Auto Insurance Rates Dropped by 6% in 2025, According to Report

After the average cost of car insurance rose 46% from 2022 to 2024, car insurance rates decreased by 6% in 2025, according to Insurify’s 2026 Auto Insurance report. American drivers now pay an average of $2,144 annually for full coverage.

The overall decline in car insurance costs hasn’t reached everywhere. Many of the most expensive states saw premiums rise in 2025 and can expect more of the same in 2026. Car insurance costs increased the most in New Jersey, Washington D.C., Rhode Island, and Michigan. All four states were already among the highest premiums in the country. Washington D.C. jumped ahead of Maryland as the most expensive place for car insurance heading into 2026, following an 18% increase in 2025.

Conversely, states like Wyoming and Idaho, which already had some of the lowest premiums, saw prices fall further from December 2024 to December 2025. The 10 cheapest states for car insurance saw their rates fall 12% in 2025, while the 10 most expensive states had rates increase by 2%.

Nationally, Insurify projects a 1% increase in the average annual full-coverage premium costs in 2026, based on loss projections and the current rate environment. Locally, car insurance costs are likely to increase in 35 states and fall in 15.

Insurify experts say conditions for insurers could depend in part on the overall health of the economy.

“Insurers often invest unused funds, and when stock market returns are high, it gives insurers more latitude to absorb costs and cut rates,” said Insurify Senior Carrier Partnerships Manager Daniel Lucas. “If the stock market dips, insurers may be more reliant on revenue from premiums for their financial standing, which can lead to higher rates.”

Among the 50 most-quoted vehicles in Insurify’s proprietary data, nearly all saw declines in average premiums except for two Tesla models – the Model S increased 9% and the Model X increased 7%.

Grouped by car make, eight of the nine most common manufacturers saw the average insurance rates on popular models fall in 2025. While premiums for popular Honda and Toyota models mirrored the national trend, on average, Tesla models became 2% more expensive to insure with full coverage.

One potential wrinkle in pricing expectations is U.S. tariff policy. The full effects of tariffs have not yet hit repair costs, which are likely to rise in 2026, according to one analysis. At the moment, insurers have not passed those costs to drivers via higher premiums. If that changes due to rising claims costs, Insurify projects an additional rate increase of 3 percentage points, bringing the national forecast from a 1% increase to a 4% increase by the end of 2026.