Why Auto Insurance Rates Are Still Rising in 2025

Car insurance premiums continue to climb in 2025, although the rate of increase has begun to slow compared to previous years. While 2023 and 2024 saw double-digit hikes, recent data shows premiums are now increasing at a more moderate pace — about 7.5% nationally during the first half of 2025.

The reasons behind these continued price hikes are complex. Auto repair costs remain high due to lingering supply chain issues and more expensive vehicle parts. In addition, an increase in the severity of claims, especially those involving injuries, is driving insurers to raise rates in an effort to stay financially solvent. Severe weather events, particularly in coastal states, are also playing a role in rising claim payouts.

States like California, New Mexico, and New Jersey have seen some of the steepest increases, with rate hikes in some regions topping 15%. In contrast, a few areas such as Texas and Ohio are beginning to see slight stabilization, thanks in part to regulatory intervention and improving loss ratios.

However, the news isn’t all negative. Average national premiums for full coverage dipped slightly mid-year, dropping from around $196 to $193 per month. Some industry experts believe this could be an early sign that the market is reaching its peak. Instead of continuing sharp hikes, many insurance companies are now focusing on customer retention through loyalty discounts, telematics-based pricing, and bundling incentives.

Despite these efforts, many policyholders remain frustrated. Surveys show that over one-third of customers feel their premiums are unaffordable or unfair, especially younger drivers and those in high-risk zip codes. Some insurers have also tightened underwriting standards, making it harder for high-risk drivers to find affordable coverage.

For drivers seeking savings, experts recommend reviewing coverage every 6–12 months, comparing quotes online, and considering high-deductible plans if financial circumstances allow. Choosing safer, more insurable vehicles also significantly reduces premiums.