Why car insurance got more expensive, and where prices stand in 2026

Car insurance became more expensive because the claims it pays became more expensive: cars cost more to fix, injury claims grew larger and more often involved lawyers, and insurers that had underpriced those trends spent 2023 and 2024 catching up with large rate increases. By the federal government's measure, the price of motor vehicle insurance rose about 55% between December 2020 and August 2026. The good news is that the trend has turned: by mid-2026 prices were falling year over year for the first time since 2021.

What the numbers show

The Bureau of Labor Statistics tracks the price of a fixed bundle of car insurance coverage in the Consumer Price Index (series CUUR0000SETE, motor vehicle insurance). Because the coverage is held constant, it isolates price changes from people buying more or less insurance. The figures below are calculated from the BLS data, not seasonally adjusted.

The yearly increase peaked at 22.6% in April 2024. The index itself topped out in February 2026 and by August 2026 was about 5.5% below that peak.

What drivers actually spent tells the same story. The NAIC's Auto Insurance Database Report, released in February 2026, puts the national average expenditure at $1,281.92 per insured vehicle in 2023, up 14.0% from 2022. Those are the latest official spending figures; our guide to the the average cost of car insurance, and what the numbers mean explains why they lag.

Cause 1: repairs got much more expensive

Physical damage claims (collision and comprehensive) are a large share of what insurers pay, and their cost climbed faster than prices in general. The BLS index for motor vehicle maintenance and repair rose 50.1% from December 2020 to August 2026 and was still up 5.2% over the year to August 2026.

The NAIC's data shows the effect on claims. The average countrywide collision claim rose from $5,123 in 2020 to $6,113 in 2021 and $7,191 in 2022. Collision coverage's countrywide loss ratio (claims paid as a share of premium) went from about 56% in 2020 to 89% in 2022, before counting the insurer's expenses. Newer cars carry cameras, radar and sensors that must be replaced and recalibrated after even minor impacts; see why car repairs cost so much more than they used to.

Cause 2: injury claims grew larger and more lawyered

Liability coverage pays for injuries you cause to others, and those claims grew faster than medical inflation. A July 2026 study by the Insurance Research Council, based on claim data from nine insurers covering about 43% of the market, found:

• Average bodily injury liability claim payments rose about 7.8% a year, from roughly $14,000 in 2017 to more than $20,000 in 2022.
• The share of claimants represented by an attorney rose from 40% to nearly 50%, and the share of claimants in litigation nearly doubled, from 10% to 18%.

The NAIC reports that total liability incurred losses reached $120.5 billion in 2022, up 9.4% from 2021. Rising legal costs, often called social inflation, are covered in our guide to social inflation and nuclear verdicts.

Cause 3: insurers priced late, then caught up

Insurers set rates in advance and, in many states, must have them reviewed or approved first. When costs jumped in 2021 and 2022, the rates being charged had been set on older, cheaper claims data. The Insurance Research Council found that personal auto insurers had an underwriting loss in 11 of the 14 years from 2010 to 2023, and that the average time to approve a rate filing grew about 40% over that period. The result was a burst of large increases in 2023 and 2024 as filings caught up with costs. In Florida, for example, the state's five largest auto insurance groups took an average rate change of +31.7% in 2023, according to the Florida Office of Insurance Regulation.

Other pressures

• Catastrophes: hail, flooding and hurricanes drive comprehensive claims.
• Theft: thefts surged earlier in the decade before declining. The National Insurance Crime Bureau reported a 21% drop in U.S. vehicle thefts in the first half of 2026, continuing a nationwide decline. See The most stolen cars in America.
• Uninsured drivers: the Insurance Research Council estimates 15.4% of drivers were uninsured in 2023, which raises the cost of uninsured motorist coverage for everyone else.

Why prices started falling in 2026

Once rates caught up with costs, profitability returned and competition followed. AM Best kept a stable outlook on U.S. personal lines in December 2025, citing improved underwriting results driven by the push for rate adequacy, as reported by Insurance Journal. Some signs of the turn:

• The CPI for motor vehicle insurance has shown year-over-year declines every month from May through August 2026.
• In Florida, the top five auto groups were indicating an average -8% rate change for 2026 as of February 2026, according to the Florida Office of Insurance Regulation, and Progressive recorded a $950 million credit for Florida policyholders under the state's excess-profits law.
• State Farm said in a March 2026 blog post, quoted by Insurance Journal, that it had reduced auto rates in more than 40 states, saving those customers over $4.6 billion a year.

Repair costs are still rising faster than general inflation, so the decreases are not guaranteed to continue, and they vary widely by state and insurer.

What this means for you

1. Check what changed at renewal. Separate the insurer's statewide rate change from changes to your own policy; the renewal rate increase checker walks through it, and why your premium went up at renewal with no claims explains the usual causes.
2. Shop when the market softens. When insurers are cutting rates and competing for customers, quotes can differ by hundreds of dollars for identical coverage. Use the car insurance quote comparison worksheet.
3. Revisit deductibles and coverage. On an older car, collision may no longer be worth its price.
4. Ask about telematics and discounts you may not have had when you first bought the policy.

Key takeaways

• Car insurance prices rose about 55% from December 2020 to August 2026, roughly double general inflation, according to BLS data.
• The main causes were costlier repairs, larger and more frequently litigated injury claims, and rate increases that lagged behind those costs.
• Annual price growth peaked at 22.6% in April 2024 and turned negative in May 2026.
• Decreases are uneven by state and insurer, so comparing quotes at renewal matters more than ever.