According to Mark Friedlander, Senior Director of Media Relations at the Insurance Information Institute, also known as Triple-I, car insurance companies saw their largest losses in 2022. That year, insurers paid out an average of $1.12 in claims and expenses for every $1 in premium they collected, according to Triple-I. Because of this, insurers charged consumers more for coverage.
Fortunately, the rising rates slowed throughout 2025 and remain steady so far in 2026. However, the increases we saw in the previous years are due to a combination of the following things: increased claim severity, increased litigation, rising vehicle repair costs, more risky driving habits and severe weather in some areas.
Increased Claim Severity
The 2024 Auto Insurance Trends Report from LexisNexis Risk Solutions found that car insurance claim severity rose significantly. We saw the following increases since 2020:
- Bodily injury severity increased by 20%.
- The severity of material damages rose by 47%.
- Total loss claims increased by 29%.
Excessive Litigation
Additionally, drivers turned to attorneys for their claims. In a LexisNexis survey, 64% of claimants who hired an attorney said they “definitely would” use legal counsel again, while 29% said they “probably would.”
According to Triple-I, legal system abuse contributed to the rising rates. This can happen when attorneys use various tactics that push policyholders towards more lawsuits and drive up the cost of litigation. One example is aggressive marketing through social media and billboard advertising.
Third-party litigation, especially in excessive amounts, drives up the cost of claims, thus increasing premiums.
Rising Vehicle Repair Costs
The increased costs of vehicle repairs are related to claim severity. Auto repair labor shortages and vehicle part supply chain issues created a ripple effect on the auto insurance industry. These issues increased the cost of vehicles and repairs, thus increasing the cost of claims.
Additionally, the technology in cars today is becoming more advanced. While features like advanced driver assistance systems, known as ADAS, can help make driving safer – using sensors and cameras that detect potential crashes – this added technology can make cars more expensive to repair.
More Risky Driving
Riskier driving not only decreases your safety on the road but can also increase your car insurance rate when your driving record suffers as a result. Insurers consider your driving record when setting rates; speeding tickets, DUI violations and at-fault accidents can increase your premium.
The LexisNexis report uncovered the following dangerous driving habit increases in 2023 compared to the previous year:
- Total miles driven increased by 2.2%.
- All moving and non-moving violations were up 4%.
- Major speeding incidents increased 10%, while minor speeding incidents increased 16%.
- Distracted driving violations increased 10%.
Additionally, DUI violations were up 8% in the first six months of 2023 compared to the first half of 2022.
More Severe Weather
Comprehensive car insurance coverage pays for damage to your car caused by severe weather, such as:
- Fire
- Theft
- Falling objects (rocks, tree limbs, etc.)
- Vandalism, riots, etc.
- Weather-related damage (hail, floods, etc.)
- Animal-related damage (hitting a deer, etc.)
- Broken or cracked windshield
- Glass damage
According to the National Centers for Environmental Information, 2023 and 2024 had the most billion-dollar weather events in history. With 28 separate weather events with losses exceeding $1 billion, 2023 saw the most ever recorded, while 2024 had the second most (27 events).
If insurers are experiencing heightened loss in a particular area due to severe weather and natural disasters, they may increase rates.
