Here’s why car insurance is so expensive in Nevada

Experts cite an increase of aggressive driving since the pandemic, inflation, labor and part shortages, and climate change as the primary reasons. (Photo via Shutterstock)

By Isabel Soisson

September 18, 2023

Over the past decade, car insurance premiums in the Silver State have increased by 51%.

The average annual premium in Nevada is currently $2,023, according to Insure.com. Nationwide, the average rate is $1,682. In Las Vegas, the state’s largest and most populous city, drivers are paying an average of $2,840 per year, according to personal finance site Bankrate.

Rates have risen rapidly in Nevada for many reasons, including the high rate of vehicle thefts, especially in larger cities like Las Vegas, and the increasing rate of luxury vehicle ownership in the state with claims for costlier repairs driving up premiums.

Here’s why else this is happening:

Labor, Part Shortages

Janey Ruiz with the Insurance Information Institute said labor and part shortages are two of the main reasons why Nevada’s car insurance rates have increased so dramatically.

On the labor front, there’s a demand for 258,000 new auto techs each year nationwide, according to a recent press release from Ford and the TechForce Foundation, but only 48,000 graduate from programs each year. This shortage has hit the Las Vegas Valley hard: there are only 4,300 automotive technicians in the field in Clark County, which is well below the national average of 5,100 for an area its size.

The coronavirus pandemic and the invasion of Ukraine, meanwhile, have disrupted global supply chains, leading to a number of part shortages, according to car makers.

These shortages have caused an increase in the cost of repairs and the time it takes to actually get a car repaired, as well. And the longer repairs take, the longer insurers have to cover the cost of rental cars, costing them money.

To make up for the effects of these issues on their bottom lines, car insurance companies are raising rates.

Inflation

Experts are also citing inflation as a reason for higher car insurance rates.

“Inflation is a primary culprit in escalating prices or premiums for auto coverage as costs rise for mechanics, other types of labor, repair parts, and more,” Cate Deventer, a Bankrate auto-insurance analyst, told USA Today. “Really, the numbers come down to inflation.”

She also believes that higher premiums are most likely being requested by state insurance departments that reflect price levels in 2022, when inflation was higher.

Car insurance companies consider a variety of factors when calculating your insurance costs, including the number of claims and costs to repair vehicles. Inflation is just another factor they consider.

Climate Change

Premium rate hikes are also the companies’ way of making up for big payouts driven by floods and natural disasters, which they categorize as “catastrophe losses.”

States that are prone to climate disasters have seen some of the steepest rate hikes.

Nevada is no stranger to these sorts of events. Just last month, Tropical Storm Hilary made its way to Nevada, flooding the famous Las Vegas strip. Footage shared by residents on social media showed cars attempting to navigate through the waterlogged roads.

According to Car and Driver, an increase in your insurance rates is possible after filing any claim, even one that’s caused by something out of your control, like natural disasters and extreme weather.

According to The Zebra, an insurance company, drivers can expect an average increase of 7% to their premiums after filing a natural disaster claim.

Busy Roads, Bad Driving

Several studies show that Americans are driving more aggressively and taking more risks on the road since the beginning of the pandemic. In a state with a growing population like Nevada, that’s only going to lead to more accidents–and it has. Last year was the deadliest year on record over the last three decades in the state of Nevada, according to the Nevada Dept. of Public Safety.

“This increases the risk that insurers take on when they are insuring you and your car,” Communications and Content Manager for Insurify Tanveen Vohra told 8 News Now.

What You Can Do

Looking to save some money on insurance?

“One recommendation is to make sure you are shopping around for car insurance between multiple insurers; a lot of drivers see rates go up when it’s time to renew,” Vohra said.

She also suggests increasing your deductible, checking for discounts you quality for regularly, and maintaining a good driving record.

  • Isabel Soisson

    Isabel Soisson is a multimedia journalist who has worked at WPMT FOX43 TV in Harrisburg, along with serving various roles at CNBC, NBC News, Philadelphia Magazine, and Philadelphia Style Magazine.

CATEGORIES: LOCAL HISTORY | POLITICS

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