Car Insurance Prices Tumbled 6% in 2025 — Insurify Projects an Affordability Gap Between States in 2026

Amid an affordability crisis, Americans received some financial relief in 2025 on their car insurance bills. The average annual full-coverage premium dropped 6% nationally to $2,144, according to Insurify data. Thirty-nine states saw their prices fall, including eight states with dips of 15% or more.

The drop is a welcome change for drivers after a two-year stretch of unusually rapid rate hikes — as costs mounted for food and other essentials. The average cost of car insurance rose 46% from 2022 to 2024, partially due to risky driving behavior following the pandemic.

Those elevated premiums significantly improved insurers’ financial footing. Insurers’ margins are now high enough to absorb tariff-driven costs without raising prices. Now, many insurers are cutting rates to attract and retain new customers.

Some drivers have already felt a softening in insurance costs. The share of drivers who say their car insurance is unaffordable dropped from 38% in May 2025 to 32% in December, Insurify surveys found.

But the overall decline in car insurance costs hasn’t reached everywhere. Many of the most expensive states saw premiums rise in 2025 and can expect more of the same in 2026. Four states underwent double-digit cost increases last year, with New Jersey’s average rate climbing 20%.

Nationally, Insurify projects a measured 1% increase in the average annual full-coverage premium in 2026, based on loss projections and the current rate environment. Locally, car insurance costs are likely to increase in 35 states and fall in 15.

But Insurify experts say conditions for insurers could depend in part on the overall health of the economy.

“Insurers often invest unused funds, and when stock market returns are high, it gives insurers more latitude to absorb costs and cut rates,” Insurify Senior Carrier Partnerships Manager Daniel Lucas said. “If the stock market dips, insurers may be more reliant on revenue from premiums for their financial standing, which can lead to higher rates.”

Insurify’s full report shows how costs are evolving in each state heading into 2026, including the cost disparity between more and less expensive areas.

Key findings

• The average cost of car insurance declined 6% nationally in 2025, with 39 states seeing rates fall. Wyoming, Iowa, and Arkansas had the largest price cuts, each declining by more than 20%.

• Three states and Washington, D.C., bucked the national trend and saw the average cost of car insurance rise at least 12%: New Jersey (20%), Washington, D.C. (18%), Rhode Island (13%), and Michigan (12%). Washington, D.C., has the highest average full-coverage car insurance rates nationwide, with drivers paying nearly double the national annual average ($4,017 vs. $2,144).

• Insurify projects the average annual car insurance cost for full coverage will increase by about 1% in 2026, which would bring the national average from $2,144 to $2,158. Insurify’s projections range from a 1.8% increase in Georgia to a 1.4% decrease in Nebraska.

• Of 50 top-quoted car models, 48 had their average annual rate decline in 2025. The models that saw increases were both Teslas: the Model S (up 9%) and the Model X (up 7%).

Of the 10 most expensive states for car insurance, the majority saw worsening affordability

After years of rising prices, car insurance became more affordable for many Americans in 2025. The national average cost of full coverage insurance fell 6%, but some of the most expensive states are still seeing stubbornly high prices. In four states, the average annual cost exceeds $3,000. In D.C., it’s more than $4,000, following a drastic $618 increase in 2025.

East Coast states tend to have some of the highest rates nationally. They already have a higher cost of living on average. In late 2024, insurers dealt with massive catastrophic losses from hurricanes, including Helene and Milton, which flooded an estimated 347,000 vehicles.^[1]

Looking ahead, Insurify projects a stable insurance market in 2026, forecasting a 1% increase in the average annual cost of full coverage by the end of the year.

One potential wrinkle in pricing expectations is U.S. tariff policy. The full effects of tariffs have not yet hit repair costs, which are likely to rise in 2026, according to one analysis.^[2] At the moment, insurers have not passed those costs to drivers via higher premiums. If that changes due to rising claims costs, Insurify projects an additional rate increase of 3 percentage points, bringing the national forecast from a 1% increase to a 4% increase by the end of 2026.

Average Annual Car Insurance Costs (2026)

	Average Annual Cost for Full Coverage (End of 2025)	Projected Increase By End of 2026	Projected Cost By End of 2026
Alabama	$1,652	1.1%	$1,670
Arkansas	$1,779	-1.0%	$1,761
Arizona	$1,798	0.8%	$1,813
California	$2,309	1.0%	$2,333
Colorado	$2,579	0.0%	$2,578
Connecticut	$2,379	1.0%	$2,404
Washington D.C.	$4,017	1.8%	$4,088
Delaware	$2,978	1.0%	$3,009
Florida	$2,723	0.4%	$2,734
Georgia	$2,939	1.8%	$2,992
Hawaii	$1,560	1.3%	$1,580
Iowa	$1,246	-1.3%	$1,230
Idaho	$1,251	-0.5%	$1,244
Illinois	$1,786	0.4%	$1,793
Indiana	$1,486	0.1%	$1,487
Kansas	$1,702	0.4%	$1,709
Kentucky	$2,142	1.2%	$2,168
Louisiana	$2,370	-0.4%	$2,361
Massachusetts	$1,716	0.8%	$1,730
Maryland	$3,601	-0.2%	$3,594
Maine	$1,243	0.8%	$1,253
Michigan	$3,073	0.2%	$3,079
Minnesota	$2,088	-1.3%	$2,061
Missouri	$2,061	0.7%	$2,076
Mississippi	$2,063	0.3%	$2,069
Montana	$1,798	-0.3%	$1,793
North Carolina	$1,278	1.7%	$1,300
North Dakota	$1,153	-0.6%	$1,147
Nebraska	$1,538	-1.4%	$1,517
New Hampshire	$956	0.1%	$957
New Jersey	$2,983	1.4%	$3,024
New Mexico	$1,604	-0.5%	$1,596
Nevada	$2,897	1.7%	$2,945
New York	$3,019	0.7%	$3,041
Ohio	$1,368	0.7%	$1,377
Oklahoma	$1,971	1.2%	$1,995
Oregon	$1,701	0.8%	$1,715
Pennsylvania	$1,860	0.4%	$1,867
Rhode Island	$3,394	1.7%	$3,450
South Carolina	$2,956	-0.2%	$2,951
South Dakota	$1,775	0.8%	$1,789
Tennessee	$1,498	0.7%	$1,509
Texas	$2,470	0.3%	$2,477
Utah	$1,655	-0.9%	$1,640
Virginia	$2,301	1.1%	$2,325
Vermont	$1,608	-0.8%	$1,595
Washington	$1,974	1.8%	$2,009
Wisconsin	$1,403	-0.7%	$1,393
West Virginia	$1,712	0.3%	$1,718
Wyoming	$1,052	0.2%	$1,054

Source: Insurify analysis of car insurance data as of January 2026. Insurify excluded Alaska due to low quote volume.

1. Washington, D.C.

• Average annual full-coverage car insurance: $4,017

• Year-over-year change: +18% (+$618)

• 2026 projected change: +1.8% (+$71)

D.C. jumped ahead of Maryland as the most expensive place for car insurance heading into 2026, following an 18% increase in 2025. The capital has several factors working against it. High population density means more opportunities for accidents. Similarly, D.C. has the third-highest rate of uninsured drivers, which raises rates for policyholders.

“D.C. lends itself to high car insurance costs on multiple fronts. It’s a highly congested, high-cost-of-living city with dangerous driving habits,” Lucas said. “Given the high financial risks insurers face, there’s little incentive, and little margin, for companies to cut premiums.”

2. Maryland

• Average annual full-coverage car insurance: $3,601

• Year-over-year change: -9% (-$341)

• 2026 projected change: -0.2% (-$7)

Maryland remains the second most expensive state for car insurance, even after a 9% decline in 2025. Maryland saw a sharp increase in insurance costs toward the end of 2024, after the state required insurers to provide enhanced underinsured motorist coverage for new policies.^[3]

Insurers constantly balance risk and rates, so it’s not uncommon to see a pullback follow a spike, as is the case in Maryland. In March 2025, average annual premiums peaked at just over $4,000. They’ve fallen about $400 since then. The change follows a 19% decrease in fatal crashes from 2024 to 2025.^[4]

3. Rhode Island

• Average annual full-coverage car insurance: $3,394

• Year-over-year change: +13% (+$386)

• 2026 projected change: +1.7% (+$56)

A small population and high density make the state susceptible to significant swings in pricing. Rhode Island has had one of the most pronounced cost increases for full-coverage car insurance in recent years. Since the start of 2024, average premiums have risen 41%, and the state has gone from the 10th most expensive for car insurance to the third most expensive. Although severe weather is typically more of a factor in home insurance, Rhode Island’s risk of flooding drives up comprehensive car insurance costs. In 2024, FEMA declared an emergency following severe storms that flooded cars and homes.^[5]

4. Michigan

• Average annual full-coverage car insurance: $3,073

• Year-over-year change: +12% (+$331)

• 2026 projected change: +0.2% (+$6)

Michigan’s average car insurance premium rose sharply in the first half of 2025 before flattening toward the end of the year. Michigan is one of 12 states that have a no-fault insurance system. Drivers in no-fault states file bodily injury claims with their own insurers following an accident, regardless of who caused the crash.

Insurify analysis shows drivers in no-fault states pay about 13% more for car insurance than those in other states. Michigan also has the fourth-highest rate of uninsured drivers, which means those with insurance pay to shoulder more risk, often leading to higher premiums.^[6]

5. New York

• Average annual full-coverage car insurance: $3,019

• Year-over-year change: -13% (-$447)

• 2026 projected change: +0.7% (+$22)

Despite averaging a 13% drop in 2025, New York remains one of the most expensive states for full coverage car insurance. New York, like Michigan, is one of 12 no-fault insurance states, which tend to have more expensive premiums.

States with high population density also tend to have more traffic and collisions, with accordingly higher premiums. Prices peaked in late 2024, with an average cost of nearly $3,500. Since then, however, rates are trending down, and the state saw a 6% decline in fatal crashes in the first nine months of 2025.^[7]

6. New Jersey

• Average annual full-coverage car insurance: $2,983

• Year-over-year change: +20% (+$495)

• 2026 projected change: +1.4% (+$41)

In 2025, New Jersey jumped from being the 15th most expensive state for car insurance to the sixth. Starting in 2026, new minimum coverage requirements took effect, including higher minimums for uninsured and underinsured motorist coverage, which could push prices higher. The state saw one of the largest increases in the rate of uninsured drivers from 2017 to 2023, along with D.C. and Missouri.^[6]

7. Delaware

• Average annual full-coverage car insurance: $2,978

• Year-over-year change: -2% (-$48)

• 2026 projected change: +1.0% (+$31)

Average premiums in Delaware have fluctuated heavily in the past year. Up until June, rates had been on an upswing, reaching a peak average annual price of nearly $3,300 for full coverage. Since then, rates have fallen about 10%.

In June, state legislators introduced an auto insurance reform task force to tamp down rising insurance costs and reform medical payments after an accident. The bill establishing the task force notes that rates have risen in an “actuarially justified manner” due to increasingly expensive vehicle technology, supply shortages, inflation, and losses from climate events.^[8]

8. South Carolina

• Average annual full-coverage car insurance: $2,956

• Year-over-year change: -13% (-$446)

• 2026 projected change: -0.2% (-$5)

South Carolina has seen its rates improve since the end of 2024, when it had the third-highest average cost for full coverage. That benchmark followed a year in which experts flagged staged accidents as a key fraud issue in the state. The National Insurance Crime Bureau noted that South Carolina’s rate of questionable claims was significantly higher than that of similar states like Alabama and Louisiana.^[9]

Pricing has come down in the last year, however, following a national trend of increased competition among insurers. Additionally, the state saw an 11% decline in fatal crashes through the first nine months of 2025, which means fewer large payouts by insurers and less pressure to raise rates.

9. Georgia

• Average annual full-coverage car insurance: $2,939

• Year-over-year change: +5% (+$137)

• 2026 projected change: +1.8% (+$53)

Georgia is one of 10 states that saw their average annual car insurance costs increase in 2025, running counter to the national trend. That increase came right after a staggering 26% cost increase in 2024 — a year in which Hurricane Helene flooded an estimated 16,800 Georgia vehicles.^[10]

Toward the end of 2025, rates started to tick down, with multiple insurers cutting premiums. Earlier in the year, state lawmakers passed reforms that aim to reduce fraud-related claims costs, similar to reforms that have yielded lower auto rates in Florida.^[11]

10. Nevada

• Average annual full-coverage car insurance: $2,897

• Year-over-year change: +0% (+$7)

• 2026 projected change: +1.7% (+$48)

Unlike most states, Nevada didn’t see its insurance rates fall in 2025. Several factors in the state put upward pressure on car insurance premiums. It’s the second most urbanized state, which leads to more opportunities for traffic collisions. It has the third-highest rate of vehicle theft, behind D.C. and California. And it has the fifth-highest average DUI arrest rate, with a much higher population than the top four states.

The states with the biggest cost increases in 2025

Nationally, car insurance became more affordable in 2025. But 10 states and D.C. saw rates rise last year. Some of the largest increases took place in the Northeast, which already has the highest regional inflation rate.^[12]

Insurify’s analysis suggests a widening affordability gap, with expensive states seeing price hikes and more affordable states seeing price cuts. The four places with the biggest cost increases in 2025 — New Jersey, Washington, D.C., Rhode Island, and Michigan — also have some of the highest average premiums nationwide.

Conversely, states like Wyoming and Idaho, which already had some of the lowest premiums, saw prices fall further from December 2024 to December 2025. As a whole, the 10 cheapest states for car insurance saw their rates fall 12% in 2025, while the 10 most expensive states had rates rise 2%.

1. New Jersey

• Average annual full-coverage car insurance: $2,983

• Year-over-year change: +20% (+$495)

• 2026 projected change: +1.4% (+$41)

New Jersey drivers saw the largest average rate increase of any state in 2025, at 20%, following a sizable 10% increase in 2024. More urbanized states like New Jersey often face higher premiums, as higher population density leads to more accidents. More rate hikes took effect in 2025. As of October, state insurance regulators had approved 69 of 77 insurer requests for rate increases.^[13]

Critics argue that a prevalence of staged accidents and excessive litigation is driving up claim costs, leading insurers to raise rates.^[14] Severe weather is another force behind insurance increases. In a mid-July storm, New Jersey saw up to 7 inches of rain, causing flash flooding strong enough to sweep cars away.^[15]

2. Washington, D.C.

• Average annual full-coverage car insurance: $4,017

• Year-over-year change: +18% (+$618)

• 2026 projected change: +1.8% (+$71)

Car insurance premiums have soared in Washington, D.C., in the past two years. Since the end of 2023, the average annual cost of full coverage has spiked 47%, more than in any state.

One likely factor is the capital’s high rate of stolen cars. The vehicle theft rate in D.C. is the highest nationwide and five times higher than in the median U.S. state. Theft declined slightly in the second half of 2025, down 4% year over year. But that improvement is less encouraging when the U.S. as a whole saw its vehicle theft rate drop 23%.

3. Rhode Island

• Average annual full-coverage car insurance: $3,394

• Year-over-year change: +13% (+$386)

• 2026 projected change: +1.7% (+$56)

Rhode Island is the third most expensive state for full-coverage car insurance and saw the third-largest increase in average rates throughout 2025. In July, the state enacted a new law that requires insurers to cover more expensive repairs if the driver requests, rather than deeming vehicles total losses.^[16] One critic estimated the bill would lead to an additional $3 million in insurer losses, which companies often pass back to the consumer via higher premiums.^[17]

4. Michigan

• Average annual full-coverage car insurance: $3,073

• Year-over-year change: +12% (+$331)

• 2026 projected change: +0.2% (+$6)

Severe weather is becoming a bigger problem for insurers nationally, and Michigan helps illustrate that trend. Prevalence of hail has increased across the Midwest in recent years, which damages car exteriors and drives up insurance rates.^[18] Michigan recorded consecutive years of more than 100 hail events in 2023 and 2024, after seven straight years of reporting fewer than 100.

Flash flooding poses another threat. In summer, the governor declared a state of emergency after 4 inches of rain fell in some areas in about four hours, washing out multiple roads.^[19]

5. Hawaii

• Average annual full-coverage car insurance: $1,560

• Year-over-year change: +6% (+$91)

• 2026 projected change: +1.3% (+$20)

The average car insurance rate in Hawaii increased 6% in 2025, although the state is still among the cheapest nationally for car insurance. An increase in dangerous driving could play a role in rising costs. Through the first nine months of 2025, fatal crashes in Hawaii were up 39% year over year, the biggest spike of any state. 

The states with the largest cost reductions in 2025

While rates declined 6% nationally, 15 states saw double-digit drops in their average annual cost for full coverage. That development widened the price gap between the most and least expensive states.

Wyoming, already one of the cheaper states for car insurance, had its average rate fall 30%. In terms of total dollars saved, the average Arkansas driver finished 2025 paying $546 less than at the start of the year.

1. Wyoming

• Average annual full-coverage car insurance: $1,052

• Year-over-year change: -30% (-$457)

• 2026 projected change: +0.2% (+$2)

Wyoming has become one of the more affordable states for car insurance in the past two years. At the end of 2023, it was the 16th-cheapest state for full coverage. Now it’s the second-cheapest, following a steady decline through 2025. Analysts consider Wyoming an insurer-friendly state, meaning companies have an easier time getting rate changes approved quickly. Additionally, Wyoming has the fourth-lowest rate of uninsured drivers, which puts less of a financial burden on policyholders.

2. Iowa

• Average annual full-coverage car insurance: $1,246

• Year-over-year change: -25% (-$423)

• 2026 projected change: -1.3% (-$16)

Rates in Iowa have been falling since the start of 2025, and that decline sped up toward the end of the year. The state is now the sixth-cheapest nationally, a drastic improvement from being the 25th-cheapest at the end of 2023. Iowa benefits from being less urbanized than other states, which means less traffic congestion and fewer chances for crashes. It also has the eighth-lowest rate of vehicle theft nationally.

3. Arkansas

• Average annual full-coverage car insurance: $1,779

• Year-over-year change: -23% (-$546)

• 2026 projected change: -1.0% (-$18)

Car insurance rates in Arkansas surged in early 2024, rising from roughly $1,900 to $2,400. Since late 2024, however, the trend has flipped. Two factors that often lead to large insurer losses have declined recently, giving companies room to lower rates. Fatal crashes dropped 12% year over year in the first nine months of 2025, and vehicle thefts dipped significantly, down 24% year over year in the first half of 2025.

4. Utah

• Average annual full-coverage car insurance: $1,655

• Year-over-year change: -18% (-$365)

• 2026 projected change: -0.9% (-$15)

Utah drivers saw substantial rate relief in 2025. At one point in 2024, the average annual cost of full coverage surpassed $2,000, but it has since fallen as insurers lowered rates to appeal to new customers.

One analysis from R Street deemed Utah the most competitive auto insurance market in the country, which can add downward pressure on premiums.^[20] Utah also saw its rate of fatal crashes drop 5% year over year in the first nine months of 2025, which means insurers had less exposure to making large payouts.

5. Idaho

• Average annual full-coverage car insurance: $1,251

• Year-over-year change: -18% (-$273)

• 2026 projected change: -0.5% (-$7)

Idaho is the sixth-cheapest state for full coverage, on average. Drivers in sparsely populated states like Idaho typically benefit from a low population density, which leads to fewer opportunities for crashes and car insurance claims.

Idaho also has the third-lowest rate of uninsured motorists. The 18% drop in insurance prices in 2025 comes as vehicle theft rates in the state fell 19% year over year. Only New Hampshire had a lower rate of stolen cars in the first half of 2025.

Auto insurance premiums declined across popular car makes

A vehicle’s make and model are another influential factor in insurance pricing. Among 50 of the most-quoted vehicles in Insurify’s proprietary data, nearly all saw declines in average premiums except for two Tesla models, the Model S (up 9%) and the Model X (up 7%). Grouped by car make, eight of the nine most common manufacturers saw the average insurance rates on popular models fall in 2025.

While premiums for popular Honda and Toyota models mirrored the national trend, on average, Tesla models became 2% more expensive to insure with full coverage. A previous Insurify report found that electric vehicles in general are more expensive to insure than gas-powered cars and that Teslas are more expensive to insure than the average EV.

At the model level, the five popular vehicles with the largest declines in full-coverage insurance cost in 2025 were:

• Kia Forte (-12%)

• Volkswagen Tiguan (-11%)

• Chevrolet Tahoe (-11%)

• Subaru Outback (-11%)

• Mazda 3 (-11%)

Tips: How to save money on car insurance premiums

Drivers may be happy to see lower rates the next time they renew, but they shouldn’t default to renewing their existing policy at a time when companies are eager to cut premiums.

Consumers can take extra advantage of relatively favorable pricing by comparing policies among different insurers. In one Insurify survey, 56% of drivers said they’ve stayed with their insurer despite believing they could get a better deal if they switched.

Drivers who compare policies with Insurify could save up to $1,100 annually. Further, advances in AI are making comparison shopping faster and simpler, with 42% of drivers having already used AI when insurance shopping.

Drivers who want to keep their policy still have a few options for lowering their premiums. The most important aspect of a driver’s insurance pricing is their driving history, so practicing safe, defensive driving is paramount.

Those with responsible driving habits might secure additional savings by installing a telematics device in their vehicle that tracks driver behavior. With some telematics programs, drivers can save up to 30% on their premiums.

Consumers who plan to buy a car in 2026 should consider how the make or model could influence their insurance bill. In 2025, some models saw average rates drop as much as 12%, while others saw increases as much as 9%.

Additionally, insurers offer a wide range of discounts for safety features, bundling policies, paperless communications, and low mileage totals, among others. When in doubt, policyholders should call their insurance agent to ask about discounts they could be eligible for.

Methodology

Insurify’s data scientists examined more than 197 million rates in its proprietary database, quoted via integrations with partnering insurance companies. Driver applications originate from all 50 states and Washington, D.C., and include information on the exact coverage specifications of each driver’s quoted policies. Insurify excluded Alaska data due to lower quoting volume.

The premiums in this report reflect the median insurance cost for drivers between the ages of 20 and 70 with clean driving records and average or better credit, unless otherwise noted. Yearly prices in this report are two-year rolling medians to manage extreme market volatility over the past few years.

Full-coverage premiums correspond to policies with bodily injury limits between state-minimum requirements and $50,000 per person, $100,000 per accident; property damage coverage between $10,000 and $50,000; and comprehensive and collision coverage with deductibles of $1,000.

To project how much the average driver will pay for full-coverage insurance by the end of 2026, Insurify data scientists analyzed the latest pricing trends in each state as well as expected industry-level loss ratios in 2025. They then used this information to project rate-change magnitude in every state through the end of the year. Broadly, Insurify forecasts that insurers’ financial strength and heightened competition for customers will mitigate increased actuarial losses in 2026.

Average potential savings with Insurify are based on initial quotes received by 151,494 customers seeking insurance through Insurify. Actual savings may vary depending on state of residence, individual circumstances, coverage selections, and insurance provider. Savings and lowest rates do not reflect typical results.