If you’ve been dreading your auto insurance policy renewals for the last few years, there may finally be a glimmer of hope on the horizon. While average full coverage car insurance rates increased by $289 last year, this is less than the $336 jump from 2023 to 2024 — and experts think 2025 increases will be even more moderate.
Cooling rates can’t offset years of high premiums
It’s not just you — car insurance continues to get more expensive. According to Bankrate’s 2025 True Cost of Auto Insurance report, the average cost of a full coverage car insurance policy went up $625 — or $26 per month — from January 2023 to January 2025. This represents an increase of more than 30 percent. The bulk of that increase (17 percent) took place from 2023 to 2024, with a smaller 12 percent increase from 2024 to 2025.
The auto insurance industry may finally be starting to get some rate stabilization after years of post-pandemic inflation and supply chain challenges. With more reliable vehicle repairs and replacements available, carriers are seeing improved loss ratios (how much money they take in vs. how much money they pay out). While extreme weather and expensive vehicle tech remain a cost concern, insurers aren’t filing for the same huge rate increases they were in many states in 2022 and 2023. However, slower increases still mean higher rates, and consumers continue to feel the sting from heavy rate hikes in previous years.
Will rates keep rising in 2025?
Rates will likely keep rising this year, but they may rise more slowly than they did in 2023 and 2024. To get a clearer picture on how car insurance rates may behave in 2025, we spoke to Mark Friedlander, director of corporate communications for the Insurance Information Institute (Triple-I).
Triple-I’s underwriting projection forecasts a countrywide average personal auto rate increase of 7% in 2025. This is down from estimates of 14% in 2023 and 12% in 2024 as the industry continues to recover from a very poor underwriting result in 2022.
— Mark Friedlander, Director of corporate communications, Triple-I
Friedlander explained that 2022 was the worst year in terms of underwriting losses in 50 years for the personal auto insurance industry; for every $1 of premium collected from policyholders in 2022, $1.22 was paid out in claims.
There are many factors that go into calculating a car insurance rate. Some are individual to you, like the kind of car you own, your driving history and how old you are (in most states). Others are much more complex and even tied to the broader economy. Things like a company’s loss ratio, the cost of repairing a vehicle, accident frequency and potential tariffs — to name only a few.
Friedlander also tells Bankrate that Triple-I’s economists have projected auto replacement costs will increase by 2.8 percent before labor costs and 3.8 percent after labor costs in 2025 compared to 2024. “A wide swing in labor costs [adds] significant uncertainty,” says Friedlander.
Where are car insurance rates not slowing down?
Many states that saw large auto insurance increases from 2023 to 2024 saw rate stabilization and even rate drops from 2024 to 2025. Pennsylvania and Missouri notably saw rate decreases of 0.3 percent and 11 percent, respectively. This is a stark contrast to their respective 2023 to 2024 rate increases of 19 and 37 percent.
That said, not all states that saw significant increases from 2023 to 2024 were spared in 2025. Some states even saw larger rate increases in 2024 compared to 2023. Drivers in the states below may want to gear up for potential further increases.
| State | 2023-2024 Avg. full coverage rate change | 2024-2025 Avg full coverage rate change |
|---|---|---|
| Arkansas | 13% | 18% |
| California | 13% | 17% |
| Colorado | 10% | 25% |
| Delaware | 7% | 12% |
| Florida | 15% | 23% |
| Minnesota | 13% | 20% |
| Nebraska | 14% | 16% |
| New Hampshire | 1% | 10% |
| New Jersey | 12% | 18% |
| North Carolina | 8% | 25% |
| Washington | 8% | 25% |
| Wyoming | 2% | 4% |
These rate moderation exceptions highlight the importance of considering your specific state’s premium trends when budgeting for coverage. “While some factors driving nationwide rate increases may be shared among states, they can impact each state differently and at different times,” says Bankrate insurance analyst Shannon Martin. “For example, California, Florida and Washington are three of the top five states with the highest vehicle theft rates, so insurance premium increases there are not unexpected.”
Insurance spikes in Minnesota may surprise many people, but hail storms caused over a billion dollars in damage in the state in 2023. When carriers either pay out on a high influx of past claims or predict a rise in certain types of future claims, they can file for a rate increase.
— Shannon Martin, Bankrate insurance analyst
What to do if your car insurance rates go up
When it comes to lowering your car insurance rate, focus on factors that are within your control. The price of labor and car parts is out of your hands, so taking a personalized approach can help you maximize savings — or at least minimize rate increases. If you’re hit with a steep rate increase when your policy renews, here’s what you can do about it:
- Read your renewal letter: Usually, when your car insurance company raises your rate, it will tell you why in your renewal letter. Read it carefully to get a clearer image of why your rate went up. If it’s due to something about you as a driver — like maybe your credit score dropped or you got into an accident during your policy’s term. Knowing what caused your rate increase can help you decide if it’s time to shop around and switch carriers.
- Consider a higher deductible if you can afford it: With both car and home insurance, higher deductibles usually mean lower premiums. But, before you raise your deductible, take stock of your own financial situation. Your deductible should always be an amount of money you can reasonably pay out with little notice.
- See how many drivers are on your policy: It’s possible that, if you’ve got a teen living at home, your car insurance company could automatically add them to your policy. If your teen is getting their own policy, or is delaying their license, be sure to let your insurer know.
Learn more: To-do list before your policy renews this year
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