Why is car insurance so expensive in Philadelphia, PA?

Trying to get car insurance in Philadelphia for the first time, or for a new (or new-to-you) car? Talk about sticker shock. Insurance in Philly can be pricey! But why are insurance costs so high in the city, especially when insurance in the rest of Pennsylvania costs about the same as the national average? Why do insurance rates keep getting higher every year? Is there anything you can do to make insuring your car in Philadelphia more affordable?

Why Philadelphia drivers pay more

Some of your car insurance costs have to do with you – the make and model of car you have, your driving history, and, in many states, your credit score. But other costs have to do with where you live. Two factors affect regional insurance costs: the cost of claims, and the volume of claims.

Cost of claims

Auto insurers set their prices based on the amount they pay on claims, plus the expenses of running their business. Since insurance claims pay for car repair, medical treatment, and property repair, the cost of insurance depends on how much it costs to repair cars, property, and people. The high cost of car parts and mechanic labor, healthcare, and contractors in Philadelphia results in higher premiums.

Volume of claims

The other factor making car insurance more expensive in Philadelphia is how many claims people file in the city. Because Philadelphia’s population is higher than, say, Scranton, there are more drivers, pedestrians, and cyclists on the road – and more chances to get into accidents. The higher the risk to your vehicle, the higher your premium will be. If you’re shopping for comprehensive insurance, which covers theft, the crime rate in your area affects your premiums too. Car thefts in Philadelphia have risen from about 5,000 thefts in 2013 to more than 12,000 thefts in 2022. That’s a lot of claims for stolen cars!

Top reasons why car insurance is expensive in Pennsylvania

Pennsylvania is a no-fault state

Pennsylvania is a “no-fault state”. That means both drivers can file injury claims with their own insurance companies no matter who caused the accident. You must have personal injury protection (PIP) coverage on your car insurance policy to help pay these accident-related medical bills. Because PIP coverage is mandatory in Pennsylvania, your policy will cost more here than in a state where PIP coverage is optional.

More drivers and more accidents

Pennsylvania’s population rose by 200,000 people between 2012 and 2022. That’s a lot more drivers, passengers, and pedestrians on the streets! The population rise correlates to more accidents, too. In 2012, one out of every 44 people was involved in a reportable traffic crash. By 2012, that number had risen to one out of every 51 people. Although crash fatalities went down (phew), there were 115,938 car crashes in Pennsylvania last year. The large population and number of accidents in the state contribute to the cost of insurance here.

Claims costs from economic state and uninsured drivers

The high cost of healthcare, auto repair, and property repair in Pennsylvania makes car insurance claims more expensive, leading to higher premiums. The proportion of more expensive claims also affects how much car insurance costs in the state. Six percent of drivers in Pennsylvania are uninsured. When those uninsured drivers get into accidents, other drivers’ insurers must pick up the tab. Insurers raise their premiums to incorporate that expense.

Worsening severe weather

It’s not just you – there are more thunderstorms, tornado watches, floods and winter storms in Pennsylvania than there used to be. Rain, snow and hail from extremely heavy storms have increased by 70 percent in the Northeast U.S. since 1958. When bad weather in Pennsylvania damages cars, their comprehensive insurance coverage has to cover the damage, again causing insurers to raise their premiums.

How to save money on car insurance in Pennsylvania

You can’t control the weather, and you probably don’t want to move just to be in a ZIP code with lower insurance premiums. Luckily, there are some things you can do to save on insurance costs without becoming a climate wizard.

Wait to get older

Insurance companies charge higher premiums for drivers under 25. Being younger than 25 doesn’t mean you’re a bad driver, but statistically, it means you’re less experienced than older drivers and more likely to get in an accident. Once you turn 26, you might see lower premiums – happy birthday! (And no, you don’t need to get off your parents’ car insurance when you turn 26.)

Improve your credit

Did you know raising your credit score could make your insurance less expensive? Drivers with no credit pay 69 percent higher premiums than drivers with excellent credit. If you’ve never had a credit card, getting one and consistently paying it off will help you establish a good credit history. If you have a low credit score, look for ways to raise it. If you have a library card, you can take free personal finance classes at the Free Library of Philadelphia!

Drive safely

Your recent claims history and driving record both affect your insurance costs. Drive to minimize accidents that could result in insurance claims. That means always driving sober, obeying traffic laws, and checking twice for cyclists and pedestrians. And maybe avoid the Oxford Circle rotary – that thing is terrifying. Depending on your insurance, you might have the option to get a discount on your premium if you install a safe driving app on your phone.

Comparison shop

Insurance in Philadelphia can be expensive, but a little research can save you money. Get quotes from multiple insurance companies and see which is the best deal for you. If you’re not sure where to start, drop us a line. Surround’s agents are experts at helping you compare policies and pick the right option for your needs.