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If it seems like you're paying more — a lot more — for car insurance, you’re not imagining it. Car insurance was up more than 11% in the last year, according to the latest data from the U.S. Bureau of Labor Statistics.
Progressive estimates its average cost of car insurance for a liability-only policy ranges from $80 to $157 a month. But you might pay far more than that depending on your coverage, driver demographics, vehicle value, what state you live in, and thanks to newly issued tariffs on countries like China, Canada, and Mexico.
Here's what experts say is behind inflated car insurance premiums and what you can do to save money without sacrificing thorough coverage on your vehicles.
Learn more: How does car insurance work? The basics explained.
4 reasons car insurance rates are climbing
If you’re curious as to why you’re suddenly paying more, even for the same car insurance policy, experts say it’s the result of several factors converging over the past few years, creating increased costs for insurance companies and, thus, a steep increase in insurance rates for consumers.
No. 1: High repair costs
Similar to auto insurance rate hikes, the cost of vehicle maintenance and repairs rose more than 7% over the last year. 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, says 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.”
No. 2: 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.
No. 3: Increase in 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," says Loretta Worters with the Insurance Information Institute. "There are also more fatalities and injuries on the road, leading to increased attorney involvement in claims."
No. 4: 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.”
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 says drivers can explore many options for scoring good, cheap car insurance. What you pay for a policy will also be influenced by some personal factors, including your gender, marital status, location, and even your credit history.
“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.”
Learn more: What is a car insurance premium, and how is it calculated?
No. 1: Assess your coverage needs
The coverage types and levels you're carrying now might not fit your situation anymore. Determine how much car insurance you need. Consider important factors such as your net worth, your risk tolerance, how much you have in emergency savings, the drivers on your policy, and more 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: Most common types of car insurance explained
No. 2: 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.
No. 3: Choose a cheaper car
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."
Here are five vehicles that top Car and Driver’s list of the 10 cheapest cars to insure:
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Subaru Outback
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Honda CR-V
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Honda Pilot
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Ford Escape
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Honda Odyssey
No. 4: 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 the 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?
No. 5: 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, nearly 30% of car insurance shoppers were presented with a telematics-based policy to help lower costs, and just over 60% moved forward with that option.
No. 6: 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: How to get all the best car insurance discounts
No. 7: Bundle your auto and homeowners insurance
McCartin says 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 explains. "Bundle your coverage with the same company for home and auto for a bigger discount."
No. 8: Work to raise your credit score
What's 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.
Learn more about CBIS at the National Association of Insurance Commissioners
No. 9: Raise your deductible
You can raise your deductible in order to lower your car insurance premium, because the higher your deductable, 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 suggests. "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
No. 10: 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 bi-annually or annually, as opposed to monthly.
No. 11: 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 to see car insurance 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 due to labor shortages, and tariffs.
Learn more: How to find cheaper car insurance
How much is car insurance?
Progressive quotes a liability-only policy at somewhere between $79.83 to $157.27 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, the location, and your driving record.
Keep in mind 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.
Learn more: How to earn a defensive driving discount
5 more (personal) reasons your car insurance is increasing
In addition to current trends and industry influences, here are more personal reasons you may see a rate hike on your next insurance bill.
Speeding or other types of tickets and violations
If you got a speeding ticket or other moving violation that put points on your license, chances are you’ll see an increase in your car insurance rate the next time your policy comes up for renewal.
Accidents
Whether you were at fault or not, accidents of any sort can raise your insurance rates. Any claim you make through your auto insurance company could translate into you being considered a higher risk.
Learn more: How much does car insurance increase after an accident?
Adding drivers or other vehicles
If you added a driver or another vehicle to your policy, you’ll likely see your insurance premium go up either due to increased risk or additional coverage being required. Teen drivers are often the culprit of significant insurance rate hikes as well as newer cars with higher replacement or repair costs.
Learn more: How to find affordable car insurance for teens
Moving
You don’t have to move far to see a difference in auto insurance rates, which are typically calculated by ZIP code. You may even see some differences in your insurance rate depending on whether your new home has a garage.
Read more: How does your Zip Code affect your car insurance
Lapse in coverage or loss of discounts
Last but not least, a lapse in insurance coverage may result in you being deemed a higher risk driver and cause a hike in your insurance rates or a loss of discounts through your provider. Many providers have continuous coverage discounts and other incentives that can reduce your overall insurance bill.
Learn more: What happens if your car insurance lapses?
How to save money on car insurance FAQs
How much car insurance do I need?
Each state has requirements for how much car insurance coverage you’ll need. Usually, minimum liability coverage is required, but some states also insist drivers carry personal injury protection and uninsured motorist coverage. You may also be required to have collision and comprehensive coverage if you’re leasing or financing your car.
Learn more: Everything you need to know about car leasing and insurance coverage
Why did my car insurance increase in 2025?
While 2024 saw steep increases in car insurance rates across the country due to several factors, rates were expected to ease in 2025. That hasn't happened yet. If your premiums have gone up, you should contact your insurance agent to find out why and if there are some discounts you may be eligible for, such as telematics or usage-based driving programs.
