US car insurance pricing models are failing to keep pace with a sharp rise in vehicle customization, a reset used-car market and the spread of advanced driver assistance technology, widening the gap between insurer-assumed values and actual repair or replacement costs, according to a new JD Power Insurance Intelligence Report.
The scale of vehicle customization is stark. The Ford F-150 alone carries upwards of 100,000 unique build configurations, while more than 600,000 distinct vehicle configurations were sold in the US last year.
Many actuarial models still rely on shortened "squish VIN" data that cannot capture that complexity, JD Power said, leaving insurers unsure which specification they are actually covering.
Within a single trim, vehicle customization can push prices far apart: a 2024 Ford F-150 Lariat 4WD SuperCrew started near $69,630 with standard options but could reach $84,465 fully loaded, a spread of $14,835 on otherwise identical listings.
The findings land on an industry only just emerging from its worst underwriting cycle in a generation. US private auto insurers recorded roughly $17 billion in net underwriting losses in 2023 before returning toward profitability in 2024, S&P Global Market Intelligence estimated last year.
LexisNexis Risk Solutions has separately put premium leakage, the revenue lost when policies are mispriced due to incomplete data, at nearly $29 billion across US car insurance in 2021, affecting roughly 14% of all policies.
Repair economics have shifted just as dramatically. Data from CCC Intelligent Solutions' Crash Course report showed US collision claim severity jumped 56% between 2019 and 2024, almost triple the pace of the preceding five years, while parts prices climbed 41.8% over the same period.
Mitchell has reported that repairs on ADAS-equipped vehicles cost an average of $1,303 more than those without, a 37.6% premium driven by sensors, cameras and radar modules embedded across bumpers, mirrors, windshields and body panels.
The used-vehicle market has reset in parallel. Average used retail prices have climbed more than 20% over five years to $29,488, a trend JD Power attributes largely to pandemic-era production disruptions that constrained late-model supply.
That has upended the long-held assumption of roughly 20% annual depreciation, with the 2024 F-150 cited earlier now worth about $50,965, down 28% from MSRP versus a traditional model estimate near $55,165.
Electric vehicles add further strain, with JD Power projecting they will lose 59% of their value over five years, against a 46% industry average.
JD Power cautioned that AI-driven underwriting, claims and pricing tools amplify the need for clean inputs, warning that without precise configuration and valuation data, such systems risk reinforcing rather than correcting inaccuracies.
With average new-vehicle transaction prices now above $46,000, the firm said carriers should expect continued pressure on repair and replacement costs, arguing that access to full 17-digit VIN data, OEM build information and real-time valuation insights could help sharpen underwriting and improve claims severity forecasts.
