The Spark

the Voice of
The Communist League of Revolutionary Workers–Internationalist

“The emancipation of the working class will only be achieved by the working class itself.”
— Karl Marx

Car Insurance Rates Continue to Skyrocket

Jul 23, 2023

As anyone with a car knows, it costs more and more to insure it. Car insurance rates officially climbed 17% over the last year.

The insurance industry gives several reasons. One is that cars themselves are getting more and more expensive—the average price of a new car is almost 50,000 dollars. And you can’t avoid rising car prices by buying used—the average price of a used car is almost 44% higher than it was five years ago. So insurance companies say that replacing a destroyed car costs them more.

Cars also have fewer parts that can be fixed, and more that need to be entirely replaced. Plus, they have more electronics that require expensive, specialized equipment to repair. This hurts the smaller, cheaper repair shops, and forces people to go to big chains or dealerships. All this is driving up repair costs, which shot up almost 20% this year compared to last year.

On top of all that, when people started going back to work after the pandemic, the number of accidents increased. We’ve all noticed people are still driving more recklessly than ever. So on top of the increased stress of driving on these roads, the insurance companies have another excuse to jack up our rates.

Because of all this, the big auto insurance companies claimed they lost billions of dollars in 2022. In case you were feeling sorry for them, remember, those losses don’t nearly eat up the extra profits they made in 2020, when so many people stopped driving and therefore stopped crashing and filing claims.

And the owners of the insurance companies are doing just fine: GEICO announced 1.2 billion dollars in losses in 2022. It is wholly owned by Berkshire Hathaway, Warren Buffett’s giant company. He told his shareholders that despite GEICO’s losses, 2022 was a “good year” for the company overall, which made 30.8 billion dollars in profit!

We pay more—and companies profit more—when we buy a car, again when we pay to insure it, and yet again when we pay to fix it. It may be true that the extra we pay in car insurance doesn’t just go to the insurance companies, it also goes to the auto makers, the auto-parts companies, and the repair shops. But whoever gets it in the end, insurance rates are making our lives more unaffordable, for the benefit of the tiny rich class of people who own all of these companies.