It comes as the FTSE 250 (^FTMC) firm reported lower first half profits. Operating profit slumped by 47% to £195.5m ($239m) in the first half of the year.
Pretax profit fell 32% to £178m, but that was still above the £155m forecast analysts anticipated.
The insurer said it would be lifting insurance premiums in response to the effects of soaring prices for everything from used cars to spare parts.
Chief executive Penny James said the insurer expects motor claims inflation to rise about 10% in 2022, adding "our rate increases ... need to reflect that". Rates rose by 15% in the first half.
Company shares sipped 0.5% in afternoon trade in London on Tuesday.
James added: "Through pricing action, steps taken in our garage repair network and through deployment of enhanced pricing capability, we have now returned to writing at our target margins based on latest claims assumptions.”
"We remain ahead of our long-term return on tangible equity target despite the challenges.. We are announcing an interim dividend in line with 2021 and are confident in the sustainability of our regular dividends as we look ahead to the full year and beyond."
The insurer maintained its interim dividend of 7.6 pence per share, and the CEO said that the company was "confident in the sustainability of our regular dividends".
Tuesday's results come after the firm already lowered its profitability forecast in July, saying the motor insurance market saw "significant" levels of claims inflation in the first six months of the year.
Direct Line said: "The UK motor market experienced significant levels of severity inflation in H1 2022. Market premium inflation has continued to lag behind the increases in claims inflation and we now estimate overall motor claims severity inflation for 2022 to be around 10%.
"As a result, our Motor current-year attritional loss ratio increased to 86.4%. We have taken action to mitigate the short-term impact of this and we have now returned to writing at our target margins based on latest claims assumptions."
In the last 12 months the cost of car insurance went up by 6%, with the average cost of a comprehensive insurance policy now at £554 — an increase of £32 over last year, according to figures from Confused.com.
Money-saving expert Martin Lewis advices customers to check different comparison sites to get the cheapest quotes as well as going through Direct Line directly or a broker.
Lewis said other perks to look for include, checking if you can get cash back benefits, shopping around for different insurance policies such as comprehensive and multi-car to find cheapest options, and checking whether your current insurer will price match so you can stay where you are.
Watch: How to save money on a low income