Why Your Car Insurance Isn’t Dropping—Even When the News Says Rates Are Coming Down

 

If you’ve read the headlines lately, you’ve probably seen something like: “Auto insurance rates expected to drop 6% in 2025.” Sounds like good news especially after years of back-to-back increases. All of us are ready for some relief.

 

Here is the reality behind the headline: many people (especially those with good driving records) won’t actually see their car insurance go down. And if they do, the “WHY” may not be what you think.

 

Here’s Why the Headlines Don’t Match Your Bill

 

Insurance news reports generally talk in averages. They’ll say rates are coming down 6% overall - meaning on AVERAGE for EVERYONE in Florida. That average is going to include urban Miami and Jacksonville downtowns as well as rural Sneads and Ocala. And that’s just the geographic difference. Consider we’re also talking about people whose driving age is between 16-90+. AND, on top of that, some of those people drive very well and are good at it…..and the rest of them you’ll see on your commute home tonight.

 

Over the past three years, most carriers hit drivers with back-to-back double-digit increases—20%- 30% in a single renewal. In some cases, they stacked those increases on top of each other year after year after year. That means one could EASILY be paying 60%+ more today than they were in 2021.

 

Now compare that to someone whose carrier only raised rates 15% one year, 10% the next two years. Yes, they saw increases, but they’re still sitting at a total increase of about 40% (ok, 40%-ish… this is a simple illustration) — which is 20% lower than what many others are paying.

 

The point is this: if your rates are going down this year, it’s because you were being overcharged the term before. That insurance carrier was pricing aggressively high to try to avoid losing money, and now they’re “correcting” back down because they were charging TOO much.

 

If your rates are still going up, especially if it’s 10% or less which I consider gradual in the current market, it’s usually a sign that your company has been giving you fair, competitive pricing all along. They didn’t spike your premiums by 25% like others did, so now they don’t have any “room” to lower them. In fact, those carriers will most likely still continue to have to adjust up, in order to get back to even with the market and stop losing money. 

 

Put another way: slow and steady increases often mean you’ve been getting a better deal all along. Many good companies are willing to accept a year or two of losses, in order to not shock their customers with massive, knee jerk rate increases. Some are absolutely unwilling to take a dime of loss if they can adjust up and avoid it, EVEN if that means pain for their customers and large numbers leaving them.

 

Why in the World Does Insurance Work This Way?

 

Auto insurance isn’t priced based only on you and your driving record—it’s priced on losses across all of its customers. What the insurance carriers bring in through premiums vs what they pay out for repairs and lawsuits. 

 

When inflation hit hard in 2021–2023 (car repairs skyrocketed, medical costs surged, replacement parts were backlogged), insurance companies had to catch up. Some did it all at once with huge hikes. Others spread it out more gradually. (See my article here for more about why rates are up in general: https://www.insurancemh.com/why-are-car-insurance-rates-rising) 

 

If you’ve been with a carrier that spread it out, your premiums may not feel great, but they’re often still lower than others who got hit with massive jumps.

 

The Myth of the “Good Driver Discount” Rate Reduction

 

This is one of the most frustrating parts of the story. People often assume: “My rates are going down—my insurance company must finally be rewarding me for being a safe driver.” That’s not usually the case. Insurance companies rarely hand out reductions just for safe driving after years of increases. They price their policy’s based on what they expect you to do that year – and they assume you’re going to be accident free EVERY year if you’re a ‘good driver’. Meaning – if you’re getting a ‘good driver discount’ and your rate went down:

 

They raised you higher than the market last year.

 

You had an accident and they were charging more because they EXPECTED you to have another claim.

 

They lost customers because their pricing was uncompetitive and now reducing where they can (for everyone – not just you).

 

None of these are a reward for good driving or longevity - it’s a correction for charging more than they had to based on their actual and expected losses.

 

Here’s the takeaway:

 

Don’t read too much into the headlines. Instead, focus on your own situation. Know your baseline. Look back 3–4 years at what you were paying and calculate your total increase. If you’re still lower than the average neighbor who’s seen 60%+ hikes, you’re in better shape than you think.

 

Don’t assume a reduction means you’re winning. If your premium dropped, it’s likely because your carrier had you overpriced before. You may still be in the best spot, but it’s not a guarantee.

 

Don’t panic over gradual increases. If your record is clean and your rates are inching up slowly, that’s usually a sign your company has been competitive all along and has been aggressively pricing – if they’re pricing and only have a 2-5% margin – then if their costs go up 6% for repairs, labor, lawsuits, etc, they have to move up just to stay minimally profitable.

 

Shop wisely, not reactively. Just because one company advertises a reduction doesn’t mean they’ll be cheapest for you. Compare your renewal against the broader market with an independent agent (like us) who works with multiple carriers.

 

Remember, auto insurance pricing may not always ‘feeeeeel’ logical, but it is based on insurance companies actual losses being paid and if they’re paying out in expenses more than they’re bringing in through premiums. 

 

So when you hear the news talking about “rates coming down,” take it with a grain of salt. Look at your own history and remember: consistent and modest increases each year often mean you’ve been doing it right the whole time.