Auto insurance affordability takes a hit—but still better than the 2000s

Consumers were shelling out about 1.9% of their income in 2003. (2 min. read)

Author

Ash Savage
March 28, 2025

Auto insurance costs have risen in recent years—but remain (slightly) better than the 2000s.

By the numbers: According to a recent study from the Insurance Research Council (IRC), the average U.S. household spent about 1.51% of its income on auto insurance per vehicle in 2022, the most recent year with available data.

  • The 1.51% ratio came from average insurance spending of $1,127—based on a median household income of $74,580 at the time, the report says.

  • While that’s an improvement compared to the peak of 1.9% in 2003, costs are expected to rise again.

  • The IRC says that number is expected to climb to 1.6% in 2023 and 1.7% in 2024 as insurers work to offset inflationary pressures.

What we know: Auto insurance premiums are driven by several factors—like accident frequency, repair costs, injury claims, and litigation. But costs also vary by state.

  • North Dakota was the most affordable state for auto insurance with a cost-to-income share of 0.93%—while Louisiana was the least affordable with a share of 2.67%.

  • Meanwhile, Florida was the second least affordable state for auto insurance in 2022, but made strides to improve insurance affordability through legislative reforms in 2022 and 2023.

  • The reforms aimed to address claim fraud and legal system abuse to (hopefully) stabilize the state’s property and casualty insurance market.

What they’re saying: ”While state-level data cannot directly address affordability issues among traditionally underserved populations, collaborative efforts to reduce these key cost drivers can improve affordability for all consumers,” Dale Porfilio, president of the IRC, said.

Between the lines: ValuePenguin projects a more modest 7.5% average premium increase in 2025 compared to the alleged 16.5% increase on average in 2024.

But now—tariffs are at play, and its possible rate hikes could speed up in 2026, according to Divya Sangameshwar, an insurance expert at ValuePenguin.

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