The latest Consumer Price Index summary found that the cost of motor vehicle insurance rose 22.6% over the last year, according to the Bureau of Labor Statistics, while the overall rate of inflation for the last year was 3.4%. Notably, the index for transportation services also rose at an accelerated rate, increasing 11.2% nationwide over the last year.
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3% in April, after rising by 0.4% in March, and among the categories that contributed to the increase was motor vehicle insurance, which rose by 1.8% over the month. During March, motor vehicle insurance rose 2.6%.
The index for shelter costs, comparatively, rose 5.5% in the last year, while the index for used cars and trucks decreased by 6.9% in the same time period.
Economists Neil Irwin and Courtenay Brown said the cost of car insurance coverage is “rising at unprecedented rates,” disrupting the “U.S. economy’s disinflationary path.” Irwin and Brown shared their statement in an April 15 Axios newsletter.
The American Property Casualty Insurance Association (APCIA) testified to the House Financial Services Committee in November that “legal system abuse” is one of the driving factors increasing insurance rates for consumers across the country. Factors such as larger jury verdicts, third-party lawsuit financing, and widespread attorney advertising are escalating these costs, compelling businesses to increase prices to manage higher risks. APCIA advocated for tort reform legislation to mitigate these issue…