Jeffrey Wade
The rising cost of auto and home insurance is a key economic concern for Americans in the 2024 election. While the president and federal government have little direct influence over insurance rates, which are regulated at the state level, both candidates have identified the cost of insurance as a crucial issue for voters. Former President Donald Trump has promised to halve car insurance rates, which have risen by 18.6% from July 2023 to July 2024, with the average cost of car insurance at $2,348. However, experts are skeptical of Trump's promise, noting that insurance is a complex product with many factors beyond presidential control. Vice President Kamala Harris has not focused on car insurance rates but has linked the steep increase in home insurance rates to climate change. Harris is expected to continue efforts to reduce premiums and expand access to affordable healthcare through Medicaid and the marketplaces.
| Characteristics | Values |
|---|---|
| Date of Publishing | August 30, 2024 |
| Focus | 2024 Election and its impact on Auto and Home Insurance |
| Key Points | Auto and Home Insurance rates are regulated at the state level; the president has minimal influence over rates; insurance commissioners in all 50 states review and regulate prices; Kamala Harris' policies could increase costs for non-EV owners; Trump has promised to lower car insurance rates by 50%. |
| Sources | Bankrate, InsuranceNewsNet |
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What You'll Learn
Auto insurance rates
Former President Donald Trump has addressed rising auto insurance rates, tweeting: "Your Automobile Insurance is up 73% — VOTE FOR TRUMP, I’LL CUT THAT NUMBER IN HALF!". While auto insurance rates have increased, the origin of the 73% figure is unclear. Private passenger automobile insurance rates rose by an average of 14.5% between 2022 and 2023. Trump has also vowed to end the electric vehicle mandate, claiming that this would save Americans "thousands and thousands of dollars per car". During his previous term, he attempted to eliminate tax credits for electric vehicles.
Vice President Kamala Harris's policies could impact auto insurance rates in different ways. If the Harris administration sets steep goals for EV adoption, this could raise premiums for all policyholders. Additionally, investing in advanced safety technology could increase the cost of auto collision repairs and the severity of insurance claims. However, Harris's roadway safety plans could also reduce the rate of accidents, leading to lower claim frequencies and potentially easing price increases.
In certain states, the election of an insurance commissioner or governor could directly impact auto insurance rates. For example, in North Carolina, the average full coverage premium increased by 20% from June 2022 to June 2024. The candidates, Republican incumbent Mike Causey and Democratic challenger Natasha Marcus, face the challenge of keeping rates low while maintaining a competitive marketplace for insurers.
While the presidential candidates may not have a direct impact on auto insurance rates, their policies and priorities could influence the industry. Voters concerned about rising auto insurance costs should consider the candidates' platforms and records on insurance-related matters to make informed decisions.
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Home insurance rates
The president and federal government have little direct influence over home insurance rates. While the president doesn't play a role in setting home insurance premiums, state governments do. Each state has an insurance commissioner, and in 11 states, voters elect the insurance commissioner. The commissioner works with state legislators and insurance companies to monitor rates, control fraud, and determine best practices in the industry.
In the 2024 election, both candidates have identified the cost of insurance as a key economic issue facing Americans. Kamala Harris has linked the steep increase in home insurance rates to climate change. She would likely continue efforts to reduce premiums and expand access to affordable, comprehensive coverage through the marketplaces and Medicaid. However, if the Harris administration sets steep goals for EV adoption, the overall cost to insurers could raise premiums even for policyholders who choose not to buy a hybrid or EV. Additionally, investing in more advanced safety technology could also contribute to rising insurance costs.
On the other hand, Donald Trump has expressed concern about high insurance rates in Florida and has criticized rival Republican candidate Ron DeSantis for this. Trump has vowed to end the electric vehicle mandate, claiming that this measure will save Americans money. During his previous term, Trump tried to eliminate tax credits for EVs. Trump's lack of concern for road safety, a key driver of insurance costs, may also be a factor in influencing insurance rates.
In summary, while the presidential candidates may influence economic and environmental policies, personal factors like driving history, home value, and credit will likely have a bigger impact on the cost of home insurance.
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Health insurance coverage
While the president and federal government have little direct influence over insurance rates, the 2024 election presents a stark choice for voters on health insurance coverage.
If elected president, Kamala Harris would likely continue efforts to reduce premiums and expand access to affordable, comprehensive coverage through the marketplaces and Medicaid. She previously supported the Medicare for All Act and included a similar plan in her 2020 presidential campaign, although it is not a central part of her 2024 agenda. As Vice President, Harris helped remove medical debt from credit reports and cancel $7 billion of medical debt for 3 million Americans. As President, she plans to work with states to cancel medical debt for even more Americans. She also led the Administration’s efforts to combat maternal mortality, calling on states to extend Medicaid postpartum coverage from two months to twelve. A Harris presidency would likely retain limits on short-term health plans and further explore opportunities to prohibit medical debt information from appearing on consumer credit reports.
On the other hand, Donald Trump's campaign website states that he "empowered American patients by greatly expanding healthcare choice, transparency, and affordability." During his previous term, Trump increased competition in the health insurance market, eliminated the Obamacare individual mandate, and signed the Right to Try Act, giving terminally ill patients access to lifesaving cures. He also lowered drug prices for the first time in over 50 years and finalized the Most Favored Nation Rule, ensuring that pharmaceutical companies offer the US similar discounts to other nations. Trump passed a flurry of measures to lower healthcare costs at the end of his tenure in 2020, including the No Surprises Act, which protects people with private insurance from unexpected bills from out-of-network providers. A second Trump presidency could loosen insurance market regulations, such as the expansion of short-term plans, which may increase choice but could also raise premiums for sicker and older people.
Other notable candidates in the 2024 presidential election include Jill Stein of the Green Party and Chase Oliver of the Libertarian Party. Dean, another presidential candidate, has expressed support for Medicare for All and plans to implement a 90% excise tax on any drug prices higher than those offered to Canada and Mexico. Williamson, another candidate, advocates for a single-payer healthcare system, arguing that the problem is not just the treatment of sickness but also the profit-driven economic system that increases the probability of sickness.
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Climate change's impact
Climate change has far-reaching impacts on insurance markets, affecting financial stability and the availability and affordability of insurance for homeowners and renters. The changing climate increases the frequency and severity of extreme weather events, such as wildfires, hurricanes, and floods, leading to higher insurance payouts and uncertainty about future losses. As a result, insurance companies are facing challenges in calculating risk and setting prices.
Insurers traditionally rely on historical loss patterns and data to determine risk. However, climate change has rendered historical data unreliable, and insurers are now struggling to accurately assess and price natural disaster risks. This has led to a dynamic where insurers either sharply increase premiums or withdraw coverage in high-risk areas. The impact of these decisions is felt differently across various economies. In highly insured economies, insurers' withdrawal from climate-exposed regions can result in higher premiums for those remaining in these areas. Meanwhile, in emerging and lower-income economies, the gap between insured and total losses leaves communities financially vulnerable and governments exposed to significant financial impacts.
The response to these challenges varies across states in the United States. Some states employ "prior approval" methods, where regulators review insurance prices before they are offered in the market. Other states allow market forces to determine insurance rates, with some regulatory oversight. Regulatory interventions designed to limit price increases can have unintended consequences, such as reducing insurers' willingness to provide coverage in high-cost areas. As private insurers retreat from high-risk regions, state and federal insurance entities may need to assume more climate risks.
To address these issues, policymakers are exploring various approaches. One suggestion is to implement means-tested subsidies to make coverage more affordable for low- and moderate-income households. While this approach targets assistance effectively, it may be challenging to control costs and implement the program. Alternative insurance products and policy approaches are also being considered to increase insurance availability and affordability for those impacted by climate change.
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Electric vehicle adoption
While the presidential election may influence how the next four years impact Americans' finances, the president has little direct influence over home and auto insurance rates. Instead, it is the state government and insurance commissioners that have the greatest influence over insurance costs.
Electric vehicle (EV) adoption is gaining traction, with a dynamic and rapidly evolving market. Electric vehicles are becoming a necessity, with advancements that promise to transform roads, cities, and ways of life. The Edison Electric Institute projects that EVs on US roads will grow to 26.4 million by 2030, making up over 10% of vehicles on the road. This transition is supported by advancements in EV technology, such as increased battery affordability, and broader acceptance of EVs as a primary mode of transportation.
Economic factors driving EV adoption include long-term savings, as EV drivers spend less on fuel and maintenance, and tax breaks offered by the government. Additionally, the emergence of second-hand markets for used electric cars is critical for fostering mass-market adoption, especially with new electric cars remaining expensive.
State mandates also play a role, with some states passing laws to prevent the sale of new gas cars, pushing car companies to improve and expand EV options. As of the first quarter of 2023, California, Washington, and New York are leading in EV adoption, while Mississippi, West Virginia, and North Dakota lag.
To support mass EV adoption, the development of charging infrastructure is crucial. Most current EV owners charge at home, but the US needs to build more public charging stations to accommodate those without at-home or work charging options. Public charging stations also promote equitable access to EV ownership for those living in multifamily housing.
The transition to electric vehicles is important for curbing greenhouse gas and air pollution emissions, achieving energy and climate goals, and reducing the health impacts of fossil fuel use.
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Frequently asked questions
Trump has promised to lower car insurance rates by 50% if he is elected. However, insurance is regulated at the state level, and the president has no power to directly affect car insurance premiums.
Harris has not made any promises about car insurance rates. However, she has worked to reduce medical debt and expand access to affordable, comprehensive healthcare coverage through the marketplaces and Medicaid.
Trump has stated that he has ""greatly expanded healthcare choice, transparency, and affordability". He also claims to have lowered drug prices and eliminated the Obamacare individual mandate. Harris, on the other hand, has helped cancel billions of dollars of medical debt and worked to combat maternal mortality. She plans to continue expanding access to affordable healthcare and reducing disparities in coverage.
Trump has not indicated that he will extend the enhanced premium tax credits, which could trigger premium spikes. Harris is likely to continue advancing coverage policies that reduce disparities and eliminating discrimination in health insurance.
