Car insurance premiums have been steadily increasing since 2022. The first spike occurred after pandemic-related supply chain interruptions, followed by a second wave caused by frequent catastrophic natural disasters, urban theft and increased lawsuits.
Inflation has most recently affected the costs of car repairs and parts. With tariffs on the horizon, it’s become increasingly complex to predict how much car insurance rates will climb.
For many Americans, insurance is not just expensive — it’s unaffordable. The nationwide average full coverage is $1,895 annually, or $158 monthly. On average, the cost of car insurance in the U.S. increased by about 20% in 2024 and is anticipated to keep rising.
Learn why car insurance rates are rising and how to lower your premiums in 2025.
Are consumers switching insurers, and if so, why?
The year 2024 experienced a rate slowdown after sharp spikes in car insurance premiums over the past couple of years. On average, car insurance consumers saw a 7.2% increase in premiums compared to 16.4% in 2023 and 12% in 2022, according to S&P Global Market Intelligence’s RateWatch data.
Insurer rate increases
In our recent car insurance consumer survey, nearly half of the respondents said they saw a 5-10% increase in their rate in the past year, with 43% attributing it to inflation and almost 30% attributing it to a combination of cost impacts. Of those surveyed, more than 80% reported switching insurers.
Car insurance rates have risen nationally in the past 12 months. However, the amount fluctuates based on personal factors, such as where you live, your driving history and what you drive.
According to our surveyed respondents, most said their rates had increased by approximately 5-10%, while 22% either saw an 11-20% increase or no change. Those who saw a 21% increase or higher were 11% of all responses.
Drivers mostly attribute higher premiums to inflation
In general, most U.S. drivers have seen an increase in their car insurance rates over the past few years. In 2024, drivers in 15 states saw increases, while some states saw increases more than the national average, according to our data.
So, what do consumers think is contributing to their car insurance spikes?
While most surveyed respondents attributed higher rates to general inflation (43%), almost 30% believe car insurance costs have increased due to a combination of factors, including inflation, repair/replacement parts costs (9%), severe weather events (6%), insurers looking to increase their profits (12%) or all of the above (29%.
According to respondents, contributing factors include accidents and moving violations, lawsuits, distracted and poor driving behaviors, politics, relocation and state law requirements.
Most drivers aren’t shopping for new policies
With rising costs, finding ways to save becomes a top priority. One of the easiest ways to find a lower monthly premium is by shopping for a new policy. Typically, the recommendation is to shop for new car insurance once a year or every six months if you’re seeing sharp rate increases.
However, according to survey respondents, most have not switched their insurance provider in the past 12 months, despite rate hikes, to the tune of 87%. Only 13% had switched carriers in the past year.
The No. 1 reason people have switched their car insurance in the past year was because they found a cheaper premium. Four percent of people had a bad claims handling experience and 5% had a bad customer service experience.
Eighty-one percent of those who switched insurance sought a new policy to cut costs, while 7% tried other cost-saving tactics, such as bundling and combining family policies.
Are people canceling coverage because they can’t afford it?
After several years of car insurance rate hikes, it’s easy to presume most consumers would be shopping around after continuous premium increases. After all, a recent report by the U.S. Bureau of Labor Statistics stated that the motor vehicle insurance index increased by 7.5% year-over-year.
While 82% of our surveyed respondents said they had not canceled their auto insurance policy in the past 12 months due to cost, 13% of those who switched insurers during that time cited cost as the reason.
While most surveyed respondents stated they didn’t change coverage in the past 12 months because of cost, those who did were motivated by other contributing factors. See the chart below to learn why consumers canceled or changed their coverage last year.
Have you canceled or changed your auto insurance policy in the past 12 months due to the cost?
| No, I have not canceled or changed my coverage in the past 12 months | 82% |
| Canceled my policy | 6% |
| Dropped collision or comprehensive | 2% |
| Increased my deductible | 4% |
| Lowered my liability limits | 3% |
| Dropped optional coverages (e.g., rental car reimbursement) | 4% |
What’s driving auto insurance rate hikes?
In 2022, the average annual insurance premium was $1,127, or $94 per month, according to a trend report by the Insurance Research Council (IRC). Today, at an annual average of $1,895 for full coverage car insurance, U.S. drivers have seen a 68% increase over the past three years. So, what’s driving the rate hikes?
“Average rates are moderating because premium increases over the past two years are catching up with insurer loss costs. Further, several major national insurers have been filing for rate decreases, particularly State Farm, Progressive and GEICO in Florida (see Feb. 5 announcement from Gov. DeSantis),” says Mark Friedlander, senior director of media relations
For the Insurance Information Institute (Triple-I). “These reductions are due to a 500% year-over-year decline in auto glass claim lawsuits following tort reform passed by the Florida Legislature in 2023.”
According to the IRC report, economic inflation, rising injury claims, poor driving behavior and legal system abuse, and increased vehicle repairs and replacement costs from post-pandemic supply chain disruptions are some of the top rate hike contributing factors. These impacts ultimately led to a 14% rate increase between 2020 and 2024.
“Common factors impacting the cost of auto insurance across the U.S. include more expensive repairs for more technologically advanced vehicles, inflationary impacts on auto parts and labor, and an escalation in litigated claims due to billboard attorneys aggressively marketing their services to consumers, encouraging them to have a lawyer handle their claim instead of filing it with their insurer,” Friedlander says.
Additionally, severe weather events and climate risks, such as those from wildfires, floods and hurricanes, have also impacted the cost of car insurance.
In 2023, weather and climate disasters cost about $1 billion, beating the previous record from the year before, according to the NOAA National Centers for Environmental Information. Costs accrued from weather-related events hit $1 billion by the fall of last year, and they’re not anticipated to slow down soon.
The affordability gap: Who’s hit the hardest
C.L. Fife, a 75-year-old driver in Nevada, says she’s seen a continuous uptick in her insurance rates over the past year, from $105 to $185 — a nearly 80% increase. She says she has heard from friends that their rates have also been steadily increasing.
She’s been at a loss as to why her rates have risen, especially as a retired, safe driver who has her policy bundled with her home insurance policy and receives a 15% discount from her insurer’s monitoring discount program.
The average annual rate for full coverage in Nevada is $2,060, compared to the nationwide average of $1,895 for a full coverage policy or $647 for liability-only. According to S&P Global Market data, Nevada was one of five states with a significant rate increase in 2024 – 12.7%.
This scenario isn’t just specific to Nevada. Auto insurance rates have increased nationwide, with some of the most significant hikes seen in Louisiana, Florida and California. No matter where you live, some drivers are seeing even higher rates, primarily those who are considered high-risk, those who opt for state-minimum coverages or those who have higher premiums.
High-risk groups, such as teens, seniors and those with multiple moving violations, accidents, or DUIs on their driving record or have poor credit, pay an average of $3,063 per year or $255 monthly.
What can drivers do in 2025?
Navigating car insurance rate hikes can be challenging, causing confusion and frustration about what to do next. In general, drivers can work on reducing rate increases with a few strategic tactics. The following are some key ways to work on lowering rate increases:
- Shop and compare policies regularly. It’s typically a good idea to shop around for new policy quotes at least once a year. Auto insurers are competitive and many can provide quotes that are substantially less than what you’re currently paying. It’s worth considering your options if you’ve been experiencing car insurance rate creep.
- Consider telematics or usage-based insurance. If you are OK with monitoring your driving behaviors, including how often you speed, brake and how frequently you drive, you may want to look into your insurer’s telematics options. These can provide cost-saving discounts. Additionally, if you’re not racking up many miles, a usage-based insurance policy may help you cut some costs.
- Raise deductibles, adjust coverage as needed. If you have higher deductibles, you’ll have a lower monthly payment. While this is a good option when funds are tight, you must remember that should you be in an accident, you’ll likely have significant out-of-pocket expenses. If you carry a high deductible, chat with your insurer about what other coverage options you could add-on for increased protections and consider keeping a savings for emergencies.
- Maximize available discounts. Car insurance companies provide discounts for various drivers, such as good/safe drivers, low-mileage and good students. These discount programs can save you 10-15% on average, helping to reduce higher rates. It’s also worth discussing bundling options — home, auto and life, for example — which can help keep your insurance premiums more affordable.
It’s important to note that if you’re a high-risk driver, it may take time before your rates begin to decrease, but a premium reduction is possible over time with good driving behaviors, adding-on coverages and participating in a driver’s safety course (but this might not be available from all insurers or in all states).
Maintaining a clean driving record for three to five years is essential – ideally, longer.
Policy and industry outlook: What’s coming next
With costs rising continuously over the past couple of years, ranging from goods and housing to car insurance, it is unlikely that a significant drop will occur. However, the rate increase has slowed and could continue to decrease from its original post-pandemic spike in 2022.
“The Insurance Information Institute’s underwriting projection forecasts a countrywide average personal auto rate increase of 7% in 2025. This is down from our estimates of 14% in 2023 and 12% in 2024 as the industry continues to recover from its worst underwriting performance in decades in 2022,” Friedlander says.
While the future is uncertain, it can be beneficial to consider what may be coming to make a plan that fits your needs and budget. As you’re thinking through your finances, it could be a good idea to consider some of these factors:
Federal and state-sponsored low-income car insurance programs
Car insurance rates also vary from state to state, meaning that some states could see drops or a continuation of higher rates. While this can create uncertainty about the future, individuals and families can seek low-income car insurance options offered through government-sponsored or state-run programs.
California’s Low Cost Auto (CLCA) Insurance Program, for example, is a state-sponsored, affordable, liability-only coverage car insurance program for eligible residents. Typically, an individual’s household income for one person must be $39,125 or less to qualify for the program. Through this coverage option, some drivers can find coverage that isn’t impacted as much by rate spikes.
AI and insurtech’s impact on car insurance
Smart vehicles have changed the driving landscape. The convenience of having a car that connects to your tech and navigation and maintains safety features while driving is a modern-day luxury that aims to improve overall driving performance. It also maintains and stores your driving data, which insurance companies use to assess risk and set rates.
Artificial Intelligence (AI) and Insurance Tech (InsurTech), such as telematics devices, chatbots and pricing data analytics, will increase in sophistication and premium assessment.
In a 2022 survey conducted by the Big Data and Artificial Intelligence Working Group of the National Association of Insurance Commissioners (NAIC), out of 193 surveyed auto insurers, 88% reported using, planning to use or exploring AI/ML models in their operations.
Today, AI and InsurTech are most often used to track driving behaviors for discount programs, offer more accurate quotes and customized policies and provide some customer service support. AI will likely be used in underwriting and more sophisticated premium assessments in the future.
Tariffs and other potential pricing impacts
As tariffs are implemented, there are likely to be more supply chain impacts, which have created a stir related to future vehicle and parts costs. With heightened concerns over economic impacts, inflation and recessionary elements, many industry experts have shared their concerns about additional spikes in costs.
“The situation regarding how tariffs could impact future rates continues to fluctuate. However, as China is a major supplier of auto parts in the U.S., tariffs are expected to negatively impact replacement costs for vehicles. Most likely, rate impacts due to tariffs would not occur until 2026. Further, current policies in force would not be impacted as rates are locked in for six-month and 12-month terms,” Friedlander says.
Continue to watch inflation and tariffs to see how they could affect insurance costs in the next year
Car insurance rates have risen post-pandemic, with 2022 and 2023 seeing the highest increases. While rates remain high, much higher than the national average in several states, there has been a slight decrease in the past year.
Consumers say inflation had the most significant impact on rate increases in the past 12 months. However, most consumers have not switched their car insurance despite the increases. Those in higher-risk groups, such as teens, seniors and drivers with violations or in states with more accidents, weather damage and theft have seen some of the most significant increases.
As the political landscape further impacts the economy, with tariffs set to start later this year, additional negative impacts to vehicle costs, inventory availability and replacement parts are anticipated to hit in the next 12 months.
To help prepare for these potential future impacts, look into switching your insurer, discussing available discounts and bundling options and consider AI or usage-based insurance to work on cutting costs and increasing your savings.
Resources & Methodology
Sources
- California.gov. “California’s low cost auto.” Accessed May 2025.
- Insurance Research Council. “Personal Auto Insurance Affordability: Countrywide Trends and State Comparisons.” Accessed May 2025.
- National Association of Insurance Commissioners. “Artificial Intelligence.” Accessed May 2025.
- S&P Global Market Intelligence. “U.S. private auto rate increases dip into single digits in 2024.” Accessed May 2025.
- U.S. Bureau of Labor Statistics. “Consumer Price Index for All Urban Consumers.” Accessed May 2025.
Methodology
CarInsurance.com commissioned research firm Dynata to conduct an online survey of 1,460 drivers about their driving habits in March 2025.
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