As economic uncertainty grows across the United States, many Americans are reevaluating their expenses, and for a surprising number, car insurance is on the chopping block. A recent survey conducted by Insurify reveals how inflation, rising interest rates, and the specter of a looming recession are driving consumers to make difficult financial decisions, including potentially reducing or even dropping car insurance coverage.
Americans Are Feeling Financial Pressure
The survey, which gathered responses from 1,001 U.S. residents aged 22 to 70, paints a sobering picture of current financial sentiment:
- 82% of respondents said they are preparing for a potential recession.
- 53% reported being worse off financially than a year ago.
- 30% said 2025 is the most financially stressful year of their lives.
These economic strains are reflected in consumer behavior, particularly regarding insurance.
Cutting Car Insurance to Save Money
According to the findings, 53% of car insurance policyholders have considered reducing their coverage due to financial concerns, and 18% have already done so. Furthermore, 23% of respondents with insurance have considered dropping coverage altogether — a move that could carry serious legal and financial consequences.
The average annual cost of car insurance in the U.S. is now $2,314, representing a 42% increase since 2022. Not surprisingly, 38% of respondents said they view car insurance as unaffordable, a sentiment particularly strong among Gen Z and those with household incomes under $50,000.
The Rise of Liability-Only Coverage
To manage costs, many drivers are turning to more basic policies. Between January and April 2025, 60% of insurance shoppers on Insurify sought liability-only coverage, compared to just 40% searching for full coverage. This trend marks a shift from 2020–2022, when only 44% opted for liability-only options.
Even individuals with good or average credit are leaning toward pared-down coverage, underscoring the widespread financial unease.
Home Insurance Also Under Pressure
The cost-cutting trend isn’t limited to car insurance. Nearly half (47%) of those with home insurance said they’ve considered reducing their coverage, and 15% have already done so. As extreme weather events become more common, experts warn that reducing home coverage could leave homeowners vulnerable to significant out-of-pocket losses.
Tariffs Add Another Layer of Economic Uncertainty
Tariffs are another source of concern for consumers. While only 32% of respondents expect tariffs to raise auto insurance prices, Insurify estimates that tariffs could increase the average policyholder’s premiums by approximately $100 annually. This is due in part to the higher cost of imported vehicle parts — expenses that are often passed on to consumers through premium hikes.
Overall, 67% of Americans believe tariffs will increase the cost of goods and services, including insurance, and 59% cited tariffs as one of their top economic concerns, second only to inflation.
Many Are Taking Action Ahead of a Potential Recession
Whether or not the U.S. is officially in a recession, most Americans are acting as if one is imminent. In fact, 82% said they are proactively preparing by:
- Cutting back on nonessential spending (47%)
- Seeking additional sources of income (33%)
- Delaying major purchases, like buying a new car (19%)
Stock market volatility and fluctuating investment returns also influence financial decisions. 65% of Americans with investments have adjusted their strategy due to recent market trends, including shifting funds into more stable assets.
How to Save Without Sacrificing Coverage
Despite the pressures, experts caution against dropping or reducing insurance coverage without fully understanding the potential consequences. Driving without insurance is illegal in nearly every state and can lead to severe penalties and financial risk.
There are alternative ways to save:
- Compare quotes regularly. About 68% of drivers have considered switching insurers, and roughly 30% have already done so.
- Increase deductibles. A higher deductible can lower monthly premiums.
- Ask about discounts. Bundling home and auto insurance, signing up for paperless billing, or maintaining a clean driving record can all reduce rates.
- Drive safely. A strong driving history remains one of the most reliable ways to keep insurance costs manageable.
Conclusion
Insurify’s latest survey highlights a critical tension in American households: the need to cut costs without sacrificing essential protections. While reducing insurance coverage may seem like an immediate way to save, it can expose individuals to greater long-term financial risks. Consumers are encouraged to explore all available options — including comparing quotes and leveraging discounts — before making changes that could leave them unprotected.
Get the latest insurance market updates and discover exclusive program opportunities at ProgramBusiness.com.