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Last updated: March 24, 2024

How a Recession Impacts Car Insurance Rates

What can the recessions of years past tell us about future car insurance rates?

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Inflation. Supply chain issues. Labor shortage. These are terms you’ve been hearing in the news for a couple of years now, and economically, things are only getting worse.

Experts are predicting a recession in the United States in 2023, which means high levels of inflation, increased unemployment, and less credit availability. But what does it mean for car insurance — and is there a way to save money on a policy during such economic turmoil?

Drivers Pay Less for Car Insurance During Recessions. How?

As people tighten their budgets during recessions, they actually pay less for car insurance compared to non-recession years. While typically, the average year-over-year change in the U.S. cost of insurance is an increase of 4 percent each year, the average during recession years is only 1 percent.

Year Year-over-year change in the cost of car insurance
2000 n/a
2001 (recession year) 4%
2002 9%
2003 8%
2004 3%
2005 2%
2006 1%
2007 (recession year) 0%
2008 (recession year) 3%
2009 (recession year) 5%
2010 5%
2011 4%
2012 4%
2013 4%
2014 4%
2015 5%
2016 6%
2017 8%
2018 7%
2019 1%
2020 (recession year) -5%
2021 4%
January to November 2022 7%

While not entirely recession-proof, car insurance is required in most states, which explains why people continue to buy it even in times of bad economies. And yet purchasers during past recessions were able to lower their car insurance costs and, thereby, still afford the premiums. We’re expecting similar events in 2023, so keep reading to find out how to get a cheaper insurance rate during a recession.


National stay-at-home orders during the COVID-19 pandemic also caused a huge drop in the cost of auto insurance in 2020, as people drove much less than usual. Much of the insurance industry was forced to give their customers prorated refunds.

Drivers Drop Add-Ons

From 2006 to 2010, a period that includes recession years, owners of older vehicles were more likely to drop their collision and comprehensive coverage, which pays for repairs from at-fault accidents, theft, vandalism, and other non-collision events. The percentage of older vehicles without these coverages, which no states require, went from 53 percent in 2006 to 63 percent in 2010, saving customers an average of $19 a month or $229 a year.

While these savings sound nice, keep in mind that if these people had their cars stolen, vandalized, or damaged by hail or any other inclement weather, they’d be responsible for these damages out of pocket because they dropped their added coverage. Additionally, while they may have saved on their policies in the short term during the recession, if they had an incident, the property damages and/or bodily injuries may have cost more than their insurance premiums.

Drivers Raise Deductibles

Raising their deductibles was another way people lowered their average cost of auto insurance during past recessions. From 2006 to 2009, the percentage of people with low collision deductibles ($0 to $250) decreased by 9 percent, while the percentage of people with higher deductibles ($251 to $1,001) increased by 2 to 5 percent each year.

An insurance deductible is the amount of money customers have to pay for a covered claim before their insurance provider contributes, and typically, only collision and comprehensive coverage includes deductibles. Like dropping add-on coverage, raising your deductible is good in the short term, as it lowers your car insurance premiums.

However, if you have a covered claim, you’ll have to pay more for your insurance company to contribute. That’s troubling when you consider how cash-strapped some people are right now. Case in point: 64 percent of all U.S. adults told the U.S. Federal Reserve that they couldn’t even afford a $400 emergency in 2020.3


Only raise your deductible to an amount you can afford to pay immediately in the event of a covered claim. Otherwise, if you have an accident, you may have to use a credit card or get a loan, both of which tack on interest, to cover the damages.

Drivers Don’t Submit Claims

An additional way to save money on car insurance, during a recession or otherwise, is to not submit insurance claims and instead, pay for repairs out of pocket. Ultimately, it may be cheaper to fund the bill yourself than submit the claim to your insurance agency because your insurer is likely to raise your premium as a result of your claim. Not submitting claims during an economic downturn could prevent your insurance rate from increasing. This method is dependent, of course, on your ability to pay for any needed repairs out of your own wallet.


Car insurance isn’t going anywhere, as driving without insurance is illegal in every state except New Hampshire and Virginia, and it’s understandable to be concerned about paying for it during a recession. But while there are cost-saving strategies like the options outlined above, when you cut down on coverages, raise deductibles, and repair your own car or not file a claim, you’re putting the financial risk back on yourself, defeating the point of a car insurance policy. While cutting immediate costs during a recession is nice, keep the risk factor in mind as you adjust to economic changes in the coming year.


  1. Databases, Tables & Calculators by Subject. U.S. Bureau of Labor Statistics. (2022).

  2. During Recession American Drivers Assumed More Risk to Reduce Auto Insurance Costs. Verisk. (2011, Mar 29).