"The mechanics of insurance pricing reveal why premiums keep rising regardless of personal behavior. Insurers calculate rates using a complex mix of regional repair costs, medical expense inflation, litigation trends, and regulatory approval processes. A driver in Cleveland with no accidents may still face steep increases because repair shops in their area charge more, or because local courts award larger settlements in injury cases."
"Medical inflation adds another layer of pressure. When someone gets injured in an accident, insurers cover medical bills that have been rising faster than general inflation. Overall inflation reached 2.0% year-over-year as of December 2025, but healthcare costs typically increase at a faster pace, forcing insurers to build higher payouts into their rate structures. Litigation trends also play a crucial role. Some regions see more frequent lawsuits and larger jury awards in auto injury cases, creating what insurers call "social inflation.""
Auto insurance premiums are increasing across the United States and affect drivers regardless of their individual driving records. Insurers base rates on regional repair costs, medical expense inflation, litigation trends, and regulatory approval processes. Modern vehicles with sensors and advanced systems cost significantly more to repair, raising claim expenses. Medical costs for accident injuries have been rising faster than overall inflation, forcing insurers to anticipate larger payouts. Litigation and growing jury awards, described as social inflation, increase settlement costs in some regions. These combined factors push insurers to raise premiums and spread costs among all policyholders.
Read at 24/7 Wall St.
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