Why Colorado’s Struggle with Skyrocketing Auto Insurance Premiums

April 9, 2024

Colorado Springs

(719) 309-3000

Grand Junction

(970) 287-1173

In Colorado, residents face sharp increases in car and auto insurance premiums, ranking the state as the 11th most expensive for vehicle coverage. Average annual premiums have risen to $1,940, with projections indicating an increase to $2,968 by 2033. This trend burdens individuals financially and raises questions about the underlying causes. Understanding these factors is crucial for consumers and policymakers.

The primary reasons for soaring insurance rates in Colorado include legislative changes, the escalating costs of vehicle repairs, and medical bills. The abolition of Personal Injury Protection (PIP) coverage, which protected against high medical expenses from auto accidents, significantly impacts premiums. Additionally, Colorado’s frequent hail storms and high vehicle theft rates drive up insurance costs. These factors, along with increasing repair and medical expenses, illustrate the challenges Colorado residents face with auto insurance.

Key Insights

  • 📈 Rapid Increase: Car and auto insurance premiums in Colorado have surged, making it the 11th most expensive state for car insurance. The average annual premium is $1,940, with predictions of reaching $2,968 by 2033.
  • 💡 Legislative Changes Impact: The elimination of Personal Injury Protection (PIP) by automobile companies lobbying has led to a drastic increase in rates. Despite promises, this change resulted in a 53% rise over the last decade.
  • 🛠️ Primary Causes for Hike: The insurance industry cites the high costs of vehicle repair/replacement and medical expenses as the main reasons for increasing premiums. Colorado also faces challenges with frequent hail storms and high vehicle theft rates, further driving up costs.
  • 🏛️ Suggested Solutions: Proposals include making legislative changes to deter theft, removing insurance caps to better cover medical expenses, and holding insurance companies accountable for rate increases. The video also highlights the excessive salaries of insurance company CEOs despite rising premiums.

FAQ Colorado's Auto insurance Market

The premiums have surged due to several factors, including frequent hailstorms, a high number of vehicle thefts per capita, rising repair costs from more complex cars, and skyrocketing claim costs. These elements combined have contributed to a 53% increase in auto insurance rates over the past decade.

In 2023, the typical full-coverage car insurance premium in Colorado increased by 16.8%, which amounted to an average increase of $313 for drivers within the year.

Projections indicate that by 2033, Colorado will have the fourth-highest auto insurance premiums in the country, with an estimated annual average of $2,968.

Analyzing these trends is challenging due to the myriad of variables at play, including changing weather patterns, technological advancements in vehicles, and fluctuating theft rates. These factors make it difficult to isolate single causes for rate increases.

Colorado’s extreme weather, including golf-ball-sized hail and icy roads in winter, increases the likelihood of accidents and vehicular damage. This heightened risk is a significant factor insurance companies consider when setting rates, contributing to higher premiums for drivers.

While this information is for educational purposes only, drivers facing rising costs should call their insurance agent and ask them what programs may be available to reduce your rate.

Tips to Reduce Auto Insurance Rates

  • Compare rates: You can shop around to find the company with the most affordable rates. State insurance departments may have information to help you compare rates and service levels at different insurers.
  • Choose a higher deductible: For example, increasing your deductible from $500 to $1,000 can save you about 10% on your premium.
  • Usage-based Insurance (UBI): Many insurance companies offer discounts to drivers with better driving habits, also known as usage-based insurance (UBI). Safe drivers can typically save 10%+. For example, you can use a driving monitor like Progressive’s Snapshot
  • Improve your credit score: For example, if your credit score has gone up, you may be able to save money.
    Work remotely: If you have gone fully remote in your work, or even partially remote and you’re not driving to the office as often, you can save on car insurance

Meet The Contributors

Joseph Ramos, MD, JD


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