Car Insurance Rates Set to Rise in 32 States as 2025 Relief Fades

The short reprieve is over

In 2025, American drivers saw something unusual: car insurance got cheaper. That seems to be ending. Insurify's 2026 Mid-Year Auto Report puts the national average for full-coverage car insurance at $2,237 a year. That is up 1% since the end of 2025, and it follows a 6% drop in 2025, when average premiums fell in 39 states.2124 Rates have gone up in 27 states so far this year. In the second half of 2025, only nine states saw increases.21 Insurify expects 32 states to finish 2026 with higher premiums than they started with, and it puts the year-end national average at $2,242.2128

The national number is small. A 1% rise is not a crisis, and the reporting agrees on that. Insurify's own senior economic analyst, Matt Brannon, described 2026 as "a year of normalization."28 What matters more is the change in direction and where the increases are landing. Insurify describes the move from a 6% decline to a projected 1% gain as a 7-percentage-point swing in the national trend.24

Where the increases are landing

Connecticut has been hit hardest. Full coverage there costs $2,652 a year, up about 10.5% ($251) in six months, and Insurify expects the state to finish the year up nearly 15%.21 Insurify CEO Snejina Zacharia said Connecticut rates have risen 67% over the past five years.22 Kentucky and West Virginia are each projected to end the year up about 8%, and Illinois and Nevada about 6%.2327 Kentucky's change is the clearest example. Its average premium was $58 below the national average and is now $65 above it.2728

The report also found that insurers are often raising prices in cheaper states while cutting them in expensive ones. Washington, D.C., New York and New Jersey all saw premiums fall at least 5% in the first half of the year.21 D.C. dropped 6.7%. New York's average fell 13% from June 2025, saving drivers about $431 a year, though it is still among the ten most expensive states.2123 D.C. still has the highest average at $3,880, followed by Maryland ($3,646), Rhode Island ($3,611), Michigan ($3,229) and Georgia ($3,109).24

This looks like price convergence rather than a broad wave of increases. Markets that were priced high during the post-pandemic repricing are giving some of it back. Lower-cost markets, where insurers may have underpriced risk, are catching up.

What's behind it: repair bills and liability claims

The reporting largely agrees on the causes. Insurify says auto maintenance and repair costs have risen 45% over five years, about twice the rate of inflation.2428 It also cites a 36% rise in bodily injury claim costs and a 42% rise in collision claim costs from 2020 to 2024.24 Zacharia pointed to more severe weather and more severe accidents.22 Yahoo Finance's summary added tariffs as a factor.23

One detail in the coverage needs care. In an interview, Zacharia mentioned a 45% increase in repair costs without a time frame.22 The report itself says that figure covers five years.24 It is a cumulative number, not a sudden spike this year.

Industry analysis shows where the pressure is concentrated. Physical damage claims have become cheaper to settle as parts and labor costs eased. Liability claims have gone the other way.35 One analysis says the cost of liability claims rose 67.5 points relative to physical damage between 2019 and 2025, a ten-year high.35 Insurers attribute much of this to litigation and larger jury awards, though that explanation comes mainly from industry groups.3133 Broader inflation adds to it. One FactSet analysis noted that headline PCE inflation picked up again to 3.8% in April 2026.34

Where the data diverge

The data don't all point the same way. Insurify reports rising consumer prices, while industry financial data describe a profitable market that is softening. Verisk reported a 92.4 combined ratio for the property/casualty industry in the first quarter of 2026, driven largely by personal auto, and said some carriers were returning auto premiums through policyholder dividends.33 FactSet reported that seven major personal auto carriers each posted underwriting gains above $1 billion. Together they announced about $4.6 billion in rate cuts across 40 states.34 The Insurance Information Institute and Milliman now expect personal auto premium volume to fall 0.6% in 2026, while the line stays profitable with a projected 95.5 combined ratio.3738

Both pictures can be true, and the details explain how. Insurify's figures come from more than 250 million quotes. They cover drivers aged 20 to 70 with clean records and average or better credit, and they use two-year rolling medians.2129 That measures what shoppers are offered, not total industry premium. Insurers can cut rates in large, expensive states and still raise them in more of the smaller ones. That would produce a falling premium base alongside a rising count of states with increases. Insurify's own monthly updates add to the confusion. One October page described first-half rates as having "held steady or even slightly decreased," which doesn't fit the mid-year report's 1% rise.25

The most reasonable reading is that the national auto market is still in a soft phase. The worries are about the future: loss costs that some actuaries put at 6% to 8% a year, which is outpacing rate increases in some states.40 S&P Global Market Intelligence expects auto combined ratios to worsen, reaching 97.1 in 2026 and 98.9 in 2027.32 Insurify's projection of increases in 32 states looks like an early sign of that turn, not proof that it has arrived.

Home insurance: still rising, but more slowly

Homeowners are further along the same path. Insurify says home insurance costs rose 12% in 2025 and another 2.2% in the first half of 2026. That puts the market on track for its projected 4% increase this year, the fifth straight annual rise.25 NerdWallet, using a different method, found premiums on a typical home up 24% over three years, with a 4.6% rise from early 2025 to early 2026.1

The two sources point to different regions. NerdWallet found the Midwest hit hardest, up 25% in three years, with Wisconsin up nearly 41%.1 Insurify's first-half data show Minnesota up 12.9% and Louisiana up 8.6%. Jefferson Parish, Louisiana, rose 33%.2 Florida is still the most expensive state at about $8,486 a year, but it rose just 2.3%.2 In March, Insurify forecast a 16% increase for California for the full year.4 Its first-half data show a 5% rise there so far.2 The California FAIR Plan, the state's insurer of last resort, approved a 29.1% average rate increase taking effect October 15.8

The main reason for the slowdown is cheaper reinsurance, the coverage insurers buy for themselves, which eased 10% to 20% at January renewals. A lack of major catastrophe losses helped too.89 The Triple-I and Milliman forecast says homeowners insurers had their best first half in more than a decade.38

Health coverage is a bigger problem for households

Auto and home increases are modest compared with what's coming in health insurance. Insurers in the Affordable Care Act marketplaces have proposed a median 15% premium increase for 2027, according to a KFF analysis of 276 insurers. That would be the second year in a row of double-digit increases, after a median finalized rise of 20% for 2026.14 KFF says typical marketplace premiums could rise by more than a third over two years.14 Insurers say the expiration of enhanced premium tax credits is adding about 4 percentage points, because healthier people are leaving the market.14

Employer coverage is under pressure too. Marsh projects per-employee health benefit costs will rise 8.2% in 2027, the largest increase since 2003. WTW projects 11.1% and Aon 9.5%.11 Marsh found that 59% of employers plan cost-cutting changes such as higher deductibles.11 It estimates GLP-1 weight-loss drugs alone add about one percentage point to cost growth.12

What it means

The headline that car insurance is climbing again is accurate, but it overstates the problem nationally. Auto insurers are highly profitable, and many are still cutting prices in big markets.34 The 32-state forecast matters most for drivers in lower-cost states such as Connecticut, Kentucky and West Virginia, where the increases are largest. For household budgets in 2027, health premiums are likely to be the bigger shock than auto or home insurance. Shopping around for coverage will help with car and home bills. It will do much less about health costs.