After two bruising years, auto insurance pricing turned. The average annual cost of full-coverage fell 6% in 2025 to $2,144, according to Insurify. US auto insurance rates declined in 39 states? and 8 posted drops of at least 15%.
The shift reverses a 46% run-up between 2022 and 2024. Risky driving after the pandemic, inflation, repair bills, and higher claims severity pushed premiums skyward.
Carriers rebuilt margins fast. With profitability restored, many trimmed rates to hold policyholders and chase new ones. Competitive pressure did the rest.
Survey data show affordability improved at the margin. The share of drivers calling coverage unaffordable fell from 38% in May 2025 to 32% in December. We think sentiment trails pricing cycles, and retention data will confirm whether relief sticks.
The national average hides sharp regional splits. Four states and Washington, D.C., logged double-digit increases in 2025. New Jersey rose 20%. Washington, D.C., climbed 18%. Rhode Island gained 13%. Michigan added 12%.
Washington, D.C., now ranks highest at $4,017 a year, nearly double the U.S. mean. Density, congestion, and a high uninsured rate strain loss ratios. Analysts said carriers see little reason to cut in a city with heavy traffic and elevated risk.
- Maryland holds second at $3,601 despite a 9% decline. A late-2024 mandate for stronger underinsured motorist coverage drove a spike, then fatal crashes eased and pricing recalibrated.
- Rhode Island moved to third, with premiums up 41% since early 2024. Small geography, dense roads, flood exposure. Volatility follows.
- Michigan and New York, both no-fault states, remain expensive. Insurify estimates drivers in no-fault systems pay about 13% more than in fault-based regimes, reflecting higher claims costs.
Lower-cost states posted the steepest drops. Wyoming fell 30% to $1,052. Iowa declined 25%. Arkansas slid 23%.
Analysts points to lower density, fewer accidents, declining theft, and fewer uninsured drivers. In Arkansas, fatal crashes dropped 12% year over year through the first nine months of 2025, and vehicle theft fell 24% in the first half.
Utah and Idaho also recorded double-digit declines. Analysts cite intense carrier competition in Utah and Idaho’s sparse population with low uninsured rates.
The 10 cheapest states saw average rates fall 12% in 2025. The 10 most expensive rose 2%. The affordability gap is widening.
For 2026, analysts projects a 1% national increase, lifting the average to about $2,158. Rates are expected to rise in 35 states and fall in 15, with changes ranging from a 1.8% increase in Georgia to a 1.4% decline in Nebraska.
According to Beinsure analysts, capital market returns influence pricing tolerance. When investment income runs strong, carriers absorb more loss cost. If markets dip, premium reliance rises.
Tariffs on auto parts sit in the background. Repair costs have not fully absorbed higher duties.
If claims expenses climb and carriers pass through the impact, 2026 increases could approach 4% instead of 1%. The spread between cheap and costly markets won’t narrow on its own.
