Maryland auto insurance cost impact trends through the end of 2022

With major changes in the economy and the auto industry in recent years, auto insurance adjustments are expected to shape the industry by the end of 2022. Recent market report from LexisNexis identified trends that have led to volatility in insurance shopping and policy growth: reduced car sales due to vehicle shortages and supply chain issues, problems receiving claims and changing driving behaviour. On top of that the cost of vehicles for American buyers also increases. While there are several negative factors affecting the market, there is also hope that customers are better positioned to make more informed decisions and increase market share. In this article, we will discuss the current factors affecting car insurance.

Average cost of car insurance

The cost of insurance policies has been rising steadily over the past few years. As stated in Sound Dollar’s Guide to Car Insurance Costs, the average full coverage auto insurance policy is $1,202 per year. This is for someone who is under the age of 65, has more than six years of accident-free driving experience and lives in the suburbs. In Maryland, however, the average price is slightly higher at $1,236 recorded by the Insurance Information Institute. It should be noted that the average cost of full coverage for an auto insurance policy is affected by price variations in expensive states, marking Maryland as the 12th most expensive state for auto insurance.

Factors affecting car insurance

As mentioned in the introduction, there are several reasons for the changes in car insurance. Below are three key factors that affect the cost of car insurance premiums:


One of the main economic aspects that affect car insurance is inflation in the country. In July 2022 CBSNews report on inflation reflecting a slight decline to 8.5% due to falling gasoline prices. Despite this change, inflation still remains at an all-time high, making it difficult to balance other rising costs such as food and shelter. With this in mind, many people consider reducing their car insurance coverage to save money on other expenses such as health insurance, electricity, home bills and mortgage. The Federal Reserve is currently expected to raise its benchmark interest rate to around 3.5% to 3.75% in an attempt to slow the economy without plunging the country into recession.

Shortage of supplies

Global issues and geopolitics have made it difficult to get supply chains right in recent years. The emergence of COVID-19 has caused the closure of many companies and industries, reducing the demand for vehicles. In recent months, however, many businesses have reopened and demand has risen to pre-pandemic levels. Still, the combination of rising prices and the Great Resignation has made it difficult to return to efficient supply chains, leaving current supplies and labor more expensive than ever. This vicious cycle of supply and demand affecting vehicles is having a big impact on car insurance – with fewer subscribers, existing policies have to increase prices to make up for the losses.

Government policies

In many states, there are considerations and efforts to combat or preserve the use of a credit score by insurance companies, which determines auto insurance eligibility and premium prices. Like disclosed by the Consumer Federation of America, the Maryland House Economic Affairs Committee chose to keep the statutory quota and retain the use of a credit score, much to the anger of many. Credit scoring has been described as an unfair and disproportionate system that penalizes even the most careful drivers. Unfortunately, people who face systemic bias tend to have lower average credit scores, making them vulnerable to higher auto premiums. It is these changes in the political environment that also ultimately affect the economics of auto insurance.

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