Car Insurance Is Up in 2026 — Here's What's Driving the Spike and What You Can Do To Save
Driving has gotten more expensive — no two ways about it. From higher car payments to gas prices, Americans everywhere are feeling the financial strain.
One of the biggest financial burdens these days? The rising cost of car insurance. According to Experian data, the national average cost of car insurance (full coverage) is $2,921 annually. A year ago, it was $2,304. That's a $617 difference.
So, what's causing car insurance premiums to spike? And what can you do about it? Find out now.
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What's Driving Up the Cost of Car Insurance?
Car insurance premiums aren't the same for every driver. Every insurer has its own rate, for one thing. Your age and driving history, as well as where you live, can determine the price. Even the vehicle type can make a difference — more expensive cars often cost more to insure.
But over the past five years, premiums have risen across the board by about 62%, as cited by MarketWatch. Why?
One of the biggest reasons for this is the rising cost of vehicles. The average new car costs over $52,000, according to Kelley Blue Book (KBB). That's a new record. Since higher-priced vehicles cost more money to repair, it's no wonder that insurance prices have spiked.
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Car insurance companies also set prices — at least in part — by claim severity. A LexisNexis report found that claim severity rose by 9.2% (body injury severity) and 2.5% (property damage severity). Year-over-year driving violations also rose by 17% across the country.
And then there's abuse of the legal system, as outlined by the Insurance Information Institute. This may occur if attorneys persuade insured drivers to file unnecessary lawsuits, often to excessive amounts. This can also increase the cost of claims, which then results in rising costs.
Last but not least is an increase in risky driving behaviors. A Nationwide report found that more drivers (9 in 10) use their phones while driving. Both commercial and noncommercial drivers feel driving conditions have worsened over the years. Most consumers say other drivers have become more aggressive (90%) or more reckless (87%) in just the past year.
Insurers factor in your own driving habits when setting their rates, but what others are doing on the road can also play a role.
What Can You Do To Save on Car Insurance?
The cost of living is already high enough. You don't need excessive car insurance premiums on top of everything else.
But if you do drive and you are dealing with costly insurance, here are a few things you can do about it.
Shop around for different policies: Use an online price comparison tool to find the best auto insurance rates.
Keep a clean driving record: Even a minor blemish can stay on your record for three or four years. A DUI can stay for up to seven years.
Bundle your insurance policies: Combining your auto and home insurance, for example, might get you a lower overall rate. Your insurer might also offer discounts for a clean driving record or if you're a military member.
Switch to a different insurance type: Limited coverage costs less than full coverage, though it's not without risk. Some insurance companies also offer special policies based on your specific driving habits. For instance, you might consider pay-per-mile insurance if you don't drive much.
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This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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