Since last year, car insurance rates have increased by an average of 3%. You may have been asking, "Why has car insurance gone up?" or "Why is my car insurance going up?" The answer includes various factors, such as inflation, climate change, the cost of car parts, and more. In this guide, we'll examine the specific factors that cause car insurance rates to rise.
Questioning, "Why do car insurance rates go up?" is common, especially in recent years. The good news is that an independent insurance agent in your area can help you find the most affordable car insurance rates available. But first, here's a breakdown of why car insurance rates are going up in 2026.
Key Takeaways - Why Are Car Insurance Rates Going Up in 2026?
Car insurance rates are up by an average of 3% from 2025.
Several factors contribute to rising auto insurance rates, including inflation, tariffs, repair costs, and vehicle theft rates.
Car insurance premiums increased by an average of 64% between September 2020 and September 2025.
You can help lower your car insurance rates by maintaining a clean driving record and asking about available discounts.
Working with a local independent insurance agent is strongly recommended, as they can shop and compare car insurance quotes from multiple carriers in your area to find the best rate.
How Much Have Car Insurance Rates Increased in 2026?
The average car insurance cost in 2026 is $2,256 per year, which is a 3% increase from 2025. However, the increase in car insurance in 2026 is considerably less than in other recent years. In the five-year span between September 2020 and September 2025, auto insurance premiums skyrocketed by an average of 64%.
8 Key Reasons Why Car Insurance Rates Are Going Up in 2026
If you've been wondering, "Why did my car insurance go up in 2026?" or "Why is my car insurance so high?" we'll break down a few specific causes next. Here are some key factors that led to the increase in car insurance rates in 2026.
Post-pandemic driving patterns
During the height of the pandemic, many workers who regularly commuted to work were suddenly forced to stay in and work from home. This led to a dramatic decrease in traffic, and with it, car insurance claims fell.
However, in 2022, many workers began resuming their commutes, which led traffic to return to pre-COVID levels. With more traffic and traveling, accidents and other car insurance claims spiked. Some factors contributing to this increase in accident frequency include more aggressive driving and resuming a higher mileage. Further, fatality rates per mile driven increased between 2023 and 2024, which reversed decades of safety progress.
Inflation
It probably comes as no surprise that inflation has played a major factor in the increase in car insurance rates as well. With the rise in inflation comes a rise in not only the sale price of new and used vehicles, but also the cost of car parts and repairs.
All of these increased costs lead to higher car insurance rates. Car insurance costs must increase to fully cover potential claims that may involve repairs. Global reinsurer rates increased by 30%-50% in some categories, forcing carriers to pass on the costs to their policyholders.
Climate change
Perhaps a more surprising answer to "Why did my car insurance go up?" could be due to climate change. Along with the changing climate comes an increase in the frequency of natural disasters such as wildfires, flooding, and other severe storms. This can also increase the risk of car insurance claims.
DID YOU KNOW?
In 2024 alone, the insurance industry paid over $140 billion in weather-related claims.
States with a higher risk of natural disasters also have much higher car insurance premiums. For example, Florida's current average cost of car insurance is a whopping $3,687 per year, partly due to the state's heightened risk of natural disasters, like hurricanes, that can affect vehicles. However, in other states where the risk of severe weather is much lower, like Ohio, the average annual cost of car insurance is still much lower, at just about $1,605.
Vehicle theft increases
Auto theft and other related crimes, such as the theft of specific car parts, have skyrocketed in recent years. In 2025 alone, more than 1.1 million vehicles were stolen. Kia and Hyundai thefts became a viral social media trend, which was largely to blame for the increase in car insurance theft rates.
Theft is a peril covered under auto insurance policies that include comprehensive coverage. With an increase in the risk of theft-related claims, car insurance costs must go up as a whole.
Supply chain issues
With everything else affected by the pandemic, supply chains were no exception. So, another factor in why car insurance is going up is simple supply and demand.
After the pandemic, global supply chains experienced much greater strain, making it harder to find auto parts due to slowed production. Further, new tariffs only compounded existing parts shortages. As a result, the cost of car repairs and parts increased, leading to increased car insurance premiums.
Car price increases
The prices of new and used vehicles alike have risen dramatically over the past few years. At the end of 2025, new vehicle prices hit an all-time high, averaging $50,326. Since cars are now more expensive to buy and replace, car insurance rates must be higher to compensate.
Distracted driving and riskier roads
Despite advancements in vehicle safety technology, accident frequency is unfortunately also rising. Distracted driving, especially cell phone use while behind the wheel, remains persistently high. The amount paid for a single wrongful death claim can equal the amount of hundreds of typical collision claims. As a result, distracted driving has a major impact on rising car insurance rates.
Tariffs and rising import costs
Approximately 60% of auto replacement parts are imported from Mexico, Canada, and China. Recent tariffs on these imports increase the cost insurers must pay to repair vehicles. This causes higher premiums for even drivers with clean records.
Additional Reasons Why Car Insurance Rates May Increase
Other factors can also lead to an increase in car insurance rates. If you're still asking, "Did car insurance rates go up?" and why this might be the case, consider the following additional car insurance premium increase reasons and how they may apply to you and your personal auto policy.
Location
Where you live has a significant impact on your car insurance rates. Not only does the area's risk of severe weather affect your premiums, but so do local crime rates and car values.
If your town's crime rate has risen recently, the cost of car insurance in your area has likely increased, too. The same could be true if your area's risk of severe weather has increased or if local auto sales prices have gone up.
At the beginning of 2026, six states saw more than a 15% increase in insurance prices. You can ask a local independent insurance agent to help you compare rates for car insurance by state.
Age and gender
Your age and gender impact the cost of your car insurance. However, gender cannot impact the cost of car insurance in six states by law, including California, Hawaii, Massachusetts, Michigan, North Carolina, and Pennsylvania.
Younger drivers tend to pay the most for car insurance nationwide due to their lack of experience and increased risk of accidents and other traffic violations. Car insurance rates for drivers decrease by their mid-20s; however, once age 65 is reached, car insurance rates tend to increase again.
Credit history
Your credit score also impacts car insurance rates. Trends have been discovered between poor credit behavior and poor driving behavior.
As a result, customers with poor credit scores tend to pay more for their car insurance. If your credit score has worsened in recent years or months, your car insurance rates may increase as a result. Likewise, improving your credit score can lead to lower rates.
However, credit is not allowed as a rating factor in every state. Currently, credit can influence car insurance prices in 45 states.
Driving record
Of course, your driving record plays an obvious role in your car insurance rates as well. The cleaner your driving history, the lower your car insurance premiums are likely to be.
However, once you have an accident, speeding ticket, or other traffic violation on record, you can typically expect your car insurance rates to go up quite a bit. A violation typically affects your car insurance rates for about three to five years.
Vehicle type and advanced technology
Another answer to "Why does car insurance go up?" is due to the increase in sales of electric vehicles. Though electric vehicles are bought and sold in the hopes of reducing emissions and slowing climate change, they're also more expensive than traditional vehicles.
Electric vehicles not only have higher sticker prices, but they also cost more to maintain. As a result, car insurance costs are higher, too. EVs cost an average of 20%-50% more to insure than gas-powered vehicles due to higher repair and battery costs.
Additionally, modern advanced driver assistance systems (ADAS) sensors make even minor repairs more expensive. For example, a blind-spot sensor replacement can average $800-$1,500. Replacing a windshield with a camera averages $850 in 2026.
Coverage type
The amount and type of car insurance coverage you select for your policy also determines its cost. If you've added more coverage recently, either more types or a higher amount, you can expect your overall premium to also increase. However, increasing your deductible, say from $500 to $1,000, can often significantly reduce your premiums. Keep in mind, though, that you'll have to pay more out of pocket if you need to file a claim.
Discounts
Certain car insurance discounts can be lost over time. For example, if you used to earn a bundling discount but no longer have another type of coverage through the same carrier, you may have lost those savings.
Likewise, if you previously had a safe driver discount but recently got into an accident, not only would your premiums increase after filing that claim for the accident, but you would also lose your discount on top of that.
How to Lower Your Car Insurance Costs in 2026
Fortunately, there are still many different options available to help you reduce your car insurance costs. Consider these simple ways you might be able to lower your premiums.
Take a driving course
There are many types of defensive driving courses and driver safety courses available. If you complete an approved course and submit proof to your insurance company, you may be able to score a discount on your car insurance.
Maintain a good credit score
Improving your credit score can lead to lower car insurance premiums. If your credit score is already in the good range, keep it there. Remember, though, that credit doesn't count as a rating factor in all states, so this strategy will vary by location.
Bundle your coverage
Most car insurance companies offer bundling discounts if you have at least two types of coverage with them, for example, auto insurance and homeowners insurance or renters insurance. If you've recently added another type of coverage through the same insurer, ask them about bundling discounts.
Ask about other discounts
Your insurance agent should automatically check for any car insurance discounts you may qualify for on coverage when you sign up for a policy. But just in case, contact your car insurance company and ask them about any discounts you may be eligible to receive that you're not already receiving. If you know your credit score has recently improved, for example, you might ask them about specific savings you think you should be earning.
Try telematics or usage-based insurance
As premiums remain historically high, usage-based insurance (UBI) programs are gaining mainstream traction in 2026. These programs track real driving behavior, including speed, braking habits, and annual mileage, and can provide an average savings of 10%-30% for safe drivers. Ask your independent insurance agent or carrier about telematics insurance discounts and usage-based insurance savings.
Shop and compare quotes annually
Shopping for insurance quotes at least annually can help you save an average of $400-$800 per year. The cost of the same policy can vary by an average of 40%-60% between insurance companies. Further, a loyalty discount for remaining with the same carrier over time rarely offsets new customer discounts that competitors offer. Independent insurance agents can shop car insurance quotes and compare car insurance rates from multiple carriers in your area simultaneously to find the best price.
Work with an independent insurance agent
Independent insurance agents help you save the most money possible on car insurance. These agents shop and compare policies from multiple local car insurance companies for you to find the best blend of coverage and cost.
They also help by adding any discounts you qualify for. Your agent can provide you with several quotes so you can select the policy that's right for you.
FAQs About Why Car Insurance Rates Are Going Up
Why did my car insurance go up when I didn't file a claim?
This could be due to several reasons, including industry-wide increases from higher repair costs, vehicle theft rates, more frequent severe weather events, and medical inflation. These price increases affect all policyholders regardless of their individual driving record.
How much have car insurance rates increased in 2026?
The average annual premium is now $2,256, which is a 3% increase from 2025. Auto insurance premiums rose by an average of more than 64% between September 2020 and September 2025.
Which states have the highest car insurance rates in 2026?
Louisiana and Florida consistently rank among the most expensive states, largely due to severe weather risk and litigation climate. In 2025, six states saw more than a 15% increase in car insurance prices.
How does my credit score affect my car insurance rates?
In most states, insurers use credit-based insurance scores as a rating factor. A poor credit score typically results in higher premiums, while improving your score over time can bring rates back down.
What is usage-based insurance and can it lower my rates?
Usage-based insurance (also called telematics) tracks real driving behavior such as speed, hard braking, and mileage. Safe drivers can earn average discounts of 10%-30% on their premiums.
Does driving an electric vehicle cost more to insure?
Generally, yes. EVs cost an average of 20%-50% more to insure than comparable gas vehicles, primarily due to higher repair costs and expensive battery replacement.
How long does a ticket or accident affect my car insurance rates?
Most violations affect insurance rates for approximately three to five years after the incident date. A clean record following a violation will typically see rates drop at the three-to-five-year mark.
How can an independent insurance agent help me find lower rates?
Independent insurance agents access multiple carriers in your area, apply all eligible discounts, and compare policies side by side to find the best blend of coverage and cost for your unique situation.
Sources
https://www.thezebra.com/state-of-insurance/auto/2026/
https://agencyheight.com/why-car-insurance-is-going-up/
https://www.nerdwallet.com/auto-loans/learn/car-market-prices
https://finance.yahoo.com/news/soaring-profits-fueling-tremendous-anger-110000792.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAAMafZjbJzSKA0VSo9gG0Z1OYf_vlANxWbuFstOXJykSlpIvR8J_hwVU3oLUXXnAC2gas39QJcnmrrBF4zoZGmEFusrTzdJOBamx7q0UQunsTcQrauIGQLI7tvNduzAq0n7XMjmNdtWHm78c3Mxd4Rw1ZrLtqxFIwZvmug1x19Wx