Inflation has hit the U.S. in significant ways over the past year. From a hike in grocery store costs — nearly 40% for eggs and 6% for beef, for example — to eating out, travel and beyond, Americans have seen an increase in their spending almost across the board.
You’re not alone if you’re wondering why your car insurance rates are rising. While the national annual average for full coverage car insurance is $1,895, drivers can pay more based on where they live.
For example, Louisiana drivers pay the most in premiums at $2,883 annually, while those in Maine pay $1,175 annually. Other states continue to see sharp spikes — Nevada drivers can now expect an increase of about 10% in the final quarter of 2024.
While inflation impacts rates, other factors contribute to how much you pay for coverage. Learn more about the cheapest and most expensive car insurance states, why rates continue rising and how you can save on your premiums.
- Louisiana is the most expensive state for car insurance, with an annual rate of $2,883 for full coverage.
- Maine is the cheapest state for car insurance at an annual rate of $1,175 for full coverage.
- Car insurance rates are rising due to inflation, increased auto part costs, repairs and parts, severe weather events, higher claims and litigation, traffic congestion and poor driving behaviors.
Our take
States are seeing a steady increase in severe weather events, city population booms, increased reckless driving behaviors in younger drivers and spikes in vehicle and part thefts, all of which lead auto insurance companies to raise rates to adjust for claims and losses.
The aftermath of the pandemic can still be felt in 2024 — inflation, increased auto incidents, costly repairs and parts — which is partly why your car insurance rates are increasing.
While you may not avoid these premium hikes, you can save wherever possible. Talk to your insurer about discounts and savings programs, shop around, compare policies and keep your driving record clean to navigate car insurance rate fluctuations.
Which states approved auto insurance rate increases in 2024?
U.S. car insurance rates have increased since 2020, after the start and stop of the pandemic on labor and production markets, with some states seeing spikes in 2022. While various factors contribute to drivers’ continued increases, most insurance companies attribute fatalities, poor driving behaviors and inflation as the biggest impacts.
Some insurers began implementing higher state-specific insurance rates this year due to increased accident claims, litigation, rising auto parts and repair costs and weather-related damages.
For example, Louisiana experienced large hikes in late 2023 from one of its top insurers, State Farm, which raised its rates by an average of 17.3%. And Louisiana lawmakers are still aiming to determine why car insurance rates are so high at an average annual rate of $2,883.
While states’ car insurance rates fluctuate based on overall population, personal driving factors, state driving trends and changing laws, the following 15 states have seen some significant increases in 2024:
- California
- Colorado
- Florida
- Georgia
- Illinois
- Louisiana
- Nevada
- New Jersey
- New York
- Pennsylvania
- Maryland
- Minnesota
- Missouri
- South Carolina
- Virginia
Ultimately, insurers determine car insurance spikes. In the second quarter of 2024, State Farm approved 42 rate increases and calculated a premium change of $196.1 million. Some of the highest rate increases during the year’s second quarter were in New Jersey, at a 23.1% increase, Washington, at a 13.8% increase and Maryland, at 11.5%.
Explore average car insurance rates by state with our interactive map
States with the highest car insurance rate increases
In 2024, the most expensive state for car insurance is Louisiana, with an annual rate of $2,883 or $240 monthly, compared to Maine, which offers the least expensive annual rate of $1,175 or about $98 a month for full coverage.
Where you live contributes significantly to how much you may pay in car insurance. While some states can maintain low rates year after year, others have seen rate hikes over time.
While extenuating factors like inflation and the cost of auto parts and repairs tend to raise rates, other factors that spike car insurance rates include higher population, crime rates and weather trends.
Check out our detailed guide on finding the cheapest car insurance in Louisiana
Drew Pearson, a public information officer with the Nevada Division of Insurance, says that more uninsured drivers and costly lawsuits push up premiums.
“In 2024 alone, the Nevada Division of Insurance has stepped in to collect over $6.9 million in recoveries on behalf of Nevada citizens. Auto insurance rate increases are a national trend and issue, with the factors affecting Nevada drivers also affecting drivers across the country,” he says.
Louisiana and Nevada are not the only states seeing car insurance increases in 2024. Below, learn more about the five most expensive and cheapest states for car insurance.
Check out our detailed guide on finding the cheapest car insurance in Nevada
Top 5 most expensive states for car insurance
While drivers in Louisiana can estimate spending about $240 a month for car insurance, those in Florida will spend about $225 a month, or $2,684 annually. See which states round out the top five most expensive states for car insurance below.
| State | Annual cost for full coverage |
|---|---|
| Louisiana | $2,883 |
| Florida | $2,694 |
| California | $2,416 |
| Michigan | $2,352 |
| Colorado | $2,337 |
Top 5 cheapest states for car insurance
Drivers in Maine, New Hampshire and Vermont have several things in common — cold winters, New England charm and cheap car insurance.
Maine tops the list of cheapest states for car insurance in 2024—its drivers can estimate paying less than $100 a month—but those in New Hampshire and Vermont can also boast rates around $100 a month.
See how the states stack up in the top five cheapest states for car insurance in the chart below.
| State | Annual cost |
|---|---|
| Maine | $1,175 |
| New Hampshire | $1,265 |
| Vermont | $1,319 |
| Ohio | $1,417 |
| Idaho | $1,428 |
Why are car insurance rates rising?
Car insurance rates have increased 16% in 2024, according to the BLS, which likely means you’ve begun to see a rise in what you’re paying for your coverage.
The year 2023 was challenging for auto insurers. Not only was there an auto parts shortage, but there were also increases in severity across injury and material damages, which included more attorney representation and medical expenses. To help alleviate these cost impacts, insurers increased their year-over-year rates by 14%, according to the 2024 LexisNexis report.
LexisNexis reports that auto insurers have been seeing an uptick in risky driving behavior since the pandemic—namely, distracted driving, driving under the influence of alcohol and/or drugs and speeding. In some states, these impacts and other factors – such as population density and theft – have created a higher incidence of collision and claims records. These factors contribute to car insurance rate fluctuations.
According to the Nevada Division of Insurance, additional factors that contribute to the rise in auto insurance rates, in addition to the ones mentioned, include:
- Insurance fraud
- More traffic and poor driving habits lead to an increase in accidents
- Labor shortages
- Litigation and increases in personal injury judgments
- Rising costs of used vehicles
- Supply chain issues
Pearson says Nevada has experienced significant population growth in recent years, with a rise in average miles driven, creating traffic congestion concentrated in urban areas. He states that this type of boom can contribute to increased rates.
“There are many people on the road at all times of the day in the Las Vegas Valley. As a 24-hour town, Las Vegas experiences an increased amount of road activity compared to other cities. Since the pandemic, law enforcement has experienced staffing challenges, impacting enforcement,” Pearson says. “There are also Nevadans who don’t have auto insurance, and the cost of accidents is borne by those who are insured. These factors combine to create a trend of increases in automotive insurance rates.”
Changes to state laws and regulations, severe weather events, higher costs for newer vehicles, and inflation could also increase car insurance premiums.
California to increase minimum liability limits in 2025
Some big changes are coming for drivers in California in 2025. Not only will EV drivers be taxed for the miles they drive in the state’s new program, California Road Charge, starting in July, but minimum liability limits will be increasing for private passenger autos, commercial business and recreational vehicles starting Jan. 1, 2025. According to a State Farm report, the new law increases the minimum limits for coverages related to the liability portion of your auto insurance policy.
The new minimum liability limits will be 30,000/60,000/15,000, doubling from the current minimums of $15,000/$30,000/$5,000. When it comes to liability coverage, the numbers represent:
- The maximum coverage for bodily injury liability for one person injured in one accident, or $30,000;
- The maximum coverage for bodily injury liability for all persons injured in one accident, or $60,000;
- The maximum coverage for property damage liability in one accident at $15,000.
According to the report, this change aims to provide additional protections for California drivers and to cover the increase in accident claims, repairs and medical costs that have risen significantly in the 56 years since the last increase.
Inflation has driven up the cost of goods and services, including vehicle repairs
There’s no denying that cost increases have been widespread in the U.S., but inflation isn’t the sole reason behind spikes in car insurance rates. Not only have prices been rising for goods and services on shelves, in supermarkets and gas stations, but they’ve also been increasing in the costs of parts, labor and sophisticated vehicle technology.
It can help to think of inflation as a ripple effect: Inflation is a rock thrown into the lake. The ripples that follow are an increase in general parts costs, which expands to specialized vehicle parts. Then, drivers begin to see it when their auto shop repair bill is several hundred dollars higher.
What happens next? Insurers start raising their rates to cover these costs because they’re starting to see a much larger bill as accident claims and litigation cases increase. This increase in accidents is attributed to varying factors, such as weather, more urban congestion, distracted driving and speeding.
Newer cars with costly repairs lead to higher insurance rates
In 2021, the U.S. began to see a sharp increase in pricing. The Consumer Price Index rose to 5% by June of that year from February’s 1.7%, attributed to factors such as pandemic shutdowns and the CARES Act and American Rescue Plan, which authorized about $5 trillion in government spending, according to the National Bureau of Economic Research.
These impacts contributed to strong consumer and business demand, pressuring increased wages and prices. By June 2022, inflation peaked at 9%, and auto industry supply chain disruptions also impacted inflation during 2021 through 2022. Newer car parts and repairs were being hit especially hard. This was partly because of their advanced technology, but can also be attributed to the aftermath of the pandemic.
According to a Federal Reserve Bank article, supply chain disruptions during the pandemic limited the supply of new vehicles and spiked the costs of used vehicles. When newer vehicles were released, they were much costlier than they typically would’ve been.
Since newer vehicles’ technology has also improved and grown, their drivers often see higher bills due to the complexity of repairs and the time their vehicles are in the shop.
Severe weather events drive up insurance costs
Over the past several years, significant weather events, such as hurricanes, floods and wildfires, have left a wake of devastation and destruction behind, with policyholders leaning heavily on their home and auto insurance coverages to foot the bill.
According to Inside Climate News, extreme weather events cost the U.S. more than $92 billion in 2023.
As of November 2024, there have been 24 weather and climate disaster events in the U.S., exceeding $1 billion each, according to the National Centers for Environmental Information.
These have ranged from severe storms and tropical cyclones to hail, winter storms and wildfires, generally impacting states in the Midwest, South and Southeast. Comparatively, the annual average from 2019 to 2023 is 20.4 events.
With these increases in natural disasters, U.S. car insurance rates going up, especially in deeply impacted states, is almost guaranteed. Frequent damage claims and an uptick in flood-damaged vehicles are factors car insurers consider when determining rates in states.
How much have car insurance rates increased since 2019?
After 2019, car insurance and driving statistics began taking interesting turns. Since worker production and worldwide shipping halted during the pandemic shutdowns, vehicle inventory and parts were limited. This led to higher costs of used vehicles and parts shortages, which started to impact car insurance rates.
Risky driving behavior also rose among younger drivers. Gen Z distracted drivers began to climb, rising 66% from 2019 to 2024, according to the 2024 LexisNexis Auto Trends Report. When insurers consider raising rates, driving behaviors and risk are a large consideration.
In Nevada, rates increased an average of 9.4% from 2019. Pearson says rates slightly decreased in 2020—about 2.6%—due to decreased vehicle usage during the pandemic.
“There has been a regular increase in requests for premiums for auto insurance rates, such as 2021’s average of 9.0%,” he says. “Keep in mind: Averages can be somewhat deceptive, as the largest insurers support multiple plans and rates for a wide variety of vehicles, and other carriers may have more niche markets, such as motorcycles or higher-end vehicles exclusively.”
The average annual cost of full coverage insurance has increased by $765 since 2019—nearly 70% in five years. While rates slightly dipped between 2019 and 2022—likely contributing to decreased driving and traveling during the pandemic—they have continued to tick upward as inflation, the cost of parts and repairs and vehicle prices have gone up.
What can you do to lower your insurance premiums?
While you can’t necessarily change inflation impacts or hikes caused by natural disasters, you can look at a couple of saving strategies to help lower your insurance premiums.
Ask your current insurer about available car insurance and driver discounts. Many of these can shave hundreds off your annual coverage amount, helping to lessen any state insurance hikes you may see.
Some typical discounts include:
- Automated driver monitoring programs
- Automatic bill payments
- Bundling of home, auto, and life insurance policies
- Defensive driving courses
- Good or safe driver discount
- Good student discount
- Low-mileage driving discount
You can also seek savings on your car insurance premiums by shopping around and comparing rates and discounts offered. By checking current premiums with other companies, you learn what the market offers and how your driving history and other personal factors impact your premiums.
Pearson says Nevada’s Division of Insurance recommends that consumers shop with a broker who can provide various options, competitive plans and rates. The division also offers informative consumer resources featuring key factors in auto insurance.
To learn more about your state’s auto insurance premiums, rate increases, and laws, search for your Division of Insurance to review the impacts you’re experiencing and the provided recommendations.
Resources & Methodology
Sources
- Federal Reserve Bank of Minneapolis. “Despite easing inflation, vehicle cost repairs soar.” Accessed November 2024.
- Inside Climate News. “Climate-fueled extreme weather is hiking up car insurance rates.” Accessed November 2024.
- Insurance Business. “Allstate to pursue further auto insurance rate increases.” Accessed November 2024.
- Louisiana Illuminator. “Lawmakers still waiting to hear why auto insurance is so expensive in Louisiana.” Accessed November 2024.
- S&P Global. “State Farm gets go-ahead for major personal auto rate hikes in Q2 2024.” Accessed November 2024.
- Economics Observatory. “Why have insurance premiums gone up so much?” Accessed November 2024.
- Insurance Information Institute (III). “Trends and insights: Personal auto insurance rates.” Accessed November 2024.
- LexisNexis Risk Solutions. “U.S. auto insurance trends report highlights new generational risks in drivers and vehicles that continue to contribute to higher claim frequencies.” Accessed November 2024.
- National Bureau of Economic Research. “Unpacking the Causes of Pandemic-Era Inflation in the US.” Accessed November 2024.
- National Centers for Environmental Information. “Billion-dollar weather and climate disasters.” Accessed November 2024.
- The Triple-I Blog. “Inflation continues to drive up consumers’ insurance costs.” Accessed November 2024.
- U.S. Bureau of Labor Statistics. “Consumer Price Index for All Urban Consumers (CPI-U): U. S. city average, by detailed expenditure category.” Accessed November 2024.
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