and live far away from public transportation.

“Having a car is pretty critical really for most people, but it’s especially critical for people who are living at the margins and trying to figure out what strategies they can use to make ends meet.”

Surveys from analytics company J.D. Power suggest that more Washington drivers were going uninsured last year. Some 8.5% of vehicle owners surveyed in the second half of 2023 indicated they had no insurance, up 2.5 percentage points compared to surveys a year earlier, said Stephen Crewdson, a senior director with J.D. Power.

“That’s somebody telling a third party, J.D. Power in a survey, essentially that I’m breaking the law,” Crewdson said.

That 8.5% figure is likely below the actual percentage of the state’s uninsured drivers, however. In 2022, the Insurance Research Council estimated that 16.5% of Washington’s drivers didn’t have insurance, the 12th highest uninsured motorist rate in the nation.

Bowers said that poorer families typically drop their insurance out of desperation.

“Most people don’t like to admit that they are not paying for car insurance,” Bowers said. “They know it is illegal, and they feel a lot of shame for not being able to do it and a lot of fear and a lot of worry about what’s going to happen if they get caught.” 

One bright spot for Washingtonians is a new state rule that requires insurance companies to explain their rate increases as of this June. Often when consumers call up their company, they can’t get an explanation. Many times, the agents don’t know why their rates have increased. The rule means to correct that, VanTuyl said.

Insurance companies will be required to alert consumers of an increase to an auto or homeowners’ policy and, if requested in writing, explain in plain language the reason for the change. On June 1, 2027, the second phase kicks in, requiring insurance companies to notify a policyholder in writing of a 10% or more increase at least 20 days before the policy renews and explain the reason in clear language.

Davern said he was especially frustrated that he got no warning of his rate hike.

“I guess I don’t have an issue with premiums going up,” Davern said. “I get it. The cost of everything goes up. It just felt shocking to me that it would go up by more than 50% without notice or acknowledgment.”

Editor’s note: An initial version of this article misspelled Aaron VanTuyl‘s name.