U.S. drivers are increasingly choosing higher insurance deductibles and reduced coverage as auto insurance premiums rise, with 45% saying they would reduce coverage or increase deductibles if premiums rose another 10%, according to new research from The Zebra.
- The median annual U.S. auto insurance premium reached $2,079 in 2026, up from $2,016 in 2025, with prices rising 74.6% since 2016
- 45% of drivers would reduce coverage or increase deductibles if premiums rose 10% more, while 29% would cancel coverage entirely
- One-quarter of drivers cannot afford their current deductible if they need to make a claim, rising to 49% among those with fair or poor credit
- Drivers with poor credit pay a median $1,805 more annually than those with excellent credit for auto insurance
- Rising repair costs are the main driver of increased claims costs, outpacing claim frequency as the primary factor in premium increases
U.S. drivers are considering higher deductibles and reduced coverage as insurance and vehicle ownership costs rise, according to new research from insurance comparison service The Zebra.
Researchers surveyed 1,500 U.S. vehicle owners in April and analyzed more than 32 million insurance rates. If premiums rose another 10%, 45% of respondents said they would either reduce coverage or increase their deductible. Another 29% said they would consider cancelling or suspending coverage entirely.
The median annual U.S. auto insurance premium reached US$2,079 in 2026, or about US$173 per month, up from US$2,016 in 2025. Since The Zebra began publishing its State of Insurance research in 2016, auto insurance prices have risen about 74.6%.
David Seider, chief commercial officer at The Zebra, said the slower increase reflects stronger insurer results following earlier premium increases.
“After years of bad loss ratios followed by premium hikes, we saw a couple years of outrageously good loss ratios,” Seider said. “This has now led to a hyper-competitive environment amongst insurance companies.”
That competition has produced different results across the country. Eleven states recorded lower median premiums this year, while most others saw increases of less than US$100. The largest increase came in New Jersey, where the median annual premium rose US$253 to US$2,676.
The spread between states remains wide. The median annual premium reached US$3,342 in Louisiana and US$3,334 in Florida. Vermont, Wyoming and North Carolina all remained below US$1,400.
Researchers cited tariffs, inflation, repair costs and auto parts supply-chain problems among the factors affecting insurance costs nationally. State regulation, local claims patterns and coverage requirements also contribute to regional differences.
The report found affordability problems extending beyond premiums. One-quarter of respondents said they could not afford to pay their current deductible if they needed to make a claim. That figure rose to 49% among respondents with fair or poor credit.
Those drivers also pay more for insurance. Consumers with poor credit paid a median US$1,805 more per year than those with excellent credit. Only 38% of respondents with credit scores below 670 said they considered the total cost of owning, insuring and driving their vehicle affordable, compared with 53% of respondents overall.
Younger drivers were more likely to consider dropping coverage. More than half of Generation Z and millennial respondents said their personal finances had significantly influenced their insurance spending. Among Generation Z respondents, 48% said they would cancel their insurance if premiums rose another 10%.
Other vehicle costs have also increased. The report puts the price of a new vehicle at close to US$50,000, up 3.5% year over year, while the average used vehicle costs more than US$26,000. Fuel prices were hovering around US$4 per gallon.
Many drivers are responding by keeping their existing vehicles longer. Some 64% said they plan to drive their current vehicle until it becomes too expensive or difficult to repair. The average age of vehicles on U.S. roads has reached a record 12.8 years.
Some 61% of respondents said they were extremely or very concerned about fuel costs, while 57% said they were driving less often to save money. Overall, 63% said they were extremely or very concerned about inflation and rising prices, while 49% said the same about insurance costs.
Similar cost pressures have been recorded in Canada.
Statistics Canada reported in June that passenger vehicle insurance premiums rose 23.9% between December 2019 and December 2025, outpacing the 21% increase in the all-items Consumer Price Index over the same period. Researchers identified higher vehicle prices and rising parts, maintenance and repair costs among the factors contributing to higher auto insurance expenses.
A separate Statistics Canada study found the passenger vehicle parts, maintenance and repair price index rose 22.3% between December 2019 and December 2024. Researchers concluded that higher costs per claim, rather than claim frequency alone, had become the main driver of rising claims costs.
Ontario data published by Rates.ca in March also pointed to higher repair costs as a factor behind rising premiums. Daniel Ivans, a licensed insurance broker and Rates.ca expert, said labour, parts, diagnostics and longer repair timelines had all increased claims costs.
