Gas prices may be dominating the headlines, but car insurance rates are also on the rise. In 2025, vehicle insurance inflation was 2.8% according to the Bureau of Labor Statistics. That percentage applied to an average premium of $190 a month for full coverage insurance equates to a cost increase of nearly $64 — and that’s assuming you didn’t get a ticket, upgrade your car, or move to an urban neighborhood.
Your driving history, car value, address, and other factors, including tariffs on autos and parts, could push your insurance costs even higher. And the more you pay now, the more you’ll get stung by future inflation.
Unfortunately, insurance costs are likely to keep rising because the root causes remain in play. Here’s a look at five reasons car insurance rates are climbing and what you can do to keep your insurance costs in check.
Learn more: How does car insurance work? The basics explained.
5 reasons car insurance rates are climbing
Insurance companies are paying out more for accident claims and passing some of those increases along to you. High repair costs, climate change, rising accident severity, tariffs, and elevated used car values are contributing.
High repair costs
Similar to auto insurance rate hikes, the cost of vehicle maintenance and repair rose by more than 43% from January 2019 to January 2025. That’s thanks to more expensive cars and car parts, such as electronics and sensors, as well as parts and labor shortages.
Michael J. McCartin, president of Joseph W. McCartin Insurance and a Trusted Choice Independent Agent, said vehicle repair costs are indeed part of the problem: “Parts and labor costs have increased, many shops are short-handed, so it takes longer to fix cars, which means people are in a rental car for a longer period of time.”
Climate change
Insurance company losses have hit historic highs as more frequent natural disasters and severe weather driven by climate change generate more claims for larger payouts. These types of catastrophic claims affect both auto and home insurance rates.
State Farm, one of the largest insurers in the U.S., received permission to institute more than 65 rate hikes across 29 different states in early 2023 due to extraordinary losses.
Learn more: How extreme weather is increasing the cost of your auto insurance
Increase in the severity of insurance claims
When cars returned to the road post-pandemic, accident rates rose. State Farm attributed its unprecedented $13.2 billion underwriting loss in 2022 to the increased severity of auto insurance claims.
“It really is a convergence of factors, including rising insurer losses due to increasing accident frequency and severity,” said Loretta Worters with the Insurance Information Institute. “There are also more fatalities and injuries on the road, leading to increased attorney involvement in claims.”
Tariffs
According to a news release from the American Property Casualty Insurance Association, “Thanks to a highly competitive insurance market, auto insurance is beginning to stabilize. This positive trend, however, could be undermined by tariffs, if they result, as expected, in increased costs to repair or replace cars and other property, which again would lead to higher costs that would need to be reflected in auto insurance premiums — a result no one wants.”
Higher used car values
Zander Cook, co-founder and CRO of lease buyout company Lease End, also identified high used car values as a factor. “Used car values have stayed elevated longer than expected after the pandemic, which has inflated replacement costs on total-loss claims,” Cook explained.
Learn more: What are tariffs, and how do they affect you?
11 ways to save on auto insurance premiums
When it comes to the hit to your personal finances, the forecast isn’t all doom and gloom. Worters said drivers can explore many options for scoring good, cheap car insurance. What you pay for a policy is also influenced by some personal factors, including your gender, marital status, location, and even your credit history.
Learn more: What is a car insurance premium, and how is it calculated?
“Consider some factors that can affect your rates,” Worters said, “and learn how an annual insurance checkup can position you to get the coverage right for you.”
Here are 11 ways to save on car insurance.
Assess your coverage needs
The coverage types and levels you’re carrying now might no longer fit your situation. Determine how much car insurance you need by considering factors such as your net worth, risk tolerance, emergency savings, and the number of drivers on your policy to choose coverage that’s just right for your situation. And be aware of the minimum amount of car insurance required in your state.
Learn more: Out of work and driving less? Why reducing car insurance isn’t always smart.
Keep (or work toward) a clean driving record
Some factors that affect auto insurance prices, like age or gender, aren’t always within your control. But a careless at-fault accident or a speeding ticket can lead to a rate increase from your insurer.
Choose a cheaper car
Insurance is only one cost of car ownership. Purchase and vehicle maintenance expenses are also part of the equation. Unfortunately, data indicates inflation in all three cost categories. A 2025 TransUnion report concludes that vehicle maintenance and insurance costs rose twice as fast as the broader inflation rate over the past five years. Additionally, as of early 2025, the average monthly car payment had increased by 27% since 2021.
Learn more: Most common types of car insurance explained
The good news is, a cheaper car can help you manage your total ownership cost, including insurance premiums. Cars that are cheaper to insure tend to have fewer claims and lower claim costs. Claims costs are influenced by vehicle complexity and, in total loss situations, vehicle value. In other words, cars that cost less to insure may also have lower maintenance and purchase costs.
McCartin encourages customers to contact an agent before they start vehicle shopping. “Some cars are less expensive to insure. Ask in advance about what an estimate of the premium might be,” she said.
Here are the cars that are the cheapest to insure, according to recent data from Insure.com:
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Honda CR-V
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Honda HR-V
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Volkswagen Tiguan
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Hyundai Venue
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Chevrolet Trailblazer
Shop around to save on insurance
If you’ve been with the same company for a while, shop around for new car insurance quotes on a yearly basis. You might find that your existing carrier will offer some incentives to keep your business. On the other hand, switching car insurance could be a better way to save money.
You can also consult with an independent insurance agent to see which insurer might be the best fit for your family or fleet of vehicles, or use an online comparison tool to shop rates for you.
Learn more: Does buying car insurance online save you money?
Consider telematics
Most insurance companies now offer discounts through usage-based insurance. Drivers download an app or install a plug-in device that monitors mileage, driving habits, speed, and more.
According to a recent TransUnion survey, “Over the past six months, for instance, more than half of consumers who were presented a policy option with telematics indicated they opted into the program. Their decisions appear to be driven by the potential for user-based insurance to outweigh similar or higher discounts realized through bundling their policies.”
Maximize car insurance discounts
Insurance companies offer a full menu of discounts, and it can be difficult to ascertain if you’re taking advantage of everything you’re eligible for.
Ask about student discounts, senior discounts, military and veteran discounts, and any discounts for safe driving, taking a defensive driving course, or enrolling in traffic school.
Learn more: Car insurance discounts: 17 ways to save
Bundle your auto and homeowners insurance
McCartin said drivers struggling with their auto insurance bill should consider bundling their policies.
“There are not a lot of options when it comes to auto insurance and reducing rates right now,” McCartin said. “Bundle your coverage with the same company for home and auto for a bigger discount.”
Work to raise your credit score
What does your credit score have to do with your car insurance? It turns out quite a lot. Insurance companies use a credit-based insurance score (CBIS) in their underwriting process to determine insurance rates. Making bill payments on time, paying down debt, and using credit cards responsibly will all improve your credit score and deem you less risky to insurers.
Raise your deductible
You can raise your deductible to lower your car insurance premium because the higher your deductible, the less the insurance company will have to pay when you file a claim.
“Take the highest deductible you can afford that makes sense,” McCartin said. “But be mindful that, at some point, the savings do not justify the additional increase in a deductible.”
Learn more: What you need to know about car insurance deductibles
Pay your car insurance annually
Paying your car insurance premium for an entire year in one lump sum is another way to save money. Insurance companies tend to charge less when premiums are paid biannually or annually, as opposed to monthly.
Get creative
Finally, try creative solutions to save money and reduce auto insurance premiums, like enrolling in paperless billing. Be sure to contact your auto insurer to discover more ways to save.
Is it normal for car insurance to increase every year?
While it’s normal to see car insurance rates fluctuate and respond to inflation over time, steep increases are usually a sign of financial stress and increased risk in the industry.
Currently, auto insurance companies are struggling with increases in claims due to climate change, more severe accidents, increases in car repair costs, and tariffs.
How much is car insurance?
According to Savvy Insurance Solutions, a full coverage policy ranges from $151 to $224 per month, but this can be influenced by many factors, such as whether you’re bundling with home insurance, how many drivers and vehicles are on your policy, your location, and your driving record.
Keep in mind that the cost of your car insurance will also be affected by the coverage limits you choose and your deductible. To get a better idea of what you’ll pay for auto insurance, you should contact an insurance agent for a quote.
Car insurance inflation FAQs
Why are car insurance prices going up so much?
Car insurance rates have risen because insurers are paying increasingly more for accident claims. Factors like higher repair costs, severe weather, tariffs, and higher used car values are contributing.
Why did my car insurance go up when nothing happened?
Car insurance rates can rise when the insurance company reprices risk, even if your driver qualifications are unchanged. For example, the insurance company could decide to charge more for drivers in your zip code based on updated accident or theft statistics.
Are car insurance rates going up in 2026?
Car insurance rates probably will rise in 2026, but at a lower rate compared to 2023 and 2024. As Zander Cook, co-founder and CRO of lease buyout company Lease End, explained, “The underlying cost drivers (repair inflation, litigation, and climate-related claims) are unlikely to reverse.”
“Insurers are still underwriting losses for previous years, which means rate increases are likely to continue or hold flat at best,” Cook added.
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