Car insurance rates increased by 15% in 2024, adding to the rising cost of car ownership and further straining drivers’ budgets. American drivers now pay an average of $2,313 annually for full coverage, but rates in six states exceed $3,000 annually, Insurify data shows.
Rising vehicle repair costs, linked to high-tech and electric vehicles (EVs), fueled rate hikes in 2024. Auto insurance companies are also increasingly factoring climate risk into their rates as insurers can incur significant losses from severe weather events.
The cost of full coverage policies surged by 24% in 2023 in response to record underwriting losses of $33.1 billion in 2022. As the industry has recovered, rate increases have slowed. Average premiums decreased in 21 states in the second half of the year, according to Insurify data.
Insurify’s data science team analyzed car insurance rates across the U.S. to determine where full-coverage premiums are rising fastest, which factors drove rate hikes, and what drivers can expect in 2025.
After a sharp rise of 15% last year, full-coverage rate increases will slow to 5% in 2025, Insurify projects. By the end of the year, the average annual cost of full coverage will rise to $2,435.
Car insurance costs increased fastest in Minnesota, Maryland, California, Virginia, and Pennsylvania with average rate hikes of 33% to 58% in 2024. Maryland drivers now pay the most for car insurance, with an average annual full-coverage premium of $4,025.
Full-coverage rates will rise by up to 10% in Florida, New York, Georgia, Nevada, and Delaware in 2025, according to Insurify projections. In the five states where rates are rising fastest, drivers already pay more than the national average ($2,313) for full coverage.
EV insurance costs for nine popular models rose by 28% in 2024, twice as fast as comparable gas-powered models, according to Insurify data.
EVs are now 24% more expensive to insure than comparable gas models, with an average annual full coverage cost of $3,430.