Car insurance premiums can increase for various reasons, including changes to your risk profile and policy choices. But even with an excellent driving record and a high credit score, your car insurance rate can still increase due to factors out of your control.
“Right now, insurance companies are facing increasing pressures. The average cost per liability claim has increased by 54% since 2019. Driving violations have increased 17% year-over-year. Additionally, inflation, rising parts and labor costs, and more complex vehicles are contributing to higher claim costs,” says Prateek Agarwal, the co-founder of Best Online Traffic School in California.
As a result of these changing market conditions, many insurance companies have raised premiums for all drivers to offset their financial losses.
In this article, we’ll explain why your car insurance premium might be increasing and what you can do about it.
CarInsurance.com Insights
- Car insurance rates are rising due to inflation, the increased cost of parts, labor shortages and risky driving.
- The motor vehicle insurance index increased 7% year over year in June 2025, according to the U.S. Bureau of Labor Statistics.
- The Insurance Information Institute forecasts a countrywide average personal auto rate increase of 7% in 2025.
Why your car insurance rates may be increasing
Car insurance rates are on the rise for most drivers. While there’s no single cause to blame for the increase in auto insurance rates, several factors can come into play.
Below is a look at some of the reasons car insurance costs are rising.
Accident or claim history
A lengthy history of accidents or claims can represent a risk factor to some insurance companies. With a higher level of perceived risk, many insurers charge higher rates to drivers with multiple claims in their past.
Moving violations or tickets
Auto insurance companies tend to reward drivers with clean driving records with lower insurance premiums. In contrast, drivers with incidents on their driving record tend to find higher insurance costs. Incidents may include speeding tickets, moving violations, at-fault accidents and DUIs.
Change of address of ZIP code
Your vehicle’s garaging location makes a big difference to your car insurance premiums. If you move to a new state or city, expect to find significantly different car insurance premiums. Sometimes, even moving to a different part of town could push your auto rates higher.
Adding drivers or vehicles
The more drivers and vehicles you have insured on your car insurance policy, the higher your premium will be. Additionally, if you insure teen drivers or brand-new vehicles, your premium will likely be much higher.
Credit score changes
In most states, car insurance companies can review your credit score when calculating your premium. In general, drivers with excellent credit pay the lowest rates, whereas drivers with poor credit pay more expensive rates.
Vehicle type and age
The type of vehicle you drive and the age of the vehicle can affect your premium. Brand-new cars typically cost more to insure than used models that have already depreciated. Luxury vehicles usually have higher rates than economy cars.
Climate change and natural disaster risk
Even the cheapest car insurance companies have been forced to raise premiums because of natural disasters, primarily caused by climate change. When insurers pay expensive claims in areas affected by fires or hurricanes, for example, they may have to raise premiums to compensate for their financial losses.
Real-world insight: Experience of a driver frustrated with rising insurance rates, shared on RedditHere’s what a motorist with a slightly older car had to say on Reddit about climbing premiums:
“I have a 2019 Camry. I’ve had State Farm insurance the past 2 years. Every renewal, my insurance premiums have gone up. From $457 to 563 to 573 to 681 (for 6 months). I’ve had no tickets for 5+ years, and no at-fault claims ever. I know medical insurance claims have been going up appreciably the past few years. Is auto insurance mirroring that or is there something else at issue here?”
Several other drivers echoed this post with complaints about recent rate hikes. Some suggested requesting new rate quotes from different carriers every three months; others advised asking your carrier about every possible discount you may qualify for.
Industry trends are driving rate increases
It’s not just personal and policy factors driving up car insurance premiums. Industry trends are also responsible for rising rates. Here are some of the most notable industry trends that are impacting the cost of auto insurance today.
Inflation and repair costs
Inflation can have a significant impact on auto insurance rates. As inflation pushes up the cost to repair or replace vehicles, insurers often pass those costs onto their customers. As a result, inflation and increasing auto repair costs can cause car insurance premiums to go up.
The Consumer Price Index for All Urban Consumers (CPI-U) increased 2.4 percent in the last 12 months to an index of 319.799. The motor vehicle insurance index increased 7% year over year in June 2025, according to the U.S. Bureau of Labor Statistics.
Labor shortages in repairs
Labor shortages make finding skilled workers to repair vehicles more challenging, which can drive up the cost of auto insurance. Luxury and high-end vehicles require specialized repairs completed by mechanics with specific levels of training. If these technicians charge more expensive rates, insurance companies have to pass the higher claim costs onto the drivers.
More severe accidents and claims
The rise of severe car accidents and more serious insurance claims is forcing many insurers to increase the cost of auto insurance. Insurance companies must charge higher premiums to remain financially stable when facing much higher claim costs. Otherwise, they risk being unable to pay claims and meet policyholder obligations.
Higher medical costs
The cost of healthcare in the U.S. is rising. When a driver gets into an accident, insurance companies have to pay higher claim settlements to cover the full cost of their medical treatment. This is another factor causing car insurance premiums to rise for many drivers.
Is your insurer raising rates across the board?
Sometimes, car insurance companies only raise premiums for specific drivers. In other cases, however, insurers raise rates for everyone. You might wonder when premiums go up for certain drivers vs. all drivers.
Every state has a department of insurance that regulates insurance companies operating in that state. These agencies also set requirements for insurance filings and premiums. If an insurance company wants to raise premiums across the board, the state insurance department can approve or deny the request based on what’s fair to consumers and current insurance laws.
Insurance companies must charge higher rates to remain profitable because rising claim costs, repair expenses, and increased risk factors lead to higher payouts, which must be offset by premiums to cover losses and operating expenses.
On the other hand, car insurance companies raise premiums for individuals when a driver creates additional risk for the insurer. This could be a driver who has been in several recent accidents, has multiple moving violations or was convicted of a DUI.
If you’re unsure whether your premium increased because of personal or market factors, you can always ask an insurance agent. Generally speaking, if you made any changes to your policy, filed any claims or received any violations, your premium likely went up because of your risk profile.
What to do if your rates keep going up
If your car insurance premium continues to increase, here’s what you can do:
Shop around for quotes
Shopping around is one of the best ways to save on car insurance. Insurance companies have proprietary risk-assessment systems, so while one insurer may not like your risk factors, another may be happy to offer coverage at a much lower rate.
Shop your coverage annually or anytime your premium goes up. Always make sure you are comparing apples to apples when it comes to coverage levels and deductibles.
Increase your deductible
You can lower your premium if you can afford to raise your deductible. The higher your deductible, the lower your premium — insurers love it when you have more skin in the game. If you can afford it, double your deductible. But always choose a deductible you can easily afford if you have to make an insurance claim.
Adjust coverage
This one can be tricky. While you want to save money, you must also ensure your vehicles are adequately insured. Look at your coverage levels and ensure they are appropriate — you need enough coverage to protect your car and other assets. State-required minimums are rarely enough coverage.
Ask about discounts
Insurance companies offer various discounts that can dramatically reduce your premium. Ask your insurance agent about all available discounts to maximize your savings.
Bundling is a significant discount that insurers offer customers with multiple lines of coverage. You should get a bundling discount using the same insurer for your home and auto insurance.
Other common discounts include paying your bill in full, multi-vehicle, loyalty, active-duty military member or veteran, and taking a defensive driving course
Even minor car insurance discounts can add up. Sign up for electronic billing or pay for your policy annually instead of monthly, which will result in a discount. If you have changed your driving habits or vehicle, contact your insurer, as you may qualify for new discounts.
Explore usage-based programs
Many insurers offer usage-based insurance programs, like pay-per-mile insurance, which can be cheaper than a traditional policy. With pay-per-mile insurance, you pay a flat monthly rate and a small fee for each mile you drive. At the end of the month, you’re only charged based on the distance you drove.
You can also enroll in a telematics program to reduce your premium. You use a mobile app to track your driving behaviors every time you drive, like speed and braking force. You can be rewarded with a lower premium if you consistently demonstrate safe driving habits.
However, note that some insurer telematics programs can increase your rate if the mobile app detects poor driving habits.
When should you switch insurance companies?
You might consider switching companies if you’re paying too much for car insurance. While switching carriers can help you get a lower premium, it’s crucial to switch at the right time.
Changing car insurance companies can be a good idea if you recently experienced a life change, such as moving, getting married or adding a teen driver to your policy. Consider switching if you had a recent accident or claim, or if you purchased a new car.
Before you switch, you’ll want to compare quotes from several insurance companies. Make sure to get quotes for the same types and amounts of coverage, and choose the same deductibles if you’re getting quotes for full coverage. Look for insurers that offer the coverage you need, as well as good discounts, a strong financial history and positive customer reviews.
If you need help choosing the right amount of car insurance for your situation, or want to see car insurance rates by make and model, you can use CarInsurance.com’s online auto insurance calculators and tools.
If you’re switching companies, avoiding a gap in coverage is important. Ideally, your new policy’s effective date should overlap a few days with the old policy’s end date. That way, you will be continuously covered as the old policy ends and the new one starts.
Will rates keep increasing? And, if so, why?
While it is impossible to predict the future, car insurance rates will likely continue to increase. Premiums rarely stay the same; in most cases, they tend to rise from year to year.
Tweaking your coverages and risk factors can help bring your premiums down. Raising your deductible while lowering your coverage levels can result in a more affordable premium. But it’s never advisable to go overboard when cutting back on coverage levels; you don’t want to be underinsured when disaster strikes.
Frequently asked questions
Why did my car insurance go up even with no accidents?
Car insurance rates are up due to high vehicle prices, labor shortages and inflation. With rising costs for most drivers, your car insurance might increase without an accident.
Will rates keep going up in 2025?
It’s difficult to say whether car insurance premiums will keep increasing. Factors like inflation, repair costs and claim severity haven’t changed much, which could lead to increasing rates. To avoid a significant rate hike, control the factors you can, like your driving record and credit score.
How often should I compare rates?
You should compare new car insurance rates at least once a year. If you opt for a six-month policy, review the coverage before every renewal.
Can my insurance go up for no reason?
Your insurance premium can’t go up for any reason. If your premium is increasing, there’s always something behind it, whether changes to your personal risk profile or market factors. If your insurance rate increases, you can ask an agent for an explanation.
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