Trends Impacting Maryland Auto Insurance Costs for the Rest of 2022

With major shifts in the economy and auto industry in recent years, auto insurance adjustments are expected to shape the industry for the remainder of 2022. A recent market research by LexisNexis identified the trends driving the volatility of insurance purchases and policy growth: reduced car sales due to vehicle shortages and supply chain issues, problems obtaining claims and change in driving behavior. On top of that the cost of vehicles for US buyers is also increasing. Although there are several negative factors influencing the market, it is also hoped that customers are in a better position to make more informed decisions and increase their market share. In this article, we will discuss current factors affecting car insurance.

Average cost of car insurance

The cost of insurance policies has steadily increased 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 a person under the age of 65, who has more than six years of accident-free driving experience and who resides in a suburb. In Maryland, however, the average price is slightly higher at $1,236, as registered with the Insurance Information Institute. Notably, the average cost of full coverage for an auto insurance policy is affected by price variations among expensive states, making Maryland the 12th most expensive state for auto insurance.

Factors Affecting Car Insurance

As mentioned in the introduction, several causes explain the changes in car insurance. Here are three crucial factors that affect the price of car insurance premiums:


One of the main economic aspects that affects car insurance is the country’s inflation. In July 2022, CBSNews Inflation Report reflects a slight drop to 8.5% due to falling gasoline prices. Despite this change, inflation remains at an all-time high, making it difficult to balance other rising costs like food and housing. With this in mind, many people have considered reducing their car insurance coverage in order to save money for other expenses such as health insurance, electricity, house bills and their mortgage. Currently, the Federal Reserve is 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 a recession.

Supply shortages

Global issues and geopolitics have made it difficult to get supply chains right in recent years. The advent of COVID-19 has caused the closure of many businesses and industries, which has reduced the demand for vehicles. In recent months, however, many businesses have reopened and demand is back to pre-pandemic levels. Yet 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 bad cycle of supply and demand affecting vehicles is having a big impact on car insurance – with fewer subscribers, current policies have to increase prices to compensate for losses.

Government policies

In several states, considerations and efforts have been made to combat or preserve insurance companies’ use of credit score, which determines auto insurance eligibility and premium prices. As disclosed by the Consumer Federation of America, the Maryland House Economic Matters Committee chose to retain the status quota and retain the use of credit scoring, much to the anger of many. Credit scoring has been described as an unfair and disproportionate system that punishes even the most careful drivers. Unfortunately, people with systemic biases tend to have lower average credit scores, which makes them vulnerable to higher car premiums. It is these changes in the political environment that ultimately affect the economics of auto insurance as well.