February CPI is here. Does this impact my car insurance?
Inflation cooled slightly in February, but motor vehicle insurance inflation remains stubbornly high. According to the latest Bureau of Labor Statistics’ Consumer Price Index (CPI) report, the current annual inflation rate is 2.8 percent — higher than the Fed’s goal of 2 percent but lower than the January year-over-year rate of 3 percent.
Auto insurance prices rose 0.3 percent for the month of February and 11.1 percent for the year. While this is a notable slowdown from the 2 percent increase in December 2024, car insurance inflation is still disproportionately higher than many other goods and services.
Motor vehicle insurance, along with motor vehicle repair costs, continue to increase at an outsized rate nearly every month, further squeezing already tight household budgets.— Greg McBride, CFA, Bankrate chief financial analyst
Why is inflation high for car insurance?
Car insurance inflation is often called “sticky” by economists because once inflation takes hold of the many moving parts related to car insurance rates, premiums can remain elevated even after inflation eases. The CPI for motor vehicle insurance remains high due to the rising costs of goods and services associated with the industry. Expenses like vehicle repairs and medical services are included in auto claims, so inflation in these sectors influences rising coverage costs.
| Expenditure category | 12-month CPI percentage change Feb. 2025 | 1-month CPI percentage change Feb. 2025 |
|---|---|---|
| All items | 2.8% | 0.2% |
| Motor vehicle repair | 7.9% | 0.7% |
| Medical care services | 3.0% | 0.3% |
| Motor vehicle insurance | 11.1% | 0.3% |
Slowing inflation rates in contributing sectors like vehicle repairs and medical services are a positive sign for the future of auto insurance. Since auto insurance rates “react” to these contributing factors, this indicates that we might see drops in insurance inflation rates in the coming year. Auto insurance inflation has historically peaked later than related products, so it’s fairly normal to see motor vehicle inflation rates lagging behind other vehicle cost sectors.
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Powered by Coverage.com (NPN: 19966249)
Coverage.com, LLC is a licensed insurance producer (NPN: 19966249). Coverage.com services are only available in states where it is licensed. Coverage.com may not offer insurance coverage in all states or scenarios. All insurance products are governed by the terms in the applicable insurance policy, and all related decisions (such as approval for coverage, premiums, commissions and fees) and policy obligations are the sole responsibility of the underwriting insurer. The information on this site does not modify any insurance policy terms in any way.
How do CPI changes affect auto insurance?
CPI reports can feel overwhelming to drivers concerned about car insurance costs and future vehicle purchases. What should drivers do with this information?
The good news is that today’s inflation report won’t impact your current cost of car insurance for several reasons. Car insurance policies are written on 6-month or 12-month terms. Aside from standard policy changes initiated by the policyholder, your rate is typically locked in until the policy renewal.
Most states also require car insurance companies to file for rate increases with the state insurance commissioner before they can increase prices for policyholders. The approval process can take months. Once approved, rate changes impact new business policies at a date set by the carrier. Current customers see this increase when their policy renews, but renewal rates are usually locked in 45-60 days before your renewal date.
So, if your policy is renewing soon or has just renewed, you have time before any rate changes affect your premium. However, if you are in the market for a new car, month-to-month changes in inflation can impact your auto loan rate and the cost of your new vehicle. Recent changes in the economy caused Bankrate editor Katie Lowery to take action. She planned on replacing her current car this year — her 17-year-old Honda had 170k miles under its belt and expensive repairs right around the corner. “It was time for a new car any way you sliced it,” says Lowery. “But the precarious economy and looming tariffs did put additional urgency on the situation.”
I felt pressure to get it done sooner rather than later because I don't know what the future holds. Both inflation and tariffs feel like a shoe waiting to drop, and I wanted to lock in our purchase before it was too expensive. It didn't influence our choice of vehicle, but the economy absolutely did influence our timing.— Katie Lowery, Bankrate loans editor
What does the CPI mean for the future of insurance rates?
Inflation also isn’t the only factor at play in high insurance premiums. The industry is finally showing signs of stabilization that could yield lower inflation in the insurance sector down the line. According to the 2025 True Cost of Auto Insurance report, full coverage car insurance rates increased an average of 12 percent from 2024 to 2025, which is lower than the 17 percent increase from 2023 to 2024. Fatal accident rates are also down from their post-pandemic peak, which reduces risk for carriers.
For many drivers, the uncertainty around President Trump’s tariffs is a cause for concern. Just like inflation, most tariffs impacting the cost of car insurance would not be felt by drivers right away. Depending on when tariffs are enacted by the U.S., insurance rates are likely to reflect these changes in 2026 and beyond.
Several factors impact car insurance rates. Some you can’t control, like inflation and tariffs. But there are steps you can take to reduce insurance costs now and in the future, even in a high rate environment:
- Seeking out new car insurance discounts
- Maintaining a clean driving record
- Consider changing your car insurance deductibles
- Improving your credit score (if you live in a state that uses an insurance-based credit score as a rating factor)
Licensed agent Jessa Claeys says she will take action to lower her auto rates when the time comes, but won’t worry about it too much until then.
The cost of my policy has fluctuated over time, but never by a lot. Plus, I know I can always shop around for a better rate if needed.— Jessa Claeys, Bankrate editor
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