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According to a new analysis by the MarketWatch Guide, average car insurance premiums in the US are expected to rise 7.5% in 2025.
The hike adds an average of $182 to the entire annual average full coverage premium, up from $2,433 to $2,615. Drivers in some states are facing an increase of over $200.
With the average American worker making $68,000, auto insurance consumes nearly 3.9% of annual income, a significant increase in states with low median income, said Market Watch Guide.
MarketWatch Guide calculated average car insurance premiums using data from a 35-year-old single driver with clean driving records and excellent credits driving a 2023 Toyota Camry.
Why do car insurance premiums go up?
The auto insurance industry faced headwinds in 2022 and 2023 years ago, said Daniel Robinson, senior auto insurance research and writer at Market Watch Guide. He said the frequency and severity of natural disasters, including floods, wildfires and hurricanes, has increased.
“These disasters led to claims that were higher than expected, and strained the revenues of insurance companies,” Robinson told USA Today. Since the chaos of the dramatic pandemic era spurred hiking rates, premiums have steadily risen, but have slowed down to smaller increases, he said.
Robinson said there is a shortage of vehicle parts and skilled auto repair workers that emerged during the pandemic era, when supply chain swells still play a role. Unfortunately, insurance companies were borne by the brunt of these repair costs, and they had to raise premiums to ensure financial stability.
“We have also seen a rise in car prices in recent years due to increased inflation and demand, which adds another compounding effect,” he said.
Customs duties that led to increased costs of parts for imported cars also make repairs more expensive and are given at higher premiums, Robinson said.
What states have the highest car insurance premiums?
Louisiana drivers pay the most for an average annual average of $3,481, and for a full coverage policy of $290 a month. Louisiana is also one of the highway mortality rates, with 19.7 deaths per 100,000 people, according to the Insurance Institute for Highway Safety Analysis of Data from the U.S. Department of Transportation’s Lethal Analysis Reporting System. The national average is 12.8 deaths per 100,000 people.
Vermont drivers have the lowest average premium, averaged $1,624 or $135 a month. According to the MarketWatch Guide, the state has a below average rate of highway mortality rates, with 11.7 deaths per 100,000 people.
Where is the most popular car insurance?
MarketWatch Guides analysis shows that the most dramatic premium price hike in Washington, DC, saw a 20% increase in premiums from $2,684 to $3,209.
Maine and South Carolina also saw a significant 10% increase. In South Carolina, the premium 10% increase is $221 a year, marking the second-highest dollar amount since Washington, DC ($525).
Nevada’s premiums have been the biggest drop. Nevada’s average premium fell from $3,549 to $2,889. This is the difference of 19% decrease and $660.
Louisiana is the most expensive state of car insurance, but it showed the second highest annual premium decline in dollar amounts and percentages. Louisiana premiums fell 14% or $576 in 2025.
Betty Lin-Fisher is a consumer reporter for USA Today. Contact her at blinfisher @usatoday.com or follow her on X, Facebook, or Instagram @Blinfisher, @Blinfisher.bsky.social.. Sign up for our free daily money newsletter. This includes Friday’s Consumer News.
