MINNEAPOLIS — These days it seems like everything is becoming more expensive.
So, it may not come as a surprise that a new report shows car insurance rates are going up, but it may be surprising that Minnesota is seeing the highest rate increase in the country.
The report released by Insurify suggests car insurance rates in Minnesota have gone up by 55% this year, the highest increase in the nation.
Their data suggests the average comprehensive insurance plan in Minnesota costs around $2,315, up from $1,492 last June. Insurify believes the price will increase even further to an average of $2,597 by the end of the year.
Aaron Cocking with the Insurance Federation of Minnesota was shocked when he first read the report.
“We got calls from a lot of people who wondered, 'Does this look right?'” Cocking said.
"I received texts and email from a number of lawmakers saying, 'Uh, is this something we're going to have to deal with? Is this something that is actually happening?'”
Cocking has his doubts that Minnesotans will actually see the massive price increases that are mentioned in the report, but he agrees prices are going up.
"One of the things we see, and I don't think it's a surprise to anyone, is the weather. We’re seeing a big impact from the weather,” Cocking said.
Insurify argues hail is the number one reason behind the rate increases they highlighted in their report.
The report uses data from the National Oceanic and Atmospheric Administration (NOAA) that shows hail is responsible for around $123 billion a year between the years 2019 and 2023. Back in the 1980s NOAA says hail was responsible for around $21.8 billion a year.
CCC Intelligent Solutions, which also analyzes insurance data, says 11.8% of comprehensive car insurance claims are caused by hail, up from 9% in 2020. But, historically, they say hail was only responsible for around 2% of all claims.
Grace Arnold from the Minnesota Department of Commerce agrees hail is a big reason why insurance is becoming more expensive in Minnesota.
"Bigger storms, they're more impactful," Arnold said. "They hit more area of potential damage."
But there are other factors.
"Cars are more expensive to repair than they have been previously."
Arnold says modern day cars contain more parts and sensors that are more expensive to replace. Labor costs have also increased, and AAA says the U.S. has seen more car accidents in recent years.
"We're really seeing an increase in crashes in the wake of the pandemic, and it's not just in Minnesota, that's across the U.S,” AAA spokesperson Brynna Knapp said.
Cocking says Minnesotans should prepare to see even more rate increases in the coming years, but he feels it's unlikely many Minnesotans will see a 55% jump in just one year.
"We're going to see steady increases year after year as these vehicles become more sophisticated as they become more difficult to repair,” Cocking said.
It's important to note that even with these rate increases, Minnesota insurance rates are still pretty average compared to the rest of the country. According to Insurify Minnesota ranks 19th in the nation.
Maryland ranks No. 1 with the average driver spending more than $3,400 a year.
New Hampshire has the lowest prices in the nation with the average driver spending around $1,000 a year, according to the report.