Insurance Inflation Index: Car insurance rates up just slightly

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Auto insurance prices, which have been steadily rising the last couple of months, rose just 0.1% in June, according to the U.S. Bureau of Labor Statistics’ Consumer Price Index, released July 15.

The year-over-year increase also slowed. Over the last 12 months rates were up 6.1%. The year-over-year increase was 7.0% in May, 6.4% in April, 7.5% in March, 11.1% in February and 11.8% in January, according to the Bureau of Labor Statistics (BLS). 

The slowdown in auto insurance inflation is welcome news for consumers, who have seen car insurance prices rise almost 27% in the last two years, according to BLS’s tracking of urban consumers’ spending.

The moderation of insurance inflation contrasts with the rise in the overall Consumer Price Index, which rose 2.7% in June from a year earlier – a quicker increase than May’s 2.4% increase. The Wall Street Journal and others noted the increase may be a sign that businesses are passing tariff costs to consumers. 

Many have wondered if President Trump’s tariffs on cars and car parts would also impact near-term insurance rates, but that doesn’t appear to be the case for now.

“Insurance costs, both yearly and monthly, appear to be on the road of moderation, but the central question remains — can it be sustained?” said Scott Shapiro, U.S. insurance sector leader at KPMG, the audit, tax and advisory firm. “The uncertainty around tariffs coupled with the current hurricane season presents a sizable obstacle for insurers in managing their expected future costs.”  

The Insurance Information Institute (Triple-I), an industry trade group, has been forecasting a countrywide average personal auto rate increase of 7% in 2025.

“The CPI report is in line with what Triple-I had forecast for 2025. Average rate decreases are moderating because premium increases over the past two years are catching up with insurer loss costs,” said Mark Friedlander, Triple-I’s senior director of media relations.

“We anticipate tariffs will have a negative impact on future auto insurance rates due to higher costs of replacement parts as well as increased costs to manufacture new vehicles,” Friedlander said. 

“Most likely, premiums will not be impacted until next year. Tariffs will have no impact on existing policies,” he said.

Consumers continue search for cheaper rates

Still, consumers — stirred by rising premiums over the last few years — are increasingly looking for cheaper rates, according to LexisNexis Risk Solutions. The data and analytics company said in May that as of March 31, 2025, almost half (46%) of all policyholders shopped at least once in the last 12 months for a new policy.

As consumers seek out cheaper insurance, it’s important to note that individual rates depend on many factors, including a person’s age, driving history, the car they drive, their coverage levels and where they live. For instance, average car insurance prices can range from $1,175 a year in Maine to $2,883 a year in Louisiana, according to the most recent analysis by Insure.com.

In other insurance segments:

• Health insurance prices rose 0.6% in June. This followed a 0.2% increase in May, which followed 0.4% month-over-month increases in both March and April. 
• Prices for tenants’ and household insurance — which most people call renters insurance — were up 1.1% in June. They were up 0.8% in May and 0.3% in April. However, that followed a decrease of 0.3% in March.

The BLS doesn’t track homeowners and life insurance. 

For June, the overall Consumer Price Index, a measure of the cost of U.S. goods and services, was up 0.3% in June. This followed an increase of 0.1 in May and 0.2% in April.

The CPI increase of 2.7% for the last 12 months was in line with experts’ predictions. 

John McCormick

 

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John McCormick is an insurance expert and the editorial director for QuinStreet's insurance sites -- CarInsurance.com, Insurance.com and Insure.com. Before joining QuinStreet, he was a deputy editor at The Wall Street Journal and was an editor and reporter at several media outlets where he covered insurance, personal finance and technology.