Why Did My Car Insurance Go Up? 8 Reasons Rates Spiked (2025)

So my premium went up 23% this year. Twenty-three percent. For the same coverage, same car, same address, same everything. I’ve had zero accidents since 2021 (knock on wood), zero tickets, nothing. And they still jacked my rate up almost a quarter.

I was pissed. I called my insurance company and basically said “what the hell” in more professional terms and the customer service person was like “well ma’am, rates have gone up across the industry” and I’m like YEAH I KNOW, I used to work in the industry, I want to know WHY specifically MY rate went up THIS much.

She couldn’t really tell me. Because the algorithm is basically a black box and nobody on the phone actually knows how it works.

But here’s what I do know from six years on the inside and from paying attention to industry data: car insurance is stupid expensive right now, it’s not just you, and there are actual reasons for it—some legitimate, some infuriating.

The numbers are genuinely wild

According to The Zebra’s 2025 report, the average driver is now paying $2,189 per year for car insurance. That’s up almost 19% from last year. And over the last decade, rates have increased by 78%. Seventy-eight percent in ten years. That’s not inflation. That’s something else.

So if you opened your renewal notice and almost fell over, you’re not imagining things. Let me walk you through why this is happening.

Reason 1: Cars are way more expensive to fix now

This is the big one. The actual cost to repair vehicles has gone through the roof.

The average collision repair now costs over $4,800. That’s up from like $3,000 just a few years ago. Why? Because modern cars are computers on wheels. They’ve got sensors in the bumpers, cameras everywhere, fancy headlights that cost a fortune to replace, and all kinds of technology that didn’t exist when I was learning to drive.

My neighbor backed into a newer Honda and cracked the bumper. Just the bumper. The repair was $3,200 because the bumper had parking sensors embedded in it and some kind of radar thing and you can’t just slap a new plastic piece on there anymore. The bumper on my 2016 Camry costs maybe $800 to replace. Same general car part, wildly different price.

Supply chain issues made this worse—parts took forever to get for a while there, and when supply is low, prices go up. Labor costs have increased too because mechanics need more specialized training now. It’s a whole thing.

Reason 2: More accidents than pre-pandemic

Remember 2020 when nobody was driving? Insurance companies made BANK that year because claims dropped off a cliff. Some of them even gave refunds—Progressive and Allstate sent checks, I got like $50 back, whatever.

Then everyone started driving again and apparently forgot how. Accident rates are higher now than they were before the pandemic. People are speeding more. Distracted driving is up. Traffic fatalities hit a 16-year high in 2021 and have stayed elevated since.

More accidents = more claims = higher premiums for everyone. That’s just math.

Reason 3: Medical costs keep climbing

When someone gets hurt in an accident, car insurance pays medical bills. And medical costs in America are… well, you know. They’re insane. Hospital bills, surgery, physical therapy, long-term care—all of this is more expensive every year.

The average cost of a medically consulted injury in a car accident is over $50,000. A disabling injury averages over $300,000. A fatality? Over $1.7 million in total economic costs.

I had whiplash from my 2021 accident and even with health insurance covering most of it, my auto policy still paid out tens of thousands of dollars between the claim and the medical portion. One ambulance ride is over a grand now. An ER visit for anything serious is easily $10-15K. This all flows back into what insurance companies pay, which flows into what they charge.

Reason 4: More uninsured drivers

I wrote a whole separate article about this but the short version: about 14% of drivers are uninsured now, up from 11% a few years ago. When an uninsured driver hits someone with insurance, the insured person’s company often ends up paying through uninsured motorist coverage. That cost gets spread across everyone’s premiums.

This is one of those things that makes me genuinely angry. Responsible people pay more because irresponsible people don’t carry insurance. And it’s getting worse because—guess what—insurance is so expensive that more people can’t afford it, so they drop it, which makes insurance MORE expensive for everyone still paying, which causes more people to drop it… you see the spiral.

Reason 5: Natural disasters are destroying more cars

Climate change is real and it’s making insurance more expensive. Bigger hurricanes. More flooding. Worse wildfires. Hailstorms that turn parking lots into disaster zones.

Insured losses from natural disasters have been trending up for years. The LA fires in early 2024 destroyed thousands of vehicles just in that one event. Comprehensive claims from natural disasters have shot up over the last decade. Insurance companies are paying out massive amounts for weather-related damage, and they’re recouping that through higher premiums everywhere.

Even if you don’t live somewhere with hurricanes or wildfires, you’re paying for the increased claims from places that do. It’s all one big pool.

Reason 6: Cars are worth more

When insurance companies total a car, they pay out the actual cash value. And actual cash values are higher than they used to be because used car prices went crazy during the pandemic and haven’t fully come back down.

The average new car costs like $48,000 now. Even used cars are way up. When I totaled my Camry in 2021, I got way more for it than I expected because the used car market was insane at that point. Good for me in that specific moment, but overall it means insurance companies are paying more when cars get totaled, which means—you guessed it—higher premiums.

Reason 7: Insurance fraud is expensive

People lie on insurance claims. Staged accidents, inflated damage, fake injuries—fraud is a real thing that costs the industry billions of dollars every year. It’s estimated at over $300 billion annually across all insurance types.

I saw some truly creative fraud attempts during my adjusting years. People claiming injuries that didn’t match the accident. Vehicles that were “stolen” but were actually hidden at a friend’s place. One guy filed a claim for hail damage with photos that reverse image search showed were from a completely different car in a different state. People get caught, but a lot of fraud also slips through, and we all pay for it.

Reason 8: Insurance companies had a terrible year (in 2022)

Look, I’m not here to defend insurance companies—I’ve seen how the sausage is made and it’s not pretty. But in 2022, auto insurers had the worst underwriting year on record. They paid out about $1.22 for every $1 they collected in premiums. That’s not sustainable.

So they raised rates. A lot. And those rate increases are still working through the system as policies renew.

This doesn’t mean I think they’re justified in raising rates 20-30% on people who’ve never filed a claim. I’m just explaining the industry perspective. They lost money, they’re making it up now, and they’ve got shareholders to answer to.

What can you actually do about it

Here’s the thing though—you’re not helpless. There are ways to fight back or at least minimize the damage.

Shop around. Like, actually get quotes from other companies. 42% of drivers considered switching insurers last year but only 14% actually did. Do it. The same coverage can cost wildly different amounts at different companies. I saved almost $400 a year by switching, and my coverage is actually better now.

Raise your deductible—if you can afford to. Going from a $500 to $1,000 deductible can cut your premium by 15-30%. But only do this if you have $1,000 sitting in savings that you could spend on a car repair tomorrow.

Ask about discounts. Bundling with home or renters insurance. Safe driver discounts. Low mileage discounts. Good student discounts if you have kids on your policy. Defensive driving course discounts. These can add up to 20-30% off and half the time people don’t even know to ask.

Review your coverage. Are you paying for stuff you don’t need? If your car is old and paid off, maybe drop collision. If you have AAA or roadside through your car manufacturer, drop roadside through insurance. Don’t pay twice for things.

Check your credit. In most states, insurance companies use your credit score to set rates. Better credit = lower premiums. If your credit has improved, tell your insurance company or shop around—you might qualify for better rates now.

Is it going to get better?

Honestly? Probably not anytime soon. Rates are expected to go up another 7% in 2025. That’s actually lower than the 12-14% increases we saw in 2023 and 2024, so maybe things are stabilizing a little. But they’re not going down.

Cars are going to keep getting more expensive and complicated. Medical costs aren’t getting cheaper. Climate disasters aren’t stopping. The underlying problems aren’t going away.

So do what you can. Shop around. Ask for discounts. Don’t just accept whatever renewal rate they send you. Make them earn your business.

I gotta go check on Comprehensive—I swear that chicken has figured out how to unlatch the coop door, which is impressive but also incredibly annoying when I have to chase her around the yard before work. Anyway. Your insurance went up because everything went up. It sucks. But you have more power than you think.