Midyear Market Outlook: Commercial Auto Insurance

Published in All Insurance Industry Insights on Wednesday, July 2, 2025 by Chris Fereday

The commercial auto insurance market continues to be challenging in 2025. Rates are rising, coverage is harder to find, and claim costs are going up across the board.

Why Rates Are Increasing

Premiums have been climbing for years. In late 2024, average commercial auto rates rose 8.9 percent, and so far in 2025, they are up more than 10 percent. Businesses with large fleets or poor loss history are seeing even higher increases.

One reason is the high cost of vehicle repairs. Newer vehicles may be safer, but they are also more expensive to fix. Tariffs on imported parts are also driving up repair costs and causing supply delays.

Legal Costs and Litigation

Legal expenses are another big factor. Social inflation and third-party litigation funding are leading to more lawsuits and higher jury awards, especially after severe accidents. Some verdicts now exceed $10 million. This is causing many insurers to reduce coverage or leave the commercial auto market entirely.

Unsafe Driving Habits

Unsafe driving is adding to the problem. Distracted driving, like texting or eating behind the wheel, continues to cause serious accidents. In 2023, distracted driving led to nearly 3,300 deaths and over 300,000 injuries. These types of claims often lead to higher premiums and possible legal issues for businesses.

What to Expect Next

Rates will likely keep rising through the rest of 2025. Insurers are tightening standards and being more selective about what they’ll cover.

Companies that invest in driver safety programs and accident prevention will be in a better position. Some may also benefit from exploring the excess and surplus market for added protection.

Need Help Navigating the Market?

At PDCM, we’re committed to helping you find the right coverage and supporting your business every step of the way. We’re proud to be your trusted insurance partner and are always here to offer expert guidance tailored to your needs.

We’re grateful for your continued trust in PDCM. If you have any questions or need further clarification, please contact Chris at 319-234-8888 or cfereday@pdcm.com

Written by
Chris Fereday