Auto insurance costs continue to rise. Motor vehicle insurance premiums increased by 0.7% in May after rising 0.6% in April, according to a June 11 report from the U.S. Bureau of Labor Statistics
Auto insurance costs have increased by 7% in the past 12 months. Although the pace has slowed from January’s 11.8% year-over-year increase, it continues to create a budgeting squeeze for many drivers.
“Car insurance costs are rising primarily due to the impact of inflation on nearly every aspect of vehicle ownership and repair,” says Rajni Kapur, CEO at All Solutions Insurance, an independently owned insurance agency in Moreno Valley, California.
This guide explains how the BLS monitors rising costs, why auto insurance costs are rising, and how to shop for the most affordable coverage.
Carinsurance.com Insights
- Although costs aren’t rising as steeply as in the past, auto insurance premiums increased by 7% year over year in May.
- Increased insurance premiums can be an unwelcome surprise when it’s time to renew your policy.
- Shopping around, revising your coverage, and seeking discounts are the best ways to find the most affordable option.
Why insurance inflation is increasing
Multiple factors are pushing insurance costs higher. Some of the most pressing reasons include supply chain disruptions, labor shortages, increased auto repair/replacement costs, pricier vehicles, more frequent severe weather events, reinsurance rate hikes and more claims.
Repair cost inflation
When repairing a vehicle after an accident is more expensive, insurers pass those costs onto drivers through higher premiums. Electric vehicles, in particular, require specialized mechanics, which adds another layer to the auto repair supply chain.
“Supply chain disruptions and labor shortages have driven up the cost of vehicle parts and repairs, while newer cars with advanced safety and technology features are more expensive to fix,” Kapur says.
Higher vehicle values
Purchasing a vehicle has become more expensive over time. As of 2025, the average new car sells for $47,740. Since Q4 2019, the average transaction price for new cars has surged by 34% through Q4 2024, reflecting rising costs across the auto market. And while mainstream car brands saw prices climb 27%, luxury brands increased by 25% from Q4 2019 to Q4 2024.
Legal and claims inflation
Higher sticker prices and repair costs aren’t the only things making claims more expensive for insurers.
“Medical costs related to accident injuries have increased, and the overall frequency and severity of claims have risen in some areas,” says Kapur.
As legal and other claim-related costs rise, insurers often raise rates.
Severe weather events
“One thing to keep in mind is (that) premiums are priced on the geographical area, environmental factors, and the driver and their habits,” says Kevin Kramer, COO at Ignition Dealer Services, a company in the automotive product space. “So if there were any major losses in the area, regardless if the driver had a claim or not, their premium may go up.”
For example, drivers in parts of Florida and North Carolina may see higher insurance costs after last year’s destructive Hurricanes Helene and Milton. Similarly, drivers in Los Angeles will face higher rates following the 14 fires that raged through the area in January of this year.
Reinsurance rate hikes
Insurance companies often mitigate financial risks by purchasing reinsurance coverage, which helps carriers absorb a financial hit during catastrophic events like hurricanes or wildfires. Insurers can maintain enough capital by offloading part of their liability to stay solvent and continue paying claims, even in high-loss years.
When reinsurance rates increase, the cost is passed on to drivers. Last year, Fitch Ratings predicted that reinsurance companies would seek double-digit increases in 2025, trickling down to drivers in the form of higher premiums.
What is the Consumer Price Index?
The U.S. Bureau of Labor Statistics’ Consumer Price Index, or CPI, measures average changes in cost for everyday household expenses, including auto insurance
The BLS tracks the change in average auto insurance premiums over time. It offers a standardized and transparent measure of the impact of inflation-specific costs on auto insurance premiums.
What the latest inflation numbers reveal about rising rates
Insurance costs have been on the rise for years. However, rates surged after the Covid-19 pandemic as supply chain disruptions, labor shortages and increasing repair/replacement costs drove up claims expenses for insurers.
The table below shows the Consumer Price Index for All Urban Consumers monthly average for motor vehicle insurance from 2015 to 2025. The base period was 1982-84, and the value was set to 100.
The big takeaway is that auto insurance is almost nine times as expensive in 2025 as in 1982-84, with a dramatic price increase from 2020.
| Year | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | Oct | Nov | Dec |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2015 | 451 | 454 | 455 | 457 | 457 | 458 | 460 | 461 | 462 | 465 | 472 | 474 |
| 2016 | 475 | 477 | 479 | 484 | 487 | 488 | 489 | 491 | 492 | 497 | 503 | 508 |
| 2017 | 511 | 513 | 518 | 516 | 521 | 525 | 526 | 531 | 532 | 537 | 544 | 548 |
| 2018 | 554 | 563 | 564 | 563 | 564 | 565 | 566 | 565 | 568 | 573 | 573 | 573 |
| 2019 | 573 | 574 | 573 | 570 | 568 | 569 | 569 | 569 | 569 | 572 | 572 | 573 |
| 2020 | 573 | 576 | 579 | 535 | 487 | 512 | 558 | 561 | 540 | 531 | 538 | 545 |
| 2021 | 552 | 560 | 565 | 568 | 569 | 570 | 567 | 566 | 566 | 565 | 568 | 568 |
| 2022 | 574 | 584 | 589 | 592 | 594 | 604 | 610 | 616 | 625 | 637 | 644 | 649 |
| 2023 | 659 | 669 | 677 | 684 | 696 | 706 | 718 | 733 | 742 | 760 | 768 | 780 |
| 2024 | 794 | 806 | 828 | 839 | 837 | 844 | 851 | 854 | 863 | 866 | 866 | 868 |
| 2025 | 888 | 896 | 890 | 893 |
How to read the inflation index
It’s helpful to read the inflation index over time, not just from month to month. Take the chart above, for example. It’s a bit overwhelming, but in the 40 years since the base period of the chart, the cost of car insurance has increased ninefold.
And although May’s 7% year-over-year increase has slowed from January’s 11.8%, the numbers still aren’t trending downward as quickly as drivers would like.
How much have car insurance rates increased by state?
According to our data, the national average rate increased 26.9% from 2022 to 2023 and 30.9% from 2018 to 2023.
But where you live and drive impacts how much your costs have climbed. Drivers in some states have seen their rates increase by almost 30%, while drivers in others saw modest rate declines.
For example, drivers in the following states saw average rates climb by more than 25% between 2022 and 2023: Arizona, Connecticut, Delaware, District of Columbia, Florida, Georgia, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Minnesota, Missouri, Nebraska, Nevada, New Hampshire, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee, Texas, Utah, Virginia and Wisconsin.
Who’s most affected by rising insurance costs?
Most, if not all, drivers are impacted by inflation. However, individuals in some situations tend to feel the pinch more than others. The following factors play a role:
- Age. Young drivers typically pay more for coverage than drivers with more experience on the road. Teen drivers, those 16 to 19, pay the most for coverage on average of any age group.
- Vehicle type. SUVs and sedans cost less to insure than luxury and sports cars, as do vehicles that perform well in crash and safety tests.
- Region. The severity of the weather where you live could impact your insurance costs. For example, drivers in hurricane-prone states like Florida might pay more for coverage than those in inland states. The same goes for areas prone to tornadoes and wildfires.
- Driving history. People with a clean driving history typically enjoy lower rates than those with prior claims.
How the Consumer Price Index is calculated
The U.S. Bureau of Labor Statistics uses a range of information to create the inflation index, including:
- Broad sampling of policies. Everyone has different insurance needs, and this data takes multiple coverage levels into account.
- Pricing changes over time. As premiums fluctuate, insurers provide this information to the BLS.
- Policy updates. The BLS’s sample policies are revised to reflect changes, such as a more current vehicle model year.
- Dividends. If a company provides dividends to policyholders, these are subtracted from the driver’s total cost.
How the CPI differs from other inflation indices
The CPI measures changes to insurance prices over time. In contrast to some other indices, the policies remain standardized from month to month.
The table below highlights some of the key differences:
| Insurance Inflation Index (CPI) | Basic trend reports | |
|---|---|---|
| Focus | Inflation-specific metrics | Inflation-related factors might not be included |
| Source | U.S. government agency | Private organizations |
| Bigger picture | The BLS report offers consumers a straightforward way to view inflation-related costs. | Isolated insurance reports don’t necessarily help drivers see how rising costs fit into the current economic picture. |
How to save money on car insurance
As you navigate rising insurance costs, here are some strategies to help you mitigate pricey premiums:
- Re-evaluate your coverage needs. Review your policy periodically to determine whether you need more or less coverage.
- Compare quotes. Comparing quotes across multiple insurance companies can help you find the most affordable option.
- Seek out discounts. Insurers offer discount opportunities to help you save. Do some legwork to determine if you qualify for any savings, and remember, discounts vary by company.
- Raise your deductible. A higher deductible typically leads to lower insurance premiums, but this is only a good call if you have the deductible amount in savings.
Final thoughts
Inflation gives you an indication of whether a rate increase is likely during your next renewal. After all, if insurance costs have gone up 7% year over year, you’re likely to experience a rate increase.
Once your current insurer provides a new policy quote, you can accept the new rate or shop around for a more affordable option.
Resources & Methodology
Sources
- CarEdge.com. “Car Price Inflation Is Real – These Brands Are the Worst.” Accessed June 2025.
- Fitch Ratings. “Reinsurers to Push for Double-Digit U.S. Casualty Price Increases.” Accessed June 2025.
- Insurance Business Magazine. “Reinsurers seek double-digit rate hikes for US casualty in 2025 renewals.” Accessed June 2025.
- U.S. Bureau of Labor Statistics. “Consumer Price Index.” Accessed June 2025.
- U.S. Bureau of Labor Statistics.”Databases, Tables & Calculators by Subject: Motor vehicle insurance in U.S. city average, all urban consumers, not seasonally adjusted.” Accessed June 2025.
Methodology
CarInsurance.com editors collected rates from Quadrant Information Services for a 40-year-old driving a Honda Accord LX with a good insurance score and no violation on record for a full coverage insurance policy with limits 100/300/100 and $500 comprehensive and collision deductibles. The hypothetical driver has a 12-mile commute and 10,000 annual mileage. We analyzed 53,409,632 records, 34,588 ZIP codes and 170 insurance companies nationwide.
Why Carinsurance.com created this report
Carinsurance.com is highlighting this index to provide drivers with a closer look at the current auto insurance market. With more than 20 years of data and significant expert opinions, this piece aims to help drivers make confident and data-informed decisions.
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