Auto claims and repair are becoming more complex and evolving with advanced vehicle technology, embedded sensors, calibrations, diagnostics and labor dynamics, according to a new report.

Although 2025 looks stable at a glance, the structure of auto insurance risk is changing, according to Crash Course 2026, an annual report recently published by CCC Intelligent Solutions. Among the changes: consumers are downgrading full coverage insurance to liability, the report notes.

“The share of repairable appraisals that now include a calibration increased by 6.5% in the fourth quarter alone,” said Kyle Krumlauf, director of industry analytics at CCC, referring to the fact that the fourth-quarter 2025 share was 28.3%, compared to 21.8% in fourth-quarter 2024.

Claims frequency across most physical damage coverages was steady last year, and overall personal auto underwriting performance improved, with combined ratios benefiting from rate actions in previous years, the report shows.

Still, Timothy Davis, president of SCA Claims, has seen the complexity of auto claims increasingly grow for some time. “What remains in the claims ecosystem is the more complex files,” Davis said, adding that many claims require advanced technical expertise, including claims related to vandalism, fuel contamination and fraud.

The CCC report cites Bureau of Labor Statistics data showing that affordability pressures continue to influence how consumers get involved in insurance and vehicle ownership. On average, the CPI Index has grown by 55.8% in the last six years, a graph in the report reveals.

Citing information from a second-quarter 2025 survey conducted by insurance agency Guardian Service, the CCC report notes several consumer impacts of economic stresses related to home- and car-buying decisions as well as insurance decisions:

• 35% delayed/canceled the purchase of a home (22%), car (8%) or both (5%).
• One in three said they would go without insurance temporarily to free up funds.
• One in five would rather have no insurance coverage than pay increasing monthly premiums.
• 29% canceled or downgraded insurance in the last year. Car insurance was the highest form of insurance canceled or downgraded at 15%, health at 8%, homeowners at 5%, pet at 4% and renters at 4%.

“Eight percent of customers have dropped full [auto] coverage to liability only, and consumers are not filing claims,” said Krumlauf. “A lot of that has to do with the fact that they may not have to because they have older vehicles, and so there’s just a lot less newer vehicles which have liens on them which are going to have full coverage.”

Krumlauf noted that there were 12 million fewer newer vehicles (aged six years or less) in operation in 2025 than in 2020, but roughly 27 million more older vehicles (seven years or older), bringing the total to 14.3 million vehicles.

The CCC report also calls out an October 2025 J.D. Power U.S. Auto Claims Satisfaction Study that found 7% of auto insurance customers say they have avoided filing a claim due to the fear of an increase in their rates. More than a quarter (26%) of auto insurance customers have $1,000 or more in deductibles, according to the J.D. Power study.

Lower-severity claims have been increasingly optional. Consumers with higher deductibles and other coverage downgrades are decreasing the filing of small claims in favor of out-of-pocket repairs. This is “reshaping the severity mix that remains in the system,” the CCC report states. “This behavioral shift has contributed, in part, to improved headline underwriting performance,” the report continues.

Davis also views some of the emerging trends as a function of affordability.

“I think that speaks to the economy,” Davis said. “When you look at the reduction of claims frequency with light claims, that’s because people are taking higher deductibles and it really speaks to the affordability crisis that consumers in America are dealing with right now.”

The P/C insurance industry’s combined ratio improved to 96.1 in 2025, while personal auto improved to 94.4, a 17.8% decrease from 2022 and a 10.5% decrease from 2023, according to the report.

Comprehensive volumes, first-party coverages that include fire, theft, vandalism, flood, hail, animal strikes, falling objects and glass-related claims, fell by 16.1% in 2025. That accounted for nearly 40% of the overall volume variance, the report shows.

Drivable vehicle claims flagged as total losses have been increasing since 2021. Drivable claims saw an increase of 3.5%, and drivable total losses were at a 4.2% increase.

While most major personal auto lines have seen claim frequency drift downward over the last two years, the report cites data showing that bodily injury is the clear outlier. Bodily injury paid claim frequency increased 11% over the last two years, with property damage liability claims decreasing 7.6% during the same period, according to the report.

The social inflation index rose from 4.4% in 2022 to 6.3% in 2023, suggesting that post-COVID affordability pressures, healthcare cost inflation, litigation intensity and evolving jury behavior played a part in the landscape of liability, the report shows.

The report also cites research from the Insurance Research Council showing the combined population of uninsured and underinsured people on U.S. roadways was 33.4% in 2023, a 10% increase since 2017.

“Insurance inflation has outpaced normal inflation and the amount of rate that was taken in recent years,” Davis said.

Method of inspection among repairable claims continues to shift to direct repair program and photo-estimating solutions, with DRP accounting for 46.7% and photo representing 26.4% of inspections in 2025.

Average repair costs are continuing to rise, primarily due to the increase in total part dollars and other miscellaneous costs that include items like diagnostics. In 2025, the average repair cost was between $4,500 and $5,000 compared to an average of almost $2,500 in 2010, according to the report.

A version of this article was previously published by Claims Journal. Martinez is a Claims Journal intern who is working on his bachelor’s degree in journalism at California State University, Long Beach. He expects to graduate in the Spring.