Car Insurance Rate Increases: How Much Will Auto Insurance Cost This Year?

Let's dissect the data to predict how much car insurance will cost moving forward.

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Why do car insurance rates increase?

Car insurance premiums have a nasty habit of rising each year — regardless of whether you've filed any claims. Why is that? Car insurance companies compensate for the money they pay out in claims per year through rate revisions. If an insurance company's claim payout total exceeded its premium revenue, it will often pass on those costs to customers the following year. On average, car insurance premiums increased by 2.3% between 2017 and 2018 — the most recent year for which data was available.

Let’s review the reasons behind car insurance rate increases.

 

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Why did my car insurance go up without an accident or ticket?

You can expect your car insurance premium to increase if you've committed any traffic violations, added drivers to your policy, moved, changed or upgraded insurance coverage, or added a vehicle. If none of these events occurred and you're still trying to figure out what triggered your higher premiums, you could be the victim of a rate increase. In order to fully understand rate increases, it’s important to know how insurance companies — home or auto — set your premium. Most of the information used by auto insurance companies is historical data used to predict what their future losses — or claim payments — could be.

Auto insurers don’t use only your information to create your profile. They also rely on related data, including your location, vehicle, age, and other factors, to create a pricing profile. If you live in an area in which insurers experienced a higher loss-to-profit ratio than usual last year, you might experience a rate increase to account for the insurance company’s loss.

Common car insurance rate increase triggers include:

  • Hurricanes/flooding
  • Wildfires
  • Substantial claims loss
  • Widespread insurance fraud

Although it might seem unfair to suffer a rate increase without any moving violations, it's an unavoidable byproduct of how the auto insurance industry operates. Insurance companies need to maintain return-on-investment and minimize risk in order to stay viable. If they had to pay a greater number of claims than expected, they'll need to compensate for that with higher rates.

Insurance companies do sometimes enact "rate decreases," in which they lower rates for some customers after particularly profitable periods. While rate decreases don’t happen as frequently as their less-fun counterparts, they do occur.

 

Auto insurance trends: how much will car insurance cost?

While we can’t predict the future, we can use historical data to inform our predictions. Over the past seven years, car insurance prices have risen significantly. The table below shows average annual car insurance costs and percent changes from the previous year.

Year
Average Annual Premium
% Change YoY
2011
$1,194
 
2012
$1,276
6.90%
2013
$1,195
-6.30%
2014
$1,229
2.80%
2015
$1,280
4.20%
2016
$1,368
6.90%
2017
$1,437
5.00%
2018
$1,470
2.30%

 

Looking at car insurance rates by region shows discrepancies based on geography. Some regions enjoyed rate decreases, while others endured significant rate increases. It all comes down to location.

  • From 2011 to 2018, Oklahoma saw the greatest decline in auto insurance rates, with 2018 rates 19.6% lower than they were in 2011.
  • Colorado saw the greatest rate hike from 2011 to 2018, with auto insurance premiums 78% higher in 2018 than they were in 2011. 2017 to 2018 saw a nearly 20% increase alone.
  • West Virginia saw the smallest change, with no net change between 2011 and 2018. The state did experience considerable year-to-year rate fluctuations during this period.
  • On a national level, rates only increased by 2.3% from 2017 to 2018 — a $33 increase in yearly auto insurance premiums.
  • Montana saw rates decrease the most from 2017 to 2018 by nearly 21%, a $360 decrease year-over-year.
  • Ten states enjoyed rate decreases from 2017 to 2018. Only eight states saw decreases between 2016 and 2017.
  • The Rocky Mountains saw the largest rate hikes from 2011 to 2018 at 52%. New England saw the smallest increases from 2011 to 2018, at only 6.3%.
  • The largest change in rate hikes from 2017 to 2018 was seen in New England with a 5.1% increase.
  • The Great Lakes region is the only area that saw a decrease in rates from 2017 to 2018, though rates only dropped by 1%.

 

Region2011 vs 2018 % Change
New England6.28%
Far West37.35%
Mideast8.71%
Plains26.44%
Southeast24.57%
Rocky Mountain52.22%
Southwest20.59%
Great Lakes26.05%

 

Looking at geography alone only paints a portion of the picture. Because car insurance is regulated at the state level and rated on a ZIP-by-ZIP basis, it's highly unique. As there are more 50,000 zip codes in the US, our analysis sticks to specific states for the sake of brevity.

 

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Average auto insurance rate increases by state

At the state level, the past eight years have brought significant insurance cost changes. Colorado experienced a rate hike of nearly 20% — most likely due to the wildfires in the area.

State
2011 vs 2018 % Change
2017 to 2018 % Change
Alabama
+8.46%
+0.65%
Alaska
-7.16%
+3.73%
Arizona
+25.93%
+2.78%
Arkansas
+31.56%
+2.02%
California
+52.55%
+4.55%
Colorado
+78.10%
+19.29%
Connecticut
-12.24%
+2.59%
Delaware
+13.24%
+6.45%
District of Columbia
+12.99%
+1.49%
Florida
+50.73%
+6.27%
Georgia
+14.19%
+7.30%
Hawaii
-2.27%
+2.76%
Idaho
+29.17%
-1.09%
Illinois
+49.32%
+2.60%
Indiana
+24.51%
+3.44%
Iowa
+17.41%
-5.09%
Kansas
+41.10%
+2.20%
Kentucky
+6.58%
-7.62%
Louisiana
+52.73%
+5.59%
Maine
-0.92%
-1.45%
Maryland
+6.50%
+9.22%
Massachusetts
+1.78%
+10.34%
Michigan
+21.30%
-6.15%
Minnesota
+10.40%
+2.28%
Mississippi
+36.87%
-0.78%
Missouri
+40.72%
+4.73%
Montana
+40.92%
-20.60%
Nebraska
+44.60%
+7.74%
Nevada
+29.04%
+3.71%
New Hampshire
+34.19%
+4.47%
New Jersey
+3.28%
+0.35%
New Mexico
-3.11%
-0.97%
New York
-3.71%
+7.03%
North Carolina
+34.01%
+5.05%
North Dakota
+6.96%
+4.03%
Ohio
+25.19%
+0.03%
Oklahoma
-19.56%
+0.07%
Oregon
+42.42%
+9.30%
Pennsylvania
+35.97%
-0.19%
Rhode Island
+54.31%
+5.16%
South Carolina
+17.19%
-2.96%
South Dakota
+20.22%
+4.59%
Tennessee
+49.16%
+8.45%
Texas
+45.70%
+1.71%
Utah
+39.94%
+7.43%
Vermont
+11.90%
+6.47%
Virginia
+1.98%
+0.53%
Washington
+12.87%
+0.52%
West Virginia
-0.01%
+2.17%
Wisconsin
+34.36%
+3.23%
Wyoming
+45.00%
+2.62%

 

Which car insurance companies increased rates recently?

While it’s nearly impossible to track down specific rate changes for every insurance company, most major insurers factor rate increases into their premium calculations. Since rate increases aren't consistent across the industry, it's important to find the company that will increase your rates the least. The only real way to do this is to shop around to find cheap car insurance rates. Remember, the rate increase is dependent on the previous year’s return-on-investment — you'll need to consistently shop for car insurance every six months to ensure your premium doesn't go up.

 

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Methodology

Learn more about where this data comes from.

 

Additional resources

If you've experienced a rate increase and are now looking for a new company, enter your zip code below to find a cheaper rate. If you'd like more information on car insurance, see our related topics below.

 

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