You're not imagining it: auto insurance rates are rising nationwide. According to the Bureau of Labor Statistics, car insurance premiums have increased by over 50% since 2020. Even drivers with a clean driving record have seen their insurance costs climb.
- Why Everyone's Car Insurance Rates Are Increasing
- Controllable Factors That Increase Your Car Insurance Premium
- Uncontrollable Factors for Car Insurance Increases
- What You Can Control vs. What You Can't Control
- What You Can Do About Increases
- When to Accept the Increase vs. Taking Action
- Realistic Expectations
- FAQs
Quick Answer: Why Is My Car Insurance Going Up?
Your car insurance costs may increase for any number of reasons, some within your control and others driven by broader industry trends:
Factors You Can Control
- At-fault accidents or moving violations
- Adding teen drivers or high-risk drivers to your insurance policy
- Moving to a higher-risk area
- Purchasing a new car or an expensive vehicle
- Changes to your credit score (in some states)
Industry-Wide Factors Beyond Your Control
- Rising vehicle repair costs and supply chain disruptions
- More expensive vehicles on the road
- Increased natural disasters and severe weather events
- General inflation affecting all insurance costs
- Higher payouts by insurance companies
Why Everyone's Car Insurance Rates Are Increasing
Even if you're a safe driver who hasn't filed any insurance claims, your car insurance rates have likely increased in recent years. Here's why:
Modern Vehicles are More Expensive
If you've purchased a new vehicle in the last five years, you've likely experienced the price surge firsthand. For those still driving older vehicles, the changes might seem shocking. The average new transaction price has exceeded $50,000. The rise in vehicle values impacts car insurance costs because insurance companies must account for higher replacement costs when calculating premiums.
Rising Vehicle Repair Costs
If vehicles are more expensive to purchase, they're also more expensive to fix. Modern cars are equipped with advanced technology, like sensors, cameras, and sophisticated computer systems. A minor fender bender that once required simple bodywork could now be thousands of dollars' worth of repairs.
Additionally, resounding impacts from COVID supply chain issues, labor shortages in auto repair, and more expensive replacement parts have forced shops to increase rates. In the U.S., new tariffs implemented in 2025 have also forced increases on many parts.
All these factors combine to push repair costs higher, which directly translates to higher premiums across all car insurance companies.
Increased Accident Severity
Auto insurance is assessed based on risk. When accident risks increase or accidents become more severe, car insurance rates rise accordingly. Despite vehicles having more safety features than ever, some troubling trends have emerged:
Drivers are more distracted than ever: The number of drivers using cell phones behind the wheel of a car increased 36% from 2014 to 2023, according to the National Safety Council. In 2023 alone, more than 300,000 people were injured in accidents involving a distracted driver. That doesn't count the number of drivers distracted by other passengers or by the large screens in most vehicles.
Vehicles are getting bigger: Larger vehicles weigh more and cause more damage on impact.
Expensive tech makes it easier to create total losses: As we mentioned earlier, we have more safety sensors and technology in our vehicles now than ever before. Even a small fender bender can result in a total loss due to the cost of replacing sensors and safety equipment.
Natural Disasters
Depending on your region, natural disasters may also impact your auto insurance rates. Comprehensive policies cover damage from wildfires, hurricanes, flooding, and other severe weather events, all of which have been breaking records in recent years. When insurance companies pay out billions in claims due to natural disasters, those losses affect all policyholders through higher premiums, even if you live in a low-risk area.
Inflation
Everything is more expensive — from milk and eggs to medical costs. When one thing costs more, everything costs more, including claims and premiums.
What This Means for Your Car Insurance Premium
Even if you're a perfect driver who limits risk and maintains a clean driving record, your insurance costs are probably higher than they were a couple of years ago. You're not necessarily being singled out or ripped off; these insurance rate increases are happening to everyone. (Read here for things you can do to lower your insurance costs.)
Controllable Factors That Increase Your Car Insurance Premium
You Had an Accident (At-Fault)
Filing an insurance claim after an at-fault accident almost always results in higher car insurance rates. Insurance companies view you as a higher-risk driver, and they may need to recover from the cost they paid out. These increases are usually temporary but can last three to five years.
Some insurers offer an accident forgiveness policy that waives higher premiums on your first accident. It's worth asking your insurance agent about adding this coverage before you need it.
You Had a Not-At-Fault Accident
While several states restrict or prohibit increasing auto insurance premiums due to not-at-fault claims, not all states do. Even when you're not responsible for an accident, you may see modest premium increases. The increase for not-at-fault accidents is typically much smaller than for at-fault accidents, but it varies by insurance company and state regulations.
You Got a Speeding Ticket or Moving Violation
Traffic violations and speeding tickets may result in higher car insurance premiums because they typically indicate risky driving habits. Drivers with traffic violations on their driving record tend to have more accidents. Luckily, these increases are also temporary and typically fall off within three years, after which your car insurance rates should decrease. More major violations, like reckless driving or driving under the influence, can impact your car insurance costs for up to 10 years.
If you receive a speeding ticket or moving violation, you have options to minimize the insurance impact. Many states and insurance companies allow you to attend traffic school or take a defensive driving course to remove points or gain a good driver discount, which could offset any premium increases from violations.
You Added a Young or High-Risk Driver
Teen driving crash rates are nearly four times those of drivers 20 years or older, making teen drivers one of the most expensive groups to insure. When you add a young driver to your car insurance policy, expect a premium increase. While there's no way to completely avoid this cost, several strategies can help minimize the impact:
- If your teen has good grades, you may be eligible for a good student discount
- Have your teen complete a defensive driving course, offered in many public schools
- Prove your teen is a less risky driver through usage-based insurance
- Opt for higher deductibles to lower your monthly premium
- Avoid expensive (new) or risky (sports car) vehicles for your teen driver
You Moved to a Higher-Risk Area
Your ZIP code significantly impacts your auto insurance rates. Insurance companies assess risks based on multiple factors specific to location, including the accident frequency in the area, crime rates (theft, vandalism), population density, weather risks, uninsured driver rates, and the cost of medical care locally.
Even moving within the same city can significantly impact your insurance costs. Moving from a suburban ZIP code to a downtown area might increase your premiums due to higher theft rates, more accidents, or having to park on the street.
To offset rate increases from moving, you can ask about car insurance discounts for garage parking versus street parking or installing anti-theft devices. Be sure to shop around and compare rates; some insurers specialize in high-risk areas.
You Bought a New or More Expensive Car
When you purchase a new vehicle or upgrade to a more expensive car, your car insurance premium will typically increase. Vehicle type matters because expensive cars cost more to replace. Additionally, if you finance a vehicle, you'll likely be required by your lender to opt for comprehensive and collision coverage, which will be more expensive annually than just having liability coverage.
Your Credit Score Dropped
In most states, insurance companies use your credit score as a factor in determining your car insurance rates. This is because they consider lower credit scores to be a higher risk. If your credit score dropped, this can lead ot higher premiums, even if your driving record stays perfect.
You Changed Your Coverage or Deductible
If your coverage changed to include new drivers, more vehicles, increased liability limits, added comprehensive or collision coverage, added optional coverage or decreased your deductible, you're likely to see higher premiums. On the other hand, raising your deductible, dropping collision or comprehensive, reducing liability limits, or dropping optional add-ons can reduce your premiums, though this may not be possible or recommended as you take more risk on yourself.
Uncontrollable Factors for Car Insurance Increases
- Your insurance company had a bad year: Insurance companies pool risk across all policyholders. If the company pays out more than expected, everyone's rates rise.
- Inflation and rising costs: When everything costs more, insurance costs more
- Natural disasters and weather events: Insurance companies spread disaster losses across all policyholders, even if you don't live in a disaster-prone area
- More expensive vehicles on the road: Cars are getting more expensive because the added technology leads to higher replacement/repair costs
- Increased distracted driving: Smartphone use while driving is an epidemic. More accidents lead to higher claims, and higher claims lead to higher premiums for everyone.
- Supply chain and labor shortages: Higher costs for parts and labor are passed to all policyholders
- State regulations and legal environment: Each state sets minimum required insurance coverage levels, and these requirements will affect your premiums
- Your insurance company changed its risk model: Insurers constantly update risk assessment models. Nothing about you changed, but their evaluation did.
What You Can Control vs. What You Can't Control
You can control most of the factors that affect your rate, but the other half are industry or market factors that are out of your hands. Focus your efforts on controllable factors, and shop around to find the best rate for factors you can't control.
| Factor | Can You Control It? | What to Do |
|---|---|---|
| At-fault accident | Yes (drive safely) | Accident forgiveness, safe driving, shop around |
| Traffic tickets | Yes (drive safely) | Traffic school, fight ticket, shop around |
| Credit score (State-dependent) | Yes (improve credit) | Pay bills on time, reduce debt, and dispute errors |
| Annual mileage | Yes (some flexibility) | Carpool, work from home, and accurate reporting |
| Vehicle choice | Yes (before buying) | Choose less expensive, safer vehicles |
| Coverage/deductible | Yes (your choice) | Optimize coverage, raise deductibles |
| Location | Maybe, if you can move | Garage vs. street parking, anti-theft devices |
| Age | No, you can't control | Wait it out, good student discounts |
| Industry inflation | No, you can't control | Shop around, increase deductible |
| Natural disasters | No, you can't control | Accept or shop for a better rate elsewhere |
| Company loss ratio | No, you can't control | Shop around for a company with better financials |
| State regulations | No, you can't control | Accept or consider moving long-term |
| Vehicle technology | No, you can't control | Accept the cost or buy simpler vehicles |
| Other drivers | No, you can't control | Accept (nature of insurance pooling) |
What You Can Do About Increases
- Shop around
- Call your current company and negotiate
- Increase your deductible
- Review and adjust your coverage
- Ask about every possible discount
- Improve your credit score
- Consider usage-based insurance
When to Accept the Increase vs. Taking Action
Not all rate increases warrant switching insurance companies or filing complaints. Here's how to determine whether you should accept your car insurance premium increase or take action.
| Accept and Move On If: | Challenge It or Take Action If: |
|---|---|
|
|
How to Challenge It:
- Call your insurance agent and ask for a detailed explanation of the increase
- Ask about all applicable car insurance discounts you might be missing
- Negotiate coverage adjustments, like raising your deductible
- Shop around and present car insurance quotes from competing car insurance companies
- File a complaint with the state insurance commissioner if the increase seems truly unfair
- Switch companies if a better deal is available
Realistic Expectations
Car insurance rates will inevitably rise over time with inflation and increasing costs across the auto industry. Some increases are unavoidable, affecting all drivers regardless of their driving history or choices. Shopping around for car insurance quotes remains your most powerful tool.
FAQs
Why is my car insurance going up when I haven't had an accident?
Even perfect drivers can see increases due to industry-wide factors. Insurance companies pool risk, so when everyone's costs rise, everyone's premiums rise. Additionally, factors like credit score changes, moving locations, or general insurance company rate adjustments affect your premium even without accidents.
Can I refuse a car insurance rate increase?
No, you can't refuse an increase from your current company. They have the right to adjust rates with proper notice. However, you aren't required to accept it by staying with them. You can shop around and switch to a cheaper company. Most states require 30 to 60 days' notice of rate changes, giving you time to find alternatives.
Why does car insurance go up every year?
Normal annual increases reflect general inflation and the rising cost of vehicle repairs, medical care, and claims. Recent years have seen abnormal increases due to pandemic-related supply chain issues, vehicle technology advances, labor shortages, and increased accident frequency. Additionally, your age, vehicle depreciation schedule, and accumulated driving years all factor into annual adjustments.
Why did my car insurance go up $100+ overnight?
A sudden $100/month increase ($1,200/year) typically indicates: adding a young driver, a serious traffic violation (DUI, reckless driving), multiple accidents, or moving to a high-cost area. For unexplained jumps this large, call your insurance immediately. It could be an error.
Can you negotiate car insurance rates?
Yes, you can call to request loyalty discounts, ask which discounts you're eligible for but not receiving, bundle policies, agree to higher deductibles, or switch providers.
Should I switch insurance companies after a rate increase?
You should definitely shop around. Different companies rate factors differently. One company's 25% increase might be another company's 8% increase. Even if your current company's increase is justified, another company may offer better rates for your risk profile. Always get three to five quotes before accepting a significant increase.
Why is my car insurance so expensive with no accidents?
Multiple factors beyond accidents affect rates: if you're under 25, a male, have a poor credit score in a state where that matters, own an expensive vehicle, live in a high-crime ZIP code, have a long commute, have previous coverage lapses, or live in a high-cost state. Insurance companies evaluate 50+ factors; accidents are just one.
Is everyone's car insurance going up?
Yes, 2023 to 2024 saw industry-wide increases. Even perfect drivers with no claims saw increases. This stems from: repair costs increasing, new vehicle prices increasing, supply chain issues, labor shortages, increased distracted driving accidents, and natural disaster losses.
Can insurance companies raise rates without reason?
Insurance companies must file rate changes with state insurance departments and show actuarial justification. However, reasons can be beyond your control: company-wide rate adjustments, regional claim trends, inflation, or changing risk models. They must provide notice (usually 30 to 60 days) before implementing increases. If your rate increases significantly without explanation, request detailed justification from your insurer.
Why does my credit score affect car insurance?
Insurance companies use credit-based insurance scores because they correlate credit management with claim frequency. This is legal in most states, but banned in a few. Improving your credit score is one of the best ways to lower insurance costs long-term.
