The economic forces behind insurance affordability
For years, drivers have been feeling the pinch at the pump, dealership, and repair shop, as car ownership-related prices continue to escalate. But often their biggest pain point is paying more for auto insurance bills, which have spiked significantly since 2020.
According to the Bureau of Labor Statistics, premiums surged more than 64% between September 2020 and September 2025, an increase that was more than double the general inflation rate of 25% recorded during the same period. A recent survey by TheZebra.com reports that 27% of respondents indicated they didn’t even have enough in emergency savings to afford their car insurance deductible (which can often be as low as $250) in the event of an accident.
What’s changed is not just how much premiums have risen, but how unevenly they now hit. Insurance affordability is no longer a shared national trend. It’s splitting along state lines, shaped by local risk, regulation and cost pressures.
Today, the average American driver currently forks over $2,256 yearly for car insurance, according to The Zebra’s 2026 State of Insurance: Auto Report. Since 2016, rates have risen a whopping 74.6%, although premiums have climbed at a more moderate 3% between 2024 and 2025 – much lower than the 18% increase observed the year prior. Still, the median premium as a percentage of income that Americans pay today is 2.6%, a higher share than many might expect.
