Why commercial auto insurance keeps getting more expensive

Commercial auto insurance keeps getting more expensive because the cost of injury claims, especially lawsuits over serious crashes, has grown faster than the premiums charged to cover them. AM Best reported that U.S. commercial auto posted an underwriting loss for the 14th consecutive year in 2024, and the line was still in the red in 2025. Carriers respond with rate increases, tighter underwriting and higher deductibles, which is what you see at renewal.

What the loss data shows

AM Best's September 2025 market segment report on commercial auto, "Stuck in Reverse," is the clearest picture of the problem. As reported by Carrier Management and Risk & Insurance:

• The line lost about $4.9 billion on an underwriting basis in 2024, its 14th straight year of underwriting losses, against about $5.5 billion in 2023.
• Liability coverage lost about $6.4 billion in 2024. Physical damage, the coverage on the vehicles themselves, earned about $1.5 billion.
• The liability combined ratio was 113 in 2024. A combined ratio above 100 means claims and expenses exceeded premium, and liability has been above 100 every year since 2014.
• Fourteen of the 20 largest commercial auto writers posted combined ratios above 100 in 2024.
• AM Best estimated commercial auto liability reserves were short by $4 billion to $5 billion, so insurers had not yet booked all the cost of past accidents.
• The line has had 14 consecutive years of rate increases, mostly from the upper single digits to double digits, and pricing gains continue to lag severity trends.

The next year was better, but not good. Reporting on AM Best's 2025 results (Insurance Journal, July 2026) puts the 2025 commercial auto underwriting loss at about $1.9 billion, with insurers booking another $2 billion in reserve deficiencies. AM Best said physical damage remained profitable while liability losses "keep mounting," and its outlook is negative. Commercial auto liability direct premiums grew by double digits in the first nine months of 2025 (Carrier Management, December 2025),.

The five forces behind the rates

1. Claim severity. Risk & Insurance, reporting on the AM Best study, said claim severity has averaged 8 percent annual growth, more than double the 3 percent economic inflation rate, and that average liability severity has more than doubled over nine years. Severity is the average cost of a claim; it matters more than frequency here.

2. Litigation and nuclear verdicts. Social inflation is the term for claim costs rising faster than general inflation because of jury attitudes, attorney advertising, case strategy and litigation finance. Marathon Strategies counted 135 nuclear verdicts of $10 million or more in 2024, a record, and reports the number is up 309 percent since 2020. AM Best's report notes that claims stay open longer and that more now exceed the typical $1 million umbrella limit. See nuclear verdicts and social inflation: why liability costs keep rising, third-party litigation funding and liability insurance and trucking verdicts and the cost of auto liability.

3. Vehicle size and crash severity. The Insurance Institute for Highway Safety reports that 5,340 people died in crashes involving large trucks in 2024, about 62 percent of them occupants of passenger vehicles. Where a heavy vehicle hits a smaller one, injuries and claims are larger. That is true even when the truck is a plumber's service body, not a tractor-trailer.

4. Repair and replacement costs. AM Best's report points to higher replacement costs from vehicle technology and rising repair labor costs. Sensors, cameras and advanced driver-assistance equipment are built into bumpers, mirrors and windshields, so a minor collision costs more to fix than it did a decade ago. Physical damage has still been profitable for carriers, but repair inflation is a cost pressure there as well.

5. Reserve and rate catch-up. Reserves are insurers' estimates of what they still owe on past accidents. When those estimates prove too low, the difference lands on current results as adverse development, and Risk & Insurance's account of the AM Best report puts about $2.7 billion of it in accident years 2021 and later. Insurers then price new policies partly to repair old losses. The mechanics are covered in loss reserves and reserve development: why they matter to buyers. The cycle of tightening and softening is explained in hard and soft insurance markets: what the cycle means for buyers.

What the combined ratio means for your renewal

Here is a hypothetical to make the arithmetic concrete. Say a carrier collects $100 of premium on a block of fleet policies and pays $113 in claims and expenses, which is a 113 combined ratio. To break even, the carrier needs about 13 percent more premium on the same business before any growth in claim costs. If claim costs also grow 8 percent, the carrier would need roughly 22 percent more (1.13 times 1.08) to break even next year. Those are simplified illustrations, not market prices; real rate filings also count expenses, investment income and reserve changes. The point is that carriers do not need to be greedy to produce double-digit increases; the math from a long streak of losses delivers them. See the combined ratio: how insurers make (and lose) money on underwriting for the full mechanics.

The market-wide trend is the backdrop. Your own price is set by your account: vehicle types, radius, garaging territory, drivers, losses and controls. Two businesses in the same city can see very different renewals in the same market.

What you can control

Rates are not the only variable. Carriers are looking for evidence that a fleet manages its risk. In rough order of effect:

1. Driver selection and monitoring. Run motor vehicle records at hire and annually, set written criteria and apply them. Driver selection, MVRs and your commercial auto premium.
2. Telematics and cameras. Forward-facing and driver-facing cameras can exonerate a driver in a disputed crash and coach risky behavior. telematics and dashcams in commercial auto insurance.
3. A real safety program. Training, a vehicle inspection routine, accident review, and consequences. building a fleet safety program that insurers notice.
4. Clean, early claim reporting. Report accidents promptly, preserve footage, and cooperate with the adjuster. Late reporting makes investigation harder and can put coverage at risk. See what to do after an accident in a company vehicle.
5. Vehicle and limits fit. Remove vehicles you do not use, fix garaging addresses and radius, and make sure every driver is listed.
6. Higher deductibles with open eyes. A larger deductible lowers premium. AM Best's report notes that when policyholders raise deductibles or drop optional physical damage coverage, carriers lose a cushion against liability losses, so ask what credit the carrier really gives. Model the trade with the deductible and retention break-even calculator.
7. Shop with a complete submission. Loss runs, driver lists, vehicle values, a safety narrative. A carrier that sees a controlled account can differentiate it from the average. The ranking of who writes the most is in the largest commercial auto insurers.

Where to expect pressure next

AM Best's outlook for commercial auto liability remains negative, citing claim severity, escalating legal expenses and new forms of litigation. Expect carriers to keep pushing rate on accounts with losses and to ask more questions about driver management. Accounts with clean drivers and documented controls are the ones carriers want, and they are the ones with leverage. Anyone with a recent large claim should expect scrutiny, and should ask the broker early about options such as a higher retention, a program with a captive, or a different carrier structure.

For a general view of premium drivers across all lines, see why your business insurance premium went up. For the form and structure of a commercial auto policy, start with commercial auto insurance: what it covers and what it leaves out.

Key takeaways

• Commercial auto lost about $4.9 billion on an underwriting basis in 2024, its 14th straight year of losses, and about $1.9 billion in 2025 (AM Best), with liability the problem and physical damage profitable.
• Severity, not frequency, is driving the pain: litigation, large verdicts, repair costs and heavier crashes have all raised the average claim.
• Carriers have raised rates for years and still lag the trend, which is why increases continue even for clean accounts.
• You cannot change the market, but you can change how your account looks: drivers, telematics, safety, claim reporting and a complete submission.
• Be cautious about cutting coverage to save premium. Higher deductibles help, but a smaller liability limit raises your uninsured exposure to a verdict.