Chances are your car insurance is more expensive and has nothing to do with your driving record. As of 2020, the cost of insuring your car has increased by nearly 55%, according to the Bureau of Labor Statistics.
In that same window, groceries are up about 25%, rent is up about 22%, and gas is up about 15%. Even with all three combined, they still fall short of the cost of car insurance alone.
This is not just normal job inflation; repairs cost more, there aren’t enough mechanics, injury payouts have nearly doubled, and big jury verdicts are pushing insurers to charge more across the board. The rate of increase is slowing, but premiums aren’t rebounding anytime soon.
Here’s what’s behind it, who’s paying the most, and what you can do about it.
The Consumer Price Index for auto insurance rose 5.9% year-over-year through February 2026, the BLS reports. That headline number is a sharp decline from the peak annual growth rate of about 20.6% recorded in early 2024, according to the Eno Center for Transportation.
“Now, even owning a car is unaffordable for many Nevadans. Despite rising gas prices and repair costs due to Trump’s war and taxes, Nevadans have the highest rate of full auto insurance in the country,” said Rep. Susie Lee, (D-NV) in a statement.
Combined, premiums are about 50% higher than in early 2020, based on BLS index data tracked by industry analysts. Average inflation for all consumer goods and services reached 22% in that same window, less than half of the increase in insurance.
Your car is more expensive to repair than it was five years ago, and that’s the biggest reason why your premium keeps going up.
The average new car now sells for about $47,740, and standard models have seen prices rise 27% since the end of 2019, according to Edmunds. A small parking lot for a 2024 model with backup cameras and parking sensors can easily cost $3,000 to $5,000 in repairs and upgrades.
The same fender bender on a 2015 model without the advanced safety technology might only cost $400 to $800 at a typical body shop. Special diagnostic equipment, software updates, and sensor overhauls are now driving up repair bills beyond what old bodies used to cost older cars.
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Your windshield alone now contains rain sensors, lane-departure cameras, and head-up projectors that can push a single glass replacement past $1,500. Even a simple bumper replacement requires technicians to rewire and recalibrate parking sensors, blind-spot monitors, and automatic braking systems before returning your car to you.
These technology-driven repair costs directly hit your insurance claims budget, and you get those costs through higher premiums, whether you file the claim yourself or not.
Ford CEO Jim Farley recently said the automaker is struggling to fill 5,000 mechanic positions that pay nearly twice the average American salary. That deficit increases the workers’ share of all maintenance costs, and those higher costs flow directly into the premiums you pay.
If a totaled car is too expensive, insurers have to write bigger checks to replace it, and they’ll get that cost back from you. The Manheim Used Vehicle Value Index peaked in 2021 and has remained high ever since, keeping net losses unusually high for insurers.
The average payout for a personal injury claim has risen to nearly $29,100 per injured person, reports CCC Intelligent Solutions.
In 2016, that same average was nearly $16,082, which means personal injury claims have grown by nearly 81% in less than a decade. Rising health care costs are a primary driver, as emergency room visits, diagnostic imaging, and surgeries are all more expensive today.
So-called “nuclear verdicts,” or jury awards exceeding $10 million, have increased more than 50% in one year, research by Marathon Strategies shows.
The average among the top 50 US personal injury claims doubled between 2019 and 2024, rising from $49.7 million to $98.2 million. All increased decisions raise the basis of what insurance companies expect to pay, and that expectation is baked right into your next renewal quote.
Your ZIP code is a big factor in how insurers assess your risk, but it’s far from the only difference working against you right now.
Low-income drivers “have very few options to cut costs without sacrificing important coverage” when premiums rise, Jeffrey Nadrich, founder of Nadrich Accident Injury Lawyers, explains. For someone earning a median family income of $74,580, the $2,678 full-coverage annual premium now costs 3.6% of gross income.
Urban drivers face higher rates due to higher rates of theft, vandalism, and accidents tied to congested roads and congested parking lots. Drivers in California, Florida, Texas, and Louisiana are seeing additional premiums as insurers reassess their exposure to severe weather in all of these states.
EV insurance will jump 28% by 2024, nearly double the average for gas-powered vehicles, because EV repairs require specialized technicians and expensive parts. Even affordable EVs like the Nissan Leaf or Chevy Bolt carry premium penalties because repair networks are always limited and training is special.
“Insurance companies know that rate hikes alone are unsustainable,” Jeremy Jawish, CEO of insurance technology company Shift Technology, explained to Yahoo Finance.
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Insurers are investing heavily in AI-powered fraud detection and automated claims processing to reduce operational costs across a single policy.
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Robust underwriting processes now use telematics data and credit scores to accurately quantify individual risk profiles for each policyholder.
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Some major insurers have pulled out of high-risk states where local regulators are reaching higher rates they can charge consumers.
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Usage-based insurance programs reward safe drivers with lower premiums by tracking driving behavior through a smartphone app or plug-in device.
These changes mean that your next policy renewal may look very different from your last, even if you stay with the exact same company.
You can’t control inflation or the cost of auto parts, but you have real control over what you pay yourself each month going forward.
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Comparison shop for all updates: Collect at least 3 quotes before accepting your current carrier’s renewal offer, because reliability rarely gets the lowest rates.
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Maximize your deductible with strategies: Increasing your excess and collision deductible from $500 to $1,000 can lower your premium, but only if you have the savings to cover the higher deductible.
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Combine your policies: Buying auto and homeowners or renters insurance from the same provider can save you 10% or more on both of your policies.
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Ask about each discount available: A safe driver, low mileage, paperless payments, and professional association discounts can add up to meaningful savings that many people never seek.
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Try usage-based insurance if you drive safely: Telematics systems track your braking, speed, and mileage, and can eliminate other risk factors that would otherwise increase your premium.
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Collision and collision in older vehicles: If the market value of your car is less than ten times your annual premium for that coverage, the math stops working in your favor.
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Improve your credit score: Most states allow insurers to include your credit report in the money, so raising your score from fair to good can save you hundreds a year.
Most industry experts project moderate, low-single-digit premium increases in 2026, a significant cooling from the double-digit spikes of 2023 and 2024. Craig Martin of JD Power’s Global Insurance Intelligence team expects “stable or moderate increases in auto premiums” through the end of the year.
Jae E. Lee, founder of Jay Lee Law, expects a nationwide premium increase of between 1% and 4%, with taxes on auto parts at risk. “Insurance companies are still posting losses over the years, which means rate hikes are likely to continue or be significantly delayed,” commented Zander Cook, CRO at Lease End.
The bottom line for you is straightforward: premiums are unlikely to drop in 2026, but the pace of increases should be more painful than in recent years. Your best defense is keeping busy with shopping, adjusting coverage strategies, and a clean driving record that goes into every single renewal cycle you experience.
Related: Reasons Why Your Car Insurance Is Going Up Quickly
This story was originally published by TheStreet on April 3, 2026, where it appeared first in the Auto category. Add TheStreet as a favorite source by clicking here.
