Auto Insurance Rates Rise 32% in 3 Years, Outpacing Income Gains

• How NerdWallet measures change over time

  NerdWallet tracked only carriers that kept a consistent market presence throughout the analysis period, excluding companies that entered or left a state mid-period. We also held the policy itself constant, with the same driving record, credit tier and coverage levels in every period. So the changes shown here reflect genuine rate movement rather than a shift in carriers or coverage availability.

  For more details, see our full methodology.

From January 2023 to January 2026, the median auto insurance premium increased 32.3%, from $1,784 to $2,359 a year, according to NerdWallet’s 2026 Auto Insurance Rates Report.

A typical driver with good credit, no recent incidents or violations, and a full-coverage policy would pay roughly $576 more for auto insurance in January 2026 than three years earlier.

For many Americans, rate increases far outpace personal income gains

Over the same stretch, from the first quarter of 2023 to the first quarter of 2026, per-capita personal income in the United States went up 13%, according to the most recent quarterly data from the U.S. Bureau of Economic Analysis (BEA).[1] That works out to insurance rising about two and a half times as fast as income, and it suggests auto insurance is taking a growing share of household budgets.

From the first quarter of 2023 to the first quarter of 2026, BEA data shows per-capita personal income rising from $68,832 to $77,816 — a three-year gain of $8,984. When measured against that gain, auto rate increases for good drivers take up 6.4% of it. For every other profile, it’s worse:

Rates jumped 13.8% from 2023 to 2024 and 13.2% from 2024 to 2025, producing most of the 32.3% three-year total — but the climb started earlier. Rates dipped in 2020 and rose for five straight years afterward, according to the Bureau of Labor Statistics’ Consumer Price Index.[3] Three factors are largely responsible for this surge.

Repairs got more expensive

The cost of car parts and electronic components rose steadily since March 2021.[4] The pandemic-era semiconductor chip shortage pushed costs up in a roundabout way: It hampered the supply of new cars, which made used cars and repairs more expensive, and both caused rates to increase.[5] And because many new car models are equipped with things like crash-avoidance sensors and cameras that require a specialist to replace, that too caused vehicle repair and replacement costs to go up.[6]

Each claim costs more to settle

Personal auto liability claim severity nearly tripled its compound annual growth rate between 2019 and 2024, reaching 10.9% a year, according to the Insurance Information Institute and the Casualty Actuarial Society.[7] Crash counts in 2024 came in below pre-pandemic levels, both in total and per mile driven.[8] So the bill is not growing because Americans are having more accidents. It's growing because each accident costs more.

Lawsuits have gotten more expensive

Insurers also point to social inflation: claim costs rising faster than prices generally.[9] The Insurance Research Council ties it to heavier attorney advertising, higher legal fees, rollbacks of earlier tort reforms and a growing market in third-party litigation financing, where an outside investor funds a lawsuit for a cut of the award.[10] [11]

In dollar terms, a recent DUI is the costliest driving profile we analyzed. Drivers with a recent DUI saw their rates climb $1,183 from January 2023 to January 2026.

Close behind were drivers with poor credit, who saw rates go up $1,081. That’s an increase of 37.7%, the steepest of any profile in percentage terms.

How the cost of car insurance has changed for different drivers

For every profile we analyzed, rates rose faster than the good driver baseline of 32.3%. Drivers with poor credit and complex driving records were already paying more for auto insurance to begin with — and it appears rates are going up for these drivers at a faster clip. Here's how much each driver profile saw average annual rates increase over the past three years:

Why credit matters so much to insurers

In every state except California, Hawaii and Massachusetts, insurers can use credit-based insurance scores (similar to FICO credit scores but weighted differently) to help determine how much a driver pays for car insurance. From the insurer’s perspective, drivers with poor credit are more likely than those with good credit to rely on insurance to pay for accident costs, so insurers charge these drivers higher premiums to account for the added claim risk.[12] However, insurers’ use of credit history in insurance pricing is controversial, as critics argue it disproportionately raises prices for lower-income drivers and drivers of color.[13]

Over the past three years, Midwestern drivers experienced some of the steepest rises to their auto insurance rates. Six of the 10 states with the highest percentage changes are in the Midwest region, as classified by the U.S. Census Bureau.[14]

These states — Minnesota, Iowa, Wisconsin, Nebraska, Illinois and Kansas — saw auto insurance premiums rise 52.9%, on average, from January 2023 to January 2026.

Our 2026 Home Insurance Rates Report found a similar pattern for homeowners insurance: Premiums rose more in the Midwest than in any other region of the country. Wisconsin saw home insurance rates go up more than 40% during this time.

Change in auto insurance premiums, by state

Severe weather in the Midwest may be the culprit. Our homeowners report notes that the number of severe hail events in these states typically increased by huge margins in 2023-2025 compared to 2020-2022 — including more than tripling in Illinois.

Research from the Federal Reserve Bank of Minneapolis on the state's rising auto insurance rates further highlights the importance of the location of severe weather.[15] When bad weather hits cities like St. Paul and Minneapolis, the most populated area of Minnesota, these events can deal more serious damage than in rural regions.

• Auto insurance rate increases by state

In most states, drivers saw their premiums increase faster than their income. Just nine states saw personal incomes rise faster than auto insurance premiums. In the worst cases, the gap between income and premium gains topped 40 percentage points.

Auto insurance premiums often rose faster than income

Here are some highlights from our state-level analysis:

• Drivers in Arkansas and Texas who have a clean record saw 13.3% of typical personal income gains go toward the increased cost of auto insurance, the most of any state.

• Drivers in Georgia with poor credit were greatly affected by rate increases. These drivers saw 25% of typical personal income gains go toward offsetting rising auto insurance costs.

• Drivers in New Jersey saw large parts of income gains go to rate increases following a recent accident (21%) or speeding ticket (20.7%).

• In Alaska, rate increases took up the smallest percentage of typical personal income gains of any state for good drivers (0.1%).

• Auto insurance rate changes compared to per-capita personal income changes, by state

Car insurance premiums have risen twice as fast as inflation overall since the start of the pandemic, according to data tracked by the Consumer Price Index (CPI).

Cumulatively, motor vehicle insurance climbed 56.2% from January 2020 to January 2026, compared to 26.0% for the CPI’s total basket of consumer goods and services, a NerdWallet analysis of inflation data found.

Over those six years, insurance rose more than anything else in the CPI’s transportation category, which also includes such factors as vehicles, parts, repairs and fuel. In the transportation category, motor vehicle maintenance and repair (+46.7%) also experienced high inflation.

Impact of inflation on transportation costs

As a whole, transportation — one of eight main categories in the CPI[16] — was up 28.2%. That’s slightly less than food and beverages (+31.2%), housing (+30.8%) and other goods and services (+30.5%), the categories with the highest inflation. But no main category increased as much as the motor vehicle insurance subcategory.

Since January 2026, auto insurance price increases have moderated while fuel costs have surged, the CPI data shows. Each of those two subcategories accounts for a little less than 3% of the overall CPI.[17]

A recent survey by NerdWallet highlights the effects of rising insurance rates. According to the survey results, 49% of Americans who have auto insurance are stressed about the cost of their premiums.

Stress over insurance isn’t limited to low-income households — 45% of policyholders with annual household incomes of $100,000 or more say they’re stressed about their premiums. That’s compared to 55% of policyholders whose household incomes are less than $100,000 per year.

While 51% of policyholders with a high school diploma or less education feel stressed, so do 46% of those with a college degree.

In addition, some Americans with auto insurance say a rate increase would cause them to have trouble affording other necessary expenses. This was the feeling among 19% of Americans with auto insurance, and 15% with annual household incomes of $100,000 or more.

The run of rate increases may soon be over. Auto insurance rates increased just 2.6% in the most recent year of our study — the smallest of the three annual increases we measured. Two things likely helped to end it.

Premiums finally caught up to losses

Insurers spent 2023 and 2024 pricing for losses that had already taken place. According to a November 2025 analysis from the Insurance Information Institute, auto premiums were “only just beginning to rebound from pandemic-era lows, lagging the rise in losses” over the previous five years. [18] Once rates finally caught up to losses, it was no longer necessary for insurers to ask for double-digit increases.

The last two hurricane seasons were quiet

Historically, natural disasters push rates up as losses mount. The last two years, however, the opposite has happened. According to the National Association of Insurance Commissioners, a nonprofit organization that sets standards for and supports state insurance regulators, insurer revenues went up in 2024 and 2025 in large part due to the absence of major hurricanes and lower loss numbers. This prompted many major insurers to ask for smaller increases or to freeze rates completely starting in early 2025, leading others to do the same in order to remain competitive.[19]

Insurer rate filing data shows this playing out in real time. Most insurers haven’t asked for a rate increase in over 18 months, according to NerdWallet’s analysis of public auto insurance rate filings to state regulators. From January 2025 through mid-August 2026, the median filed rate change was 0%.

Insurers sought rate increases on just 28.7% of customer policies in 2025 and 24.2% through the first seven and a half months of 2026. In 2024 they sought increases on 67.5% of policies, and in 2023 on 91.4% of policies, with median filed rate changes of 6% and 9.2%.

This points to auto insurers having regained their financial footing after a string of hard years, which lets them rate new customers more competitively and, in some cases, cut rates for existing ones.

For example, from January 2026 through mid-August, State Farm filed for rate increases on just 5% of its policies, and its median filed change during that span was 0%. And while GEICO and Auto-Owners requested rate increases on 45% of their policies, the median filed rate change was -1.2% and -0.6%, respectively, indicating the majority of their policyholders are likely to see a rate cut at renewal, not a freeze.

However, not every driver is in the clear. Our analysis found many “nonstandard” insurers that specialize in insuring drivers with poor credit or with a history of driving violations are still requesting rate increases on most of their policies — some with a median filed change as high as +5.2%. These drivers already pay higher rates on average, and it looks like some will keep seeing increases heading into 2027.

While rate filings indicate prices may be trending downward, the cost of auto insurance is still much higher now than it was even a few years ago. But there are still a few ways drivers may be able to lower their rates or find cheaper auto insurance.