Many auto insurers slashing rates as claims drop

Insurers nationwide are slashing vehicle insurance rates in response to a sharp reduction in claims.

The unusual trend is benefiting drivers from Florida to California, as well as several states in between. Experts had predicted that President Donald Trump's tariff strategy would increase vehicle insurance costs.

The rate cuts are merely another market response, said Maya Afilalo, auto insurance industry analyst and managing editor at AutoInsurance.com, albeit in an unusual direction.

"Prices are stabilizing now because insurers have finally regained the profits they lost in the post-pandemic years," Afilalo explained. "Those years saw increased claims, combined with inflation and supply chain disruptions, increasing the cost of those claims. Insurers were losing money — paying out more than they took in. As a result, companies increased premiums to offset the losses."

Last week, Louisiana Insurance Commissioner Tim Temple approved Progressive Security Insurance Co.’s request for a 6.6% average rate decrease on its over 270,000 private passenger auto insurance policyholders in the state, and Progressive Paloverde Insurance Co.’s request for a 4% average decrease on its nearly 200,000 policyholders. Progressive Security’s 6.6% decrease follows a 3.2% decrease the company filed in July 2025, Temple noted.

Combined, the two Progressive companies write approximately 23.5% of the Louisiana private passenger auto insurance market. The changes take effect Jan. 16 for new business and Feb. 13 for renewal business.

The Louisiana rate reduction follows similar filings in Florida, Tennessee, California and other states.

Rate changes are statewide averages, so each policyholder’s rate change will vary based on their individual risk, Temple said.

No equal rates for all

AutoInsurance.com found a widening gap between standard and high-risk pricing and calls it "one of the most important trends" to watch in 2026. Between the first half and the second half of 2025, drivers with clean records generally saw slight decreases in full coverage rates, the website said.

The national average annual premium for full coverage dropped from $2,399 to $2,356 between the first and second half of 2025, about 2%.

Drivers with higher-risk profiles saw significant rate increases. For example, drivers with a DUI experienced the largest price change, a 35% increase. Meanwhile, teen drivers saw rates go up by an average of 17%, while minimum coverage policies rose by 14%, the website found.

"Property damage and bodily liability claims still remain expensive," Afilalo said. "Car repairs are also pricey, especially as more cars are equipped with new technology that can break more easily in collisions and is expensive to repair."

In addition to Progressive, State Farm and Allstate are other major vehicle insurers slashing rates.

In a December rate filing in Tennessee, State Farm requested a rate cut of more than 10% effective for new business on December 15 and for existing customer renewals one month later. It marked State Farm's second rate-cut request since April, dropping Tennessee rates down more than 17% total.

Overall rate reductions in 2025 will amount to more than $252 million in lower total annual premiums for Tennessee private passenger customers, State Farm said in a news release, averaging approximately $200 in savings per vehicle.

“We are pleased to help our customers save money, combined with the personalized attention of our local agents and first-rate customer service,” said State Farm Senior Vice President Allyson Watts.

A short-lived trend?

Vehicle insurance rates are probably not going to remain low, said Franklin Manchester, principal global insurance advisor at SAS, a global data and AI solutions provider.

Many factors affect the final cost to the consumer for auto insurance, Manchester explained, including weather, road density, inflation, labor prices, state regulation, technology, fraud and litigation. While not doubting the insurance companies and their reasoning for cutting rates, he doesn't expect those trends to continue due to several variables.

For example, California tends to be a more litigious state, which drives up the cost of vehicle insurance. In early 2025, California increased its minimum insurance requirements for the first time since 1967, doubling the required amounts for injuries and accidents.

"The impact increased premium volumes," Manchester said, "which would have felt like a rate increase."

In Louisiana, civil liability reforms that took effect Jan. 1 will have "immediate impacts in terms of higher judgments and frivolous lawsuits," Manchester said.

"People don't typically become 'better drivers' spontaneously," he concluded. "Evolving weather patterns, technological innovation, or legal changes tend to have more of an impact on rates for the consumer."

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InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.