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% between 2018 and 2019 — the most recent year for which data was available.

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

avgpremiums_YoY.png

 

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 have occurred and you haven't filed an insurance claim, you could be wondering what sparked your higher premiums. In such a case, you could be the victim of a rate increase. In order to fully understand insurance rate increases, it’s important to know how insurance companies set your home or auto insurance premium. Most of the information used by car 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, credit score, 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:

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 the company reduces rates for some customers after the company enjoys a particularly profitable period. While rate decreases don’t happen as frequently as rate hikes, theydo occur.

 

Auto insurance trends: how much will car insurance cost next year?

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.

 

YearAverage Annual Premium% Change YoY
2011$1,194 
2012$1,2766.90%
2013$1,195-6.30%
2014$1,2292.80%
2015$1,2804.20%
2016$1,3686.90%
2017$1,4375.00%
2018$1,5215.8%
2019$1,5481.8%

 

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

  • From 2011 to 2019, Oklahoma saw the greatest decline in auto insurance rates, with 2019 rates 7.9% lower than they were in 2011. However, from 2018 to 2019, premiums in Oklahoma increased by nearly 13%.
  • Colorado saw the greatest rate hike from 2011 to 2019, with auto insurance premiums 86% higher in 2019 than they were in 2011. This trend was maintained in 2018 to 2019, increasing another 3.4%.
  • Alaska saw the smallest change, with only a 1% net change between 2011 and 2019. The state did experience some year-to-year rate fluctuations during this period.
  • On a national level, rates only increased by 1.8% from 2018 to 2019 — a $27 increase in yearly auto insurance premiums.
  • Texas saw rates decrease the most from 2018 to 2019 by nearly 21%, a $365 decrease year-over-year.
  • Some states — 18 of them — enjoyed rate decreases from 2018 to 2019. Only ten states saw decreases between 2017 and 2018.
  • The Rocky Mountains saw the largest rate hikes from 2011 to 2019 at 64%. New England saw the smallest increases from 2011 to 2019, at only 3.6%.
  • The largest change in rates from 2018 to 2019 was seen in the Southwest region with a 10.2% decrease — like related to the large decrease seen in Texas.

 

Region2011 vs 2019 % Change
New England13.34%
Far West43.61%
Mideast11.24%
Plains42%
Southeast34.60%
Rocky Mountain63.83%
Southwest7.73%
Great Lakes39.24%

 

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.

State2011 vs 2019 % Change2018 to 2019 % Change
Alabama13.36%-0.53%
Alaska-1.25%5.31%
Arizona42.96%6.60%
Arkansas49.29%8.40%
California56.97%1.62%
Colorado86.12%3.36%
Connecticut-3.98%6.73%
Delaware11.66%-3.94%
District of Columbia4.45%-12.53%
Florida69.06%9.60%
Georgia18.76%0.96%
Hawaii-5.52%-6.79%
Idaho47.68%8.85%
Illinois59.16%3.66%
Indiana26.14%-1.96%
Iowa31.53%9.51%
Kansas55.03%5.44%
Kentucky23.98%9.40%
Louisiana55.36%0.46%
Maine3.42%-0.25%
Maryland13.54%5.23%
Massachusetts16.61%10.21%
Michigan39.47%7.34%
Minnesota13.10%-3.04%
Mississippi41.33%-1.05%
Missouri73.33%9.98%
Montana55.85%6.15%
Nebraska54.21%7.82%
Nevada33.02%3.67%
New Hampshire25.94%-8.41%
New Jersey-1.60%-6.99%
New Mexico-4.41%-4.48%
New York-2.78%-2.53%
North Carolina35.12%-1.35%
North Dakota11.32%1.58%
Ohio27.00%-0.44%
Oklahoma-7.86%12.69%
Oregon49.54%1.94%
Pennsylvania44.29%-0.35%
Rhode Island53.74%-5.30%
South Carolina21.01%-0.05%
South Dakota53.07%21.93%
Tennessee64.11%4.27%
Texas12.87%-20.47%
Utah51.19%10.01%
Vermont20.30%4.74%
Virginia11.74%4.40%
Washington28.09%8.94%
West Virginia8.13%0.49%
Wisconsin48.31%6.12%
Wyoming51.78%3.48%

 

Which car insurance companies have 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 for an insurance policy with the cheapest 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 the cost of your car insurance 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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Ava Lynch LinkedIn

Based in Austin, TX, Ava has been in the insurance industry as a licensed agent for 4-plus years. Ava is currently one of The Zebra’s resident property insurance experts and has been featured in publications such as US News Report, GasBuddy, and Yahoo! Finance.