Why do my auto insurance rates go up every year? (2026 Premiums Explained)

Wondering why do my auto insurance rates go up every year? Whether or not you’ve had any claims, your car insurance costs have a habit of increasing yearly.

One of the reasons is the amount of money that auto insurance companies spend on claims each year is offset by increasing your annual rates.

Insurance companies frequently pass expenses on to customers the next year if their total claim payouts exceed their premium income. Since 2019, car insurance rate trends have climbed by an average of 2%.

Keep reading to understand better the reason why auto insurance rates increase annually and what you can do to find the cheapest auto insurance companies. Need to find a better rate on auto insurance? Compare quotes with our free tool.

Why Auto Insurance Rates Go Up

You may be asking yourself, “Why does my car insurance keep going up every 6 months? If your auto insurance costs increase every year or even every six months, you’re not alone. There’s a strong chance that your rates increase a little each year, even if you haven’t filed any claims or recorded any traffic infractions. 

Read More: Is there a limit for auto insurance rate increases? 

So why does my car insurance go up every year? Your premium may increase even if certain of your personal risk variables alter in an apparent little way. However, as you might have suspected, a premium rise is not necessarily the result of your particular driving habits.

Another significant element that influences these costs is inflation. The costs of paying claims have frequently increased throughout states. Consider costs of living such as salary, health care, and other expenses that tend to rise across all sectors of the economy. The majority, if not all, drivers are impacted by the premium increase to balance out these greater costs.

If you’re wondering, “Why does car insurance go up every year?” let’s examine the causes of potential annual increases in auto insurance rates.

Top Reasons Why Auto Insurance Goes Up

Why did my car insurance go up? The factors that affect car insurance rates are numerous. A new claim, traffic violation or speeding ticket, adding or changing the vehicles or drivers on your policy, or an increase in the scope of your coverage are a few examples. Of course, the possibility of annual hikes multiplies if your policy covers many drivers, including more cars and coverage.

Does a new car increase insurance? Yes, similar to replacing or adding a driver, the cost may go up. If your insurance company believes the new car is less safe or will cost more to fix, your rates will go up even if you simply switch from one make, model, or year to another. 

Finally, your cost will increase if you elect to raise your policy’s coverage limits, add optional coverages, or lower your deductibles. Let’s dive into the answer to, “Do car insurance premiums increase every year?”

Other Factors That May Explain Why Auto Insurance Goes Up Every Year

So, why does auto insurance increase every year? Your risk level depends on your driving history, as most insurance companies consider it when determining your rates. While certain insurance providers may not directly use points, the offenses that led to those points usually lead to higher rates.

Traffic infractions, accident history, and claims history could be included. Unsurprisingly, car accidents will raise the cost of your insurance. This is especially true if you were to blame for the collision. However, you may not see a rate increase if you qualify for accident forgiveness. 

Maintaining a reduced premium and averting accidents before they happen will stop your insurance rates from going up too much. Learn more about the state’s point system to determine what infractions can raise your premiums, and compare quotes to find cheap auto insurance for a bad driving record.

Coverage

Why does insurance go up every year? One reason your rates may have gone up is a change in coverage level. Only the coverage kinds and levels that your state mandates are included in minimum coverage insurance.

These coverage limits are typically less expensive because they provide relatively little financial protection. Compared to full coverage insurance policies with higher limits, rate hikes on minimal coverage plans might not seem as dramatic.

However, the lower rate hikes that come with a minimum coverage policy also come with a higher financial burden if you get into an accident. Full coverage, while it costs more, better protects your vehicle.

Insurance Claims

Why is my car insurance going up every 6 months? A lengthy claims record could explain why your premiums are higher.

Additionally, filing a car insurance claim can increase your rates. Any new claim or traffic infraction, such as a DUI or traffic ticket, is likely to make you appear riskier, except for low-cost claims under $1,000 and minor driving infractions, like a broken tail light.

Full Coverage Auto Insurance Monthly Rates by Provider & Driving Record

Depending on the type of claim you submit or the infraction, the increase varies. A comprehensive claim, for instance, will normally incur a lower increase than a collision claim.

Inflation

Why does my car insurance keep going up? Another significant reason rates have risen lately is inflation.

The price of several commodities, especially energy, is impacted by inflation. Consumers are noticing an increase in their annual insurance rates due to the rising costs of office space rental, heating, and cooling, as well as the cost of providing computers and other devices to workers.

The best auto insurance providers are equally impacted by the effects of inflation on business expenses as the general public.

Rate Level Variations

Why does car insurance go up every year? Another reason rates could be going up is higher auto repair and health care costs.

The so-called rate level increase is the result of industry trends toward more expensive auto repairs and health care expenses. Drivers are unlikely to see their auto insurance premiums decrease because the costs of repairs and healthcare are always rising.

Should Car Insurance Increase Every Year: Rate Trends

Should my car insurance go up every year? Car insurance costs have dramatically increased over the past seven years.

Where you live has a big impact on how much your auto insurance rates increase. While certain states experienced rate reductions, others had to deal with hefty premium rises. It all depends on the traffic, auto theft rates, and weather conditions in your home state.

Even though we can’t predict the future, we can use historical data to help us budget for our monthly auto insurance costs (Read More: What is the average auto insurance cost per month?). 

Not every company raises rates in every state. For example, 5% rate cuts requested by Amica for North Carolina and Colorado were authorized, resulting in a $4.3 million reduction in the total premiums paid by local drivers. 

Your level of coverage, however, is one of the most crucial aspects to take into account when considering rate increases.

The price of your bodily injury liability (BIL) auto insurance, medical payments coverage, and personal injury protection (PIP) auto insurance could also be impacted by escalating medical expenditures.

So, how often does car insurance go up? The frequency of your rate change depends on your provider and other factors.

Finding the Best Auto Insurance Rates Even With Increases

Should car insurance go up every year? Drivers should expect to see a rise in their auto insurance rates this year due to inflation and the increasing price of new and used cars (Read More: How to Find Affordable Auto Insurance Rates Online). You might be able to budget more effectively if you anticipate rate hikes, but it’s crucial to remember that not all rate increases are equal. 

It can be a good idea for customers who are seeing their premiums rise to look for a new policy or find other ways to reduce their costs. 

Now that you know the answer to, “Why does my insurance go up every year?” start shopping for more affordable coverage today with free auto insurance quotes from local companies. Use our comparison tool below to find cheaper car insurance rates.