Auto insurance rates can fluctuate for various reasons, so it is essential to understand the factors that insurance companies consider when determining premiums.
Inflation in the United States continues to rise, impacting the overall cost of living, including auto insurance. According to Bankrate, the national average price of a full coverage car insurance policy has increased by 12% since 2024. Additionally, car insurance rates have surged by 50% since 2020. The cost of a basic liability policy has risen by almost 10% since 2024 and has surged over 30% since 2020.
During the pandemic, global supply chain disruptions led to delays in the production and distribution of auto-related goods, which extended repair times and increased the cost of auto insurance claims. While there have been some improvements, the implementation of tariffs on aluminum and steel in 2025 is expected to further increase insurance rates, as repair shops will need to import parts from international suppliers.
When tariffs lead to higher costs for new vehicles, it affects the way insurance companies determine your policy premiums. If your car is declared a total loss, meaning it can’t be repaired, insurers must pay more to replace it. To maintain their sustainability, insurance companies may need to adjust their premiums, which could result in higher costs.
Rising tariffs on imported replacement parts, which comprise 60% of the market from countries like Mexico, Canada, and China, have led to inflated car repair costs across the insurance industry. This shift affects insurers and policyholders, as it increases the cost of repairs and labor. These inflated auto parts include bumpers, side panels, windshields, and semiconductor chips.
According to the Insurance Information Institute, other factors influencing your annual car insurance premium include the type of coverage you choose, your driving record, and your location. With rising costs and inflation, drivers must remain informed and proactive in managing their auto insurance needs.
Driving record
Speeding tickets, a DUI, or any moving violation.
New car
Adding a new car may cause premiums to increase as new cars are more costly to repair or replace when there is a claim.
At-fault accident
At-fault accidents can be an indicator of a driver’s potential for future at-fault accidents.
More complex cars
Newer cars feature safety sensors, entertainment systems and special technology to make it all work. This increases the cost to repair or replace vehicles.
Policy changes
Policy changes, such as adding a newly licensed driver, may increase insurance costs.
Overall claim trends
In recent years, speeding, distracted driving, and impaired driving, have increased the number of accidents, which drives up rates overall for auto insurance.
Inflation
Just like everyone else, insurance companies are paying more for things like auto parts, labor, rental rates and medical fees. In some cases, auto accident and repair costs are escalating much higher than the rate of inflation.
Loss of discounts
Some discounts are required to be validated annually or the driver may need to reapply for the discount. An example is policyholders who receive the Good Student discount need to provide a report card annually to continue receiving the discount.
So, how can you lower the costs of what you pay for auto insurance? Most insurers, like MAPFRE, offer discounts if you buy at least two kinds of policies from them, typically called “bundling.” For example, if you bundle your auto and home insurance, you could qualify for a reduced rate.
And while discounts vary from state to state, other discounts you could qualify for with MAPFRE are:
- Paid-in-full Discount
- Good Student Discount
- Student Away From Home Discount
If you’re unsure what your auto insurance policy covers or which discounts you might qualify for, an independent agent in your state is here to help! They can review your personal information and ensure you have the right coverage tailored to your needs. And if you’re not yet a MAPFRE customer in Massachusetts, don’t worry! You can get a fast and free car insurance quote today for outstanding coverage at a great price. We’re here to help you every step of the way!
