It’s exhilarating to experience a Porsche GT3 as it flies from 0 to 60 miles per hour in a matter of seconds, but it’s nowhere near as fun when you’re paying staggeringly high insurance rates to keep it on the road. According to a National Association of Insurance Commissioners (NAIC) 2024 snapshot, private passenger auto insurance made up about 35% of all property and casualty direct premiums written, which is unsurprising seeing as liability insurance is mandatory in many states. But while auto insurance may not make up the majority of Americans’ insurance spending, it might not feel that way for every individual. The NAIC’s latest auto database report shows the average expenditure per insured vehicle was $1,281 in 2023. Of course, that figure could be much higher for those with more than one car or living in a high-cost state.
What happens when this supposedly low percentage of your spending begins to widen into more substantial fractions? The Bureau of Labor Statistics shows motor vehicle insurance was one of the fastest-growing components of the Consumer Price Index in 2024, growing 11.3% from 2023 and outpacing many other household categories. Unfortunately for consumers, this jump is also occurring at a time when the U.S. Census Bureau reports household income has stagnated.
Insurers tend to follow shrewd formulas to optimize profits, and a given customer’s location, vehicle, credit, and age could all factor into the final bill.
Owning a car in your area became pricier and riskier
One of the biggest forces informing rising insurance premiums is location: Insurance providers look at your state and its corresponding laws, your ZIP code, and even where you physically keep your car to determine what your rate should be. If an agent detects anything that could make insuring a car in your area more expensive, it could easily affect your rates.
Premiums vary by state due to factors like liability requirements, the cost of medical services, traffic density, theft rates, repair costs, and weather exposure. That means that moving even just a few miles could drastically alter your insurance payments. If you’re moving from a rural area to a more urban locale, your insurance rate may rise because of higher rates of accidents, vandalism, and vehicle theft. Meanwhile, some regions face higher comprehensive losses due to severe weather events like hailstorms, floods, or hurricanes. According to the National Oceanic and Atmospheric Administration, the U.S. experienced 27 separate billion-dollar weather disasters in 2024, each of which can contribute to higher insurance payouts in affected regions.
Another thing to consider is that there might be a rising number of uninsured drivers in your state. As of 2023, an Insurance Research Council (IRC) study reports that 15.4% of motorists are uninsured, and the concentration of uninsured drivers throughout the U.S. is largely variable from state to state. Areas with more uninsured drivers can create more pressure on claims costs, which could mean higher insurance rates for you.
The model you drive has a high rate of theft claims
High-theft locations are one issue that may be raising your premiums, but another is driving a car with a high-theft risk. This largely factors into cars with full coverage, as that’s usually what you need if you want your insurer to help pay for your stolen car. Still, insurers consider vehicle type and theft exposure when setting premiums for comprehensive insurance. If your specific model has built a reputation for disappearing from driveways and parking lots, providers may have a stronger reason to charge more to cover it. According to the National Insurance Crime Bureau, the most stolen vehicles in the U.S. in 2024 were the Hyundai Elantra, Hyundai Sonata, Chevrolet Silverado 1500, Honda Accord, and Kia Optima.
For some models, the theft frequency is high simply because there are a lot of them out on the streets. However, others may be designed with lacking security features that make them easier to steal, and insurers have to look out for models with a reputation for popularity among thieves. Geico, for instance, says a factory anti-theft system can earn drivers up to 23% off the comprehensive portion of their premium, which tells you theft risk is significant enough for insurers to price around it.
Modern cars are more expensive to fix and easier to total
News cars might be safer and smarter than any of their predecessors, but they’re also getting significantly more expensive to repair after even relatively small accidents. The complexity that marks many newer model years could be one of the greatest sources of pressure on your rising auto insurance premiums. Previously simple car parts like bumpers, side mirrors, windshields, and grilles now frequently contain cameras, radar sensors, parking sensors, and other advanced driver-assistance systems (ADAS). According to research from AAA, technology now accounts for a substantial portion of repair costs: ADAS components represented 70.8% of the expense associated with replacing a side mirror, 40.9% of a minor rear collision repair, and 25.4% of a windshield replacement in the vehicles examined in the study. After fitting them, there’s also the increasing cost of calibration and diagnostics to consider.
Another side effect of expensive repairs is that more vehicles are now easier to declare a total loss, a designation that’s given when a vehicle is not worth repairing. According to CCC Intelligent Solutions, repair costs and other economic factors increased the frequency of total loss claims to 22% in 2024, which Auriemma Roundtables reports is an increase from 17% in 2020. All of these trends have snowballed into higher insurance rates across the board. Since insurers determine rates based on the cost of paying claims, these costs typically end up getting passed on to you.
If your credit score gets worse, your premiums could go up
Many people might not know this, but in most U.S. states, insurers use a credit-based insurance score from your credit report to estimate how risky it is to insure you. This rating is not the same exact thing as a standard credit score, but they are calculated using similar factors including your payment history, debt levels, and length of credit history. Insurance companies use this score to gauge the risk potential policyholders pose to the company, and even federal institutions have approved of their use. Since insurers price policies and rates around expected losses, drivers with lower credit scores may be placed in high-risk tiers despite having clean driving records.
Market analyses cited by the Consumer Federation of America also show that drivers with poor credit pay about 115% more on average than drivers with excellent credit. Similar comparisons from Bankrate back this up, suggesting drivers with poor credit may pay roughly double the premiums of otherwise identical drivers with strong credit in many states. If you live in a state that allows insurers to use your credit to set policies and you’ve noticed rising property and auto insurance premiums, it might be time to check your current credit status. If it’s low, you can look into some easy steps you can take to raise your credit score.
You may be aging out of the insurance-friendly years
When it comes to age, auto insurance premiums typically lower over the course of several decades before rising again in your golden years. So, it’s common for younger drivers to see their rates continuously reduce until about the age of 70, when premiums generally begin to rise again. This may seem unfair, but insurers aren’t bringing their prices up arbitrarily.
Multiple studies have shown that drivers 70 and older have higher fatal crash rates than those in most younger cohorts. Additionally, older drivers are more physically vulnerable to injury even in lower-speed collisions. The severity of these incidents is definitely something insurers factor into the rates you may see in your bill.
Analysis from insurance comparison site The Zebra found the average annual premium for a 60-year-old driver is about $1,934, but that rises to roughly $2,089 by age 70 and $2,545 by 80. That amounts to increases of about 8% after 10 years and 32% in 20. Similar research from ValuePenguin estimates that drivers around age 75 pay roughly 19% more than 60-year-olds for comparable full coverage policies. That’s not such a big jump, but in the context of generally rising auto insurance premiums, these rates could be the differentiating factor between what’s tolerable and what becomes financial strain.
Based in New York, Stephen Freeman is a Senior Editor at Trending Insurance News. Previously he has worked for Forbes and The Huffington Post. Steven is a graduate of Risk Management at the University of New York.