Auto
According to Value Penguin’s State of Auto Insurance report, costs will grow by 7.5% in 2025, estimating the national average at $2,101 for full coverage. That’s a considerable slowdown from last year’s increase of 16.5% and 12% in 2023.
Nevada, Florida, and Michigan are the most expensive states, with rates exceeding $250 per month. Maine, New Hampshire, and Vermont were the cheapest states, with prices barely topping $100 monthly.
Even with the slowdown, insurance costs will remain higher than in the past.
Reasons auto insurance prices grow
Insurance companies are recovering from losses due to extreme weather and the increased cost of vehicle repairs. Increased losses translate into higher premiums for all drivers. Insurance companies need to restock reserves to fund future loss events. By increasing auto premiums, they can save more for payouts when there’s an accident or catastrophe.
Insurance companies need to charge prices that reflect today’s cost to repair or replace vehicles and medical payments. If they don’t, they risk not having enough to pay for auto accidents and injuries.
For example, if a company insures unsafe drivers at the same rate as safe drivers, they risk having too many payouts. Too many payouts put them over budget, causing them to stop accepting new or risky drivers. In extreme cases, they can go bankrupt.
This is why insurers remain selective about who gets the best auto insurance rates. Here are some strategies to secure better rates.
Tip for lowering your auto insurance premiums
Contact your agent about discounts. Qualifying might be easier than you imagine. Ask about these potential savings moves:
- Bundle your car and property insurance.
- Pay the entire policy upfront instead of monthly.
- Enroll in autopay.
- Go paperless.
- Try telematics. (Before you commit, ensure there are no penalties for driving errors or unenrolling from the program if you don’t like it.)
- Get good student driver discounts.
- Improve your credit score.
- Raise your deductible. (You’ll pay a lower monthly premium but more out of pocket if you’re in an accident. Choose an out-of-pocket amount that works for your budget.)
- Be sure you are rated with the proper use: Are you retired now? Are you working from home? Use can affect your rate.
Your independent agent can walk you through these options. Ask them to run quotes with different discounts and/or deductibles. Your agent can advise you on the best.
Get an insurance quote before you buy your next car
Insurance rates go up for several reasons, and they don’t always have to do with your driving record. Usually, they go up during a hard market when insurance companies raise their standards and rates to compensate for the losses they incurred in previous years. It may seem unfair, but insurance carriers can go bankrupt if they don’t raise rates to reflect the current conditions.
Here are some reasons auto rates increase:
- An increase in accident rates. High congestion in urban areas and increased distracted and impaired driving contribute to more accidents.
- Higher medical costs from accidents involving injuries. The medical expenses associated with these claims have also been growing.
- An increase in car prices and technology. Modern cars have features like backup cameras and collision warning systems, making them more expensive to repair or replace.
- A rise in uninsured or underinsured drivers. When more drivers are uninsured, insurance companies pay more for accidents, especially when the payment would have come from the other uninsured driver’s insurance carrier.
- Fraud. Scammers often stage accidents or exaggerate claims, increasing the overall cost. Policyholders absorb these costs.
Call for an auto coverage review
Your independent insurance agent monitors the market for trends in auto insurance. They’re happy to help you stay updated about ways to save. Call them for a review to see if you qualify for savings.