Rising Cost of Driving Pushes U.S. Drivers to Cut Coverage and Delay Vehicle Purchases
The cost of owning and operating a vehicle continues to put pressure on American households, with auto insurance premiums reaching a median of $2,079 per year, or approximately $173 per month. According to a new State of Insurance report from TheZebra.com, the rising cost of driving is forcing many consumers to rethink how they insure, maintain and use their vehicles.
The report, titled The Growing Cost of Driving in 2026, examines the financial pressures facing U.S. motorists as insurance, fuel and vehicle expenses continue to consume a growing share of household budgets. Although auto insurance rates have begun to stabilize following several years of significant increases, the overall cost of transportation remains a major concern for millions of drivers.
The report suggests that the $2,079 median annual insurance premium represents only one part of the financial burden associated with owning a vehicle. New vehicle prices are approaching $50,000, gasoline prices remain close to $4 per gallon in many areas, and maintenance and repair costs continue to add to household expenses.
Together, these costs are pushing some Americans to make difficult financial choices. Drivers are reducing coverage, increasing deductibles, delaying vehicle purchases and driving less frequently in an effort to control expenses.
“The number that matters most isn’t what you pay for insurance — it’s what it costs you relative to everything else in your budget,” said David Seider, chief commercial officer at The Zebra. He noted that drivers in some states spend as much as 5% of their annual income simply to remain insured. Nearly one-third of drivers surveyed said they would consider dropping their coverage altogether if premiums increased further.
Insurance Costs Vary Widely Across States
The report introduces the Zebra Premium Price Index, or ZPPI, a proprietary measure designed to evaluate auto insurance costs in relation to household income. While the national average shows that Americans spend approximately 2.55% of their annual income on auto insurance, the financial burden varies considerably depending on where drivers live and their individual financial circumstances.
Louisiana has the highest median annual auto insurance premium in the country at $3,342. Florida follows closely at $3,334 per year. At the other end of the spectrum, Vermont, Wyoming and North Carolina remain among the most affordable states, with median annual premiums below $1,400.
The findings highlight how geographic location can have a significant impact on the cost of maintaining legal auto insurance. Drivers in higher-cost states may face premiums more than twice those paid by motorists in the most affordable markets.
Premium Trends Begin to Stabilize
Despite the continued affordability concerns, the report found signs that the rapid rate increases seen in recent years may be slowing.
Eleven states recorded lower median insurance premiums between 2025 and 2026. More than half of all states experienced only modest increases, with the average rise remaining below $100. New Jersey recorded the largest year-over-year increase, with premiums climbing by $253.
However, national stabilization does not mean that all drivers are experiencing relief. Premiums continue to depend heavily on location, driving history, credit profile, vehicle type and the insurer selected.
“Rates are stabilizing nationally, but that doesn’t show the full picture at the state level,” Seider said. “The story isn’t simply that insurance is getting cheaper or more expensive. It depends heavily on where you live, your credit score and who you’re insured with.”
Credit Can Have a Major Impact on Insurance Costs
One of the report’s notable findings concerns the impact of credit scores on insurance premiums. In 27 states, drivers with a DUI pay less for auto insurance than drivers with poor credit.
Nationally, motorists with poor credit pay a median of $1,805 more per year than drivers with excellent credit, according to the report. The findings demonstrate the significant financial impact that credit history can have on insurance costs in states where insurers use credit-based insurance scoring.
For households already dealing with higher living expenses, these additional costs can create a substantial financial burden. Drivers with lower incomes may be particularly vulnerable because even relatively small increases in monthly premiums can affect their ability to afford other necessities.
Drivers Are Considering Cutting Coverage
The rising cost of insurance is also influencing how consumers think about their coverage.
According to the report, 45% of American drivers said they would reduce their coverage or increase their deductible if premiums rose by 10%. Another 29% said they would consider canceling their auto insurance entirely.
The concern is even greater among younger motorists. Nearly 48% of Gen Z drivers surveyed said they would consider canceling their coverage if insurance costs increased by 10%.
While reducing coverage or dropping insurance may appear to offer short-term savings, such decisions can expose drivers to significant financial and legal risks. The trend nevertheless reflects the growing pressure consumers feel as transportation expenses rise.
Americans Are Holding on to Vehicles Longer
The cost of purchasing a new vehicle is also influencing consumer behavior.
The report found that 64% of drivers plan to keep their current vehicle until it becomes too expensive to repair. This trend is contributing to the continued aging of the U.S. vehicle fleet, with the average age of vehicles on American roads reaching an all-time high of 12.8 years.
For many households, keeping an older vehicle is viewed as a more affordable alternative to purchasing a new car. However, older vehicles can bring higher maintenance costs and more frequent repairs, creating a difficult balance between avoiding a major monthly car payment and paying for unexpected mechanical problems.
The high price of new vehicles has also encouraged consumers to delay purchases. As new car prices approach $50,000, many drivers are choosing to keep their existing vehicles for longer periods.
Fuel Costs Are Changing Driving Habits
Fuel prices remain another major source of concern for American motorists.
The report found that 61% of drivers are extremely or very concerned about rising fuel costs. More than half, or 57%, said they are driving less often in an effort to save money.
For some consumers, this means combining trips, reducing recreational driving, using public transportation when available or working remotely more frequently. Others may be limiting long-distance travel or changing their daily routines to reduce fuel consumption.
The findings suggest that the financial pressure associated with driving is influencing not only vehicle purchasing and insurance decisions but also how frequently Americans use their cars.
The Total Cost of Driving Is the Bigger Concern
The Zebra’s report emphasizes that auto insurance cannot be viewed in isolation. The real cost of driving includes multiple expenses, including insurance premiums, fuel, vehicle payments, maintenance, repairs, registration and depreciation.
When these costs are combined, transportation can represent a significant portion of household spending. The burden is particularly challenging for lower-income drivers, who may have fewer alternatives to personal vehicles for commuting, work and essential daily activities.
The Zebra’s ZPPI metric is designed to provide a broader view of affordability by measuring insurance costs relative to income rather than focusing solely on the dollar amount of a premium.
Nationally, auto insurance accounts for approximately 2.55% of annual income. However, the share can rise to 5% in Louisiana, illustrating how insurance costs can affect households differently depending on regional pricing and income levels.
Shopping Around Could Help Drivers Save
Although many drivers are facing higher costs, the report stresses that insurance prices can vary significantly between providers. Comparing quotes, reviewing coverage levels and speaking with insurance professionals may help consumers find more affordable options.
A driver’s location, credit history, driving record, vehicle and insurer can all influence the final price of coverage. As a result, the most affordable option for one motorist may not be the same for another.
The Zebra recommends that consumers regularly compare insurance options and evaluate whether their current coverage still meets their needs. Drivers may also be able to reduce premiums by adjusting deductibles, reviewing optional coverage or taking advantage of available discounts, depending on their circumstances.
“It’s more important than ever to shop around, speak to an agent and find the right coverage for your needs,” Seider said.
Survey and Rate Data Provide Broader Picture
The 2026 report is based on a survey of 1,500 U.S. auto owners conducted in April 2026. The survey data was combined with insurance rate information generated through The Zebra’s Dynamic Insurance Rating Tool, known as DIRT.
The tool analyzes approved rate filings across approximately 34,500 ZIP codes in the United States, providing data on insurance pricing trends across different markets.
By combining consumer responses with insurance rate data, the report aims to show both the financial reality of auto insurance and how drivers are responding to broader transportation costs.
The findings indicate that affordability remains a major concern even as insurance rate growth begins to slow. For many Americans, the challenge is not simply the cost of insurance itself, but the combined expense of keeping a vehicle on the road.
With vehicle prices, fuel costs, repairs and insurance all affecting household budgets, drivers are increasingly being forced to make difficult choices. Some are keeping older vehicles longer, others are driving less and many are considering changes to their insurance coverage.
The overall message from the report is clear: The cost of driving remains a significant financial challenge for American consumers. While rates may be stabilizing nationally, the impact of auto insurance continues to depend heavily on individual circumstances, including location, income, credit history and the insurer a driver chooses.
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