There are a handful of reasons why auto insurance costs are rising in 2026. Insurance fraud is one major contributing factor, and the ever-increasing costs of vehicles, parts and labor is another.
Today, the seasoned team of insurance experts at Einsurance.com will explain everything a consumer needs to know about the auto insurance affordability crisis. Many of these points are beyond the control of the average person. Some points, though, we can control.
We’ll discuss how to lower your car insurance premium rates and attempt to forecast the average car insurance costs for most drivers.
Keep reading to discover:
Let’s begin with a look at some reasons why car insurance prices are rising now.
Why Auto Insurance Costs are Rising in 2026
According to Bankrate.com, as of November 2025, the average cost of full coverage auto insurance for a single vehicle was $225 per month. That’s nearly $2,700 per year!
And it represents a 121% increase from 2024. It’s extra frustrating for consumers, because these prices have been climbing steadily for years. Why?
Increasing Auto Prices Play a Huge Role in Insurance Costs
Back in the 1970s, one could buy a brand-new vehicle for less than $15,000. That vehicle had far less technology and safety research, however. It was probably built right here in the US, with US-sourced materials.
Those vehicles were less efficient, heavier, and sometimes unsafe. No one had thought about crumple zones. Seat belts were rare, and many vehicles didn’t even have standard air conditioning.
Modern Vehicles Have a Ton of Technology
Newer vehicles boast a ton of technology that didn’t exist 15 years ago.
We’re talking about:
- Digital displays
- Music and sound
- Satellite navigation
- Crumple / crush zones for safety
- Dozens of sensors throughout a vehicle to help diagnose it for repairs
- Air conditioning & other climate control amenities, like heated / cooled seats
And the list goes on.
Car manufacturing costs are beyond the control of a US consumer. Yet we all pay for them directly when we buy vehicles, and again when we insure a new car.
Parts Shortages in Recent Years
Consider the Covid-era microchip shortage that made it nearly impossible to find a new car for sale in 2022-2023. These microprocessors are crucial for new auto manufacturing. They’re also very expensive to produce, made of precious metals and tiny parts.
If you weren’t car shopping back then, know this shortage caused auto prices to skyrocket. Individuals with money to spend were paying tens of thousands of dollars extra to get in a new car circa 2023.
Auto prices have calmed since then. Still, the average consumer paid about $50,000 for a new car in 2025. These prices will probably continue to rise, and cause auto insurance premiums to increase more in 2026.
Inflation Affects Auto Prices and Insurance Premiums
Inflation — the devaluation of the US dollar — also plays a role. In short, every dollar has less buying power every year.
Inflation can range anywhere from 2% to 9% a year. This has a significant impact on our average car insurance cost forecast.
A $200/month policy in 2025 might cost $204 to $219 in 2026. That price increase is coming, even for insurance customers who had no claims or major events.
And finally, another reason auto insurance costs will rise in 2026 is the high cost of fraudulent claims.
Fraudulent Claims Will Cause Insurance Rates to Increase
As auto insurance professionals, we have noticed a shocking increase in auto repossessions recently. The final numbers are not yet available for 2025, but CBS News reported last November that 2.2 million autos had been “repo-ed” already and projected 3 million vehicles would be repossessed by the end of the year.
Now, you are wondering, “What do repossessions have to do with increasing auto insurance prices?”
It is our experience that certain economic indicators — high unemployment rates and especially “repos” — mirror instances of major insurance fraud.
We won’t explain all the ways people commit auto insurance fraud today. Just know that when people cannot make their car payments, they think of very creative ways to get rid of those payments.
And, when a vehicle that has full coverage insurance becomes a total loss, the insurance company pays for it.
Next, that cost is pushed to other consumers in the same risk rating group, and the loss might also be associated with similar vehicles on the road. Consumers who own vehicles with high theft rates, for instance, will find themselves paying more for insurance in 2026.
Now that we’ve explored reasons why auto insurance costs are rising in 2026, let’s talk about the impact of those costs.
The Impact of Rising Insurance Rates
Unless you are very wealthy, and even then, you are probably very aware of your overall insurance costs. Unlike other products and services, insurance is intangible. We cannot touch it or see it, so it feels like an unneeded cost at times. That can be frustrating.
And the impact of rising auto insurance rates can launch a vicious downward spiral for people dealing with financial strain.
Driving Without Insurance is Illegal in All States
Most of us will face financial struggles at some point in our lives.
Some people in this position will try driving while uninsured. This is a terrible idea! Eventually, these drivers are caught and hopefully only face a few fines. Repeat offenders might lose their license entirely, depending on the laws in their state and their history.
In many cases, a lienholder (the bank or car dealer) discovers the uninsured status, and will repo the car. When a car is “repo-ed”, the customer might still owe a lot of money to the bank.
Now, they end up with:
- Debt for a car they do not have
- Dismal credit scores for the next 7 years or more
- A history of driving without insurance (and yes, insurers keep track of this data)
Or a bank may add force-placed insurance to the loan.
Force-Placed Insurance
Force-placed insurance is very expensive.
In short, the lienholder needs to protect their interest in an asset (the uninsured vehicle). The bank buys insurance, and that cost is added to the loan (with interest), and the uninsured driver finds themselves paying even more for their car or making payments for a longer term.
For consumers with subprime (poor) credit, who pay higher interest rates, this added cost can lead to financial ruin over time. Ultimately, they are left owing tens of thousands of dollars on a car that is worth almost nothing.
In the worst cases, an uninsured driver causes tremendous damage, or even fatality. Then, some other driver must pay for unexpected medical bills, property damage, and even funeral costs.
In short, it’s never a good idea to drive without insurance. If you find yourself in this position, do not drive. Take the bus, walk, borrow an insured car from family, or figure out some other way to get around.
Now, you are thinking, “What can I do about rising auto insurance costs in 2026?” Let’s explore some ideas to help you save money.
How to Lower Your Car Insurance Premiums This Year
Shop around! Try our handy online auto insurance quoting tool at Einsurance.com. We aim to match consumers with insurers who are seeking business.
Whether you are a senior seeking car insurance, a teen, a college student, or a high-net-value individual with a lot of assets to insure in a bundle, we can probably help you find more affordable auto insurance.
Just gather your information, like your VIN # and driver’s license, plug them into the quote, and we will have insurers contacting you right away. It’s easy!
Consider Dropping Full Coverage if You Own Your Vehicles
This choice is not for everyone. But, if you have access to several reliable vehicles, and your car is totally paid off, you could buy a liability-only policy.
Of course, that means your insurance will only cover the damage you cause to others.
A liability-only policy WILL NOT pay for:
- Hail damage
- Theft of the vehicle
- Garage fires
- Damage done to your car by an uninsured driver
If you are not comfortable with a liability-only policy, try auditing your policy for unneeded costs.
You might be able to get rid of some extra coverage, like roadside aid or rental car coverage. While these endorsements are worth the money, sometimes every penny counts. You might be able to lower your bill by $10 – $30 per month.
Think About Changing Vehicles
Some autos are more expensive to insure.
We’re talking about:
- Exotic cars
- Some European brands (Mercedes, BMW)
- Some electric cars
- Certain hot rods (top trim V8 Challengers, the Hellcats and Demons, especially)
- And some affordable cars that have become known for easy theft, like Kias
Newsy events can also make a certain make/model more expensive to insure.
For example, consider the 2025 rash of Tesla vehicle vandalism cases. This made national news; you probably heard about it.
Auto insurance companies were on the hook to pay for these vehicles, whether they needed minor repairs or were a total loss after a fire. Therefore, our average car insurance cost forecast predicts that in 2026, Tesla owners might discover their auto insurance costs increasing a lot!
And even individuals who do not own a Tesla but find themselves in the same risk-rating group, may see sharp increases in auto insurance rates.
Ultimately, many consumers will find themselves switching to less expensive used cars in 2026. Prices on these cars should be good, because the market is flooded with repossessed vehicles. And it is much cheaper to insure a $12,000 2012 Jeep Wrangler than a $100,000 2025 Tesla Cybertruck.
If you don’t happen to own a Cybertruck, a Hellcat, or a much-stolen Kia, you can still find ways to lower your auto insurance costs this year.
Consider Increasing Your Deductibles on Full Coverage Policies
Here is another choice that may not work for everyone, but it could help some.
If you own your car outright and need full coverage, consider increasing your deductible amounts. Remember, the deductible is the amount you will pay before insurance kicks in to cover a loss.
Modern deductibles range from $500 to $5,000. If you switch from $500 to a higher amount, like $2,500, you will see major savings on your insurance bills.
A high deductible does bring some financial risk. You will be on the hook to pay that deductible if you have an accident, so you always need to have access to those funds. In other words, if you do not keep $5,000 in the bank for emergencies, do not switch to a $5,000 deductible.
Individuals who make a car payment will probably not be able to change their deductible very much. Lienholders usually require a full coverage policy with a $500 or $1,000 deductible.
Try Taking a Driving Class for a Discount on Your Insurance
Most auto insurers offer discounts for drivers who take driver’s education classes. This discount can be as much as 10%, and the classes are easy to complete online. They are worth the small investment of time and money.
Talk to your insurance company first; they may offer a list of preferred providers.
Our Final Thoughts on the Increasing Costs of Auto Insurance in 2026
Auto insurance premiums have increased significantly in recent years, and consumers can expect more of the same in 2026.
These overall cost increases are beyond the control of a normal consumer. Still, you can be sure you are getting the best price. Remember to shop around for car insurance every few years, take driving classes, audit your policy for unneeded coverage, and never drive without insurance.
