Car Insurance Rates Fell For The First Time In Two Years, But Only For Some

After two years of increases to annual insurance premiums, rates have fallen for the first time in 2025. Based on analysis of more than 197 million rates from partner insurers, an Insurify report has found that, on average, rates fell six percent. However, this isn't a universal truth, and decreases were found in 39 of the 50 states (notably, Alaska was excluded due to poor sample size). Some states saw larger cuts than others, and some saw stagnation, if not slight increases.

Costs fell for 2025, and could stagnate in 2026

Some states saw more than the average 6% decrease. Notable outliers included eight states that saw a 15% or higher decrease, while Wyoming, Iowa, and Arkansas saw more than 20% losses in insurance premiums. Rates increased in some places, however: 20% in New Jersey, 13% in Rhode Island, and 12% in Michigan, while Washington DC saw an 18% increase to make the District of Columbia the place with the highest average full-coverage car insurance rates nationwide. It's nearly twice the national average, at a stagering $4,017 annual rate.

Changes largely followed existing trends in their respective states. Places on an upswing, like DC, saw increases, whereas states in a downward trend saw similar decreases in average insurance premiums. Insurify believes that trend will continue in 2026, which will have the effect of widening the gap between locations where car insurance is either expensive or cheap. On a broader, national level, this will have the effect of averaging out, keeping trends largely level for the coming year. If that comes to pass, the average rate will increase by just 1%, which translates to an average of $2,158 for an annual full-coverage premium.

Drivers still pay more than they did just a few years ago

It's a stark contrast from the last two years, which saw drivers eat a huge 46% average increase from 2022 to 2024. The recent stagnation in the insurance market is nowhere near a recovery from these massive rate hikes. Insurers began to raise rates in response to tariffs, which drove up costs for repairs and other coverage claims as parts for damaged vehicles began to increase in price. As a result, the cost to own a vehicle is rising on two fronts: insurance and monthly payments.

With the average transaction price of a vehicle rising to more than $50,000 last year, Americans are paying more for their cars than ever. The increases in costs come in step with rising costs in other sectors, leaving many unable to afford even basic transportation.