Car insurance prices are only expected to increase slightly on average in 2026, with New Jersey projected to see the largest surge, according to LendingTree.
The details: LendingTree’s research arm, ValuePenguin, anticipates auto coverage to go up an average of 1% across all states in 2026 (the smallest year-over-year increase since 2022) after inflation sent rates surging an average of 17.13% in 2024.
New Jersey is projected to see its insurance prices increase 10.46% this year, followed by Nevada (6.42%), California (6.13%), New York (6.02%), and Washington, D.C. (5.36%).
More than half of the U.S. is expected to see insurance rates drop in 2026, led by Iowa at 6.19%, Minnesota (5.29%), Arkansas (4.70%), Missouri (4.45%), and Illinois (4.26%).
The average cost of full-coverage car insurance in the U.S. is currently $208 per month (about $2,496 per year), with Nevada ranking as the highest priced at $335 a month and rural Vermont the lowest at $128 a month.
Why it matters: Insurance is a quiet but powerful lever in the affordability equation. In high-cost states, or on higher-risk vehicles, elevated insurance premiums can blow up deals right as F&I managers go to close.
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Between the lines: Beyond state boundaries, another big factor for 2026 rate changes will be the companies issuing the policies when they’re up for renewal, though most major providers aren’t expected to raise prices significantly.
Of major insurance companies, Allstate is expected to see the largest rise in pricing, a modest 1.98%, with State Farm projected to see a rate decrease of around 4%.
Rate increases among midsize insurance companies are expected to be higher, with NJM projected to see an average price rise of 21.18% at renewal, Erie (7.92%), and Plymouth Rock (6.24%).
Bottom line: Given that average auto insurance costs have been rising consistently on an annual basis for years, the fact that costs are only projected to increase 1% in 2026 is good news for car buyers. Ultimately, it would be ideal if costs were declining, but a stall in growth is a step in the right direction and signals that a more favorable cycle could be on the way.
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