If you have asked yourself why is car insurance so expensive, the answer starts with a surprising pair of federal numbers. In the 12 months to September 2026, the Bureau of Labor Statistics (BLS) reports that vehicle maintenance and repair prices rose 5.8%, while its motor vehicle insurance index fell 5.0%. This guide explains how a car insurance price is built, filed, and approved, and why a national index and your own renewal notice can tell different stories.
Educational only, not insurance, legal, or financial advice. Rules differ by state, and this cannot tell you what applies to your own policy. The video behind this article cited the August 2026 BLS figures (insurance index down 5.1%); the numbers here use the newer September release, published October 14, 2026. BLS publishes new figures monthly, and the next release is scheduled for November 10, 2026.
Why is car insurance so expensive: how a price is built
According to the American Academy of Actuaries, auto insurance rates are a function of costs in the system. That system pays for injuries, medical bills, lost wages, car repairs, other property damage, theft, and legal costs. Insurers study how often claims happen and how large they are, then ask whether current rates need to go up or down.
There is a timing problem built in: a price has to be set before the costs are known. Ratemaking uses historical data to estimate what a future period will cost, so every price is an estimate made in advance. The Academy describes two main steps. First, estimate the overall average change needed. Then spread that change across classes of drivers. Because of that second step, most rate changes do not land evenly: some customers see increases and others see decreases.
State rating laws generally add a legal standard: rates must not be excessive, inadequate, or unfairly discriminatory, applied at both the overall level and the class level.
Why is car insurance so expensive: what pushed rates up
Costs rose sharply in recent years. AM Best, an insurance rating agency, reports in its 2024 personal auto results that insurers lost about $17 billion on underwriting in 2023, after three straight years of underwriting losses, and that the average private passenger auto claim reached almost $13,000 in 2024, up more than 10% from the year before. A separate AM Best special report says rising claim frequency and severity drove spikes in filed rate increases in 2023 and 2024.
Why is car insurance so expensive: how states review rate filings
State regulators decide, but when they review differs. The NAIC rate filing chart describes four main methods:
- Prior approval: rates must be approved before use. Some states add a deemer provision, so rates count as approved if not denied within a set number of days.
- File and use: rates are filed first and used, with no specific approval, though the department can disapprove them later.
- Use and file: rates are used first and filed within a set period afterward.
- Flex rating: prior approval is needed only when changes exceed a set percentage.
For private passenger auto, the chart lists New York as prior approval (30 days, extendable to 45), New Jersey as prior approval with faster tracks for small changes, Florida as file and use (60 days) or use and file (30 days) at the insurer’s option, Texas as file and use, Illinois as use and file, and Michigan as file and use (90 days). This is not a judgment on any state. It shows why the same national headline plays out differently from place to place.
Did higher rates fix insurer results?
According to AM Best, private passenger auto insurers posted an underwriting profit in 2024 for the first time since 2020, with net underwriting income near $14 billion. AM Best also reports that the average approved increase fell from 9.7% in 2024 to 3.7% in 2025. Note the wording: these are still increases, just smaller than the year before. AM Best also notes that where insurers’ loss results improved, later rate filings tended to ask for smaller increases. That is a correlation, so treat it as a clue rather than proof.
What the insurance price index measures
Now back to the index. In the 12 months to September 2026, the BLS Consumer Price Index release shows the motor vehicle insurance index down 5.0%. Seasonally adjusted, it fell 0.3% in July and 0.8% in August, then edged up 0.1% in September. Over the same 12 months the maintenance and repair index rose 5.8%, and it includes maintenance, not only collision repairs.
The key detail is in the BLS methodology: the index holds driver characteristics constant and uses premiums calculated for those unchanging profiles, not the actual premiums policyholders pay. It covers coverages such as collision, comprehensive, and liability for private passenger vehicles. Premium reductions applied to a policy count in the index, while separate dividend payments do not. So the index measures a fixed profile, not your household bill.
Why your renewal can rise while the index falls
A falling index and a rising renewal can both be true, because the measure, the timing, and the state differ. Rate changes are spread across driver classes, so two drivers in the same state can see different renewals. Geography matters too: AM Best says auto rates in California, Nevada, New Jersey, and New York stayed disproportionately high in 2025, and it gives no reason in that release. A national number can hide very different local stories.
One reasonable interpretation is that prices may trail results, since filings follow loss experience. That is an interpretation, and the sources cited here do not explain why the index turned negative in 2026.
Why is car insurance so expensive: what you can do
- Remember what the index is. It tracks a fixed policy profile, not your personal bill.
- Start with your state insurance department. Rate filings go to the state, and it can explain its own rules.
- Ask for an explanation. In Oregon, under HB 2563, an insurer renewing a qualified personal policy must give a written explanation of a premium increase if you ask in writing, for renewals on or after September 1, 2026. Other states differ, so ask yours.
- Compare your own coverage and quotes. Your class, coverages, and state shape your price.
For another example of how a price moves slowly through a chain, see how tariffs affect prices, and browse more in Cars & Transportation.
Frequently asked questions
Why did the car insurance index fall while repair costs rose?
They measure different things. The insurance index tracks premiums for fixed policy profiles, while the repair index tracks maintenance and repair prices. They can diverge.
Does the index show what I will pay at renewal?
No. It does not track actual premiums paid, and your renewal depends on your policy, your driver class, and your state.
Is this insurance advice?
No. This is general education. Brightward is independent and does not sell insurance.