Why Is My Car Insurance So High? (2024)

Insurance rates soared in 2023 as climate disasters, rising repair costs, and more severe car accidents meant increased claims payouts for insurance companies. Car insurance rates already vary greatly because age, ZIP code, credit history, driving record, and other factors affect auto premiums. Those national and individual factors can lead to more expensive rates.

Right now, U.S. drivers pay an overall monthly average of $153 for car insurance, according to Insurify data. People opting for the cheapest minimum insurance coverage pay as little as $16 per month.

Comparing car insurance quotes from multiple companies could help you find better-than-average insurance rates.

Factors that affect your car insurance premium

Car insurance companies base premiums on multiple rating factors, including individual driver profiles — to estimate your risk level — your age, ZIP code, vehicle type, driving record, and more. These are some common factors insurers consider when setting rates.

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Age

More experienced drivers pay lower car insurance rates than young drivers. The crash rate for teen drivers aged 16–19 is nearly four times the rate for drivers 20 and older, according to the Insurance Institute for Highway Safety (IIHS).^[2] Crash rates are lowest for people in their 60s, and that’s typically when you get the cheapest rates.

Here’s an example of average monthly quotes for liability-only insurance by age.

Location

The annual national average for full-coverage car insurance is $2,422, but people in some states pay up to 67% more than that. New York, Nevada, and Florida are the three most expensive states to buy car insurance, according to the latest Insurify auto insurance report.

Factors like population density, regional increases in severe accidents, vehicle theft, vandalism, and damaging weather events can lead to rising rates. Rampant insurance fraud contributed to soaring insurance rates in Florida in 2023.^[3]

Where you live in the state and local population density can also affect premiums. In New York, drivers in Staten Island pay an average of $449 monthly for full coverage, while people living in the less densely populated city of Rochester in upstate New York pay $204 per month.

Driving record

Your driving record is one of the most critical factors in determining your car insurance rates. If you have a clean driving record, you’ll likely pay significantly less than drivers with traffic violations or accidents on their records. Car insurance companies tend to charge more if your driving habits indicate you could be a high-risk driver.

Drivers with a DUI pay the highest insurance rates, on average. COUNTRY Financial, the cheapest insurer for drivers with a DUI, charges $26 per month for liability coverage. By comparison, the company charges drivers with a clean record just $16 per month for liability insurance.

Drivers with at-fault accidents experience rate increases of about 26%, according to Insurify data. Depending on your insurance company, you could face a premium surcharge every year when your policy renews, for three to five years. Some insurers offer accident forgiveness coverage for your first car accident.

Speeding tickets can also increase your premium, but how much of a spike you’ll see depends on your overall record, location, and insurance company. The following table shows the average monthly liability-only rates top insurers charge compared to their rates for drivers with clean records.

Make and model of your car

The car you drive can affect your auto insurance rates significantly. Insurers consider car and repair costs, risk of theft, and overall safety when quoting premiums, according to the Insurance Information Institute (Triple-I).

For example, theft rates and repair costs are higher for luxury vehicles compared to those for a modest sedan, according to Triple-I. A luxury vehicle may also be more likely to be the target of vehicle thieves.

Insurers also consider safety when setting rates. The Insurance Institute for Highway Safety named the Subaru Forester and Outback Top Safety Picks in 2023, and those cars are the cheapest to insure, Insurify data shows.

Choosing a safe, reasonably priced, and easily repaired vehicle can help reduce your premium. Right now, these are the 10 cheapest cars to insure.

Economic factors leading to higher car insurance rates

Auto insurance companies continue experiencing multi-billion-dollar losses, which peaked in 2022 and dropped slightly in 2023, global credit rating agency AM Best reports. Many insurers increased premiums at the expense of customer satisfaction, according to consumer insights agency J.D. Power.

Numerous reasons, from rising vehicle prices to costly natural disasters, are behind these losses and higher rates.

High maintenance and repair costs

Rising repair costs have affected insurance rates significantly, but several elements are contributing to those costs.

Though auto insurance claim frequency has decreased since the pandemic, claim severity has increased dramatically, according to Triple-I. That’s at least partially due to changing driving patterns, including more incidences of distracted driving.

Cars are more expensive to repair due to the rising cost of auto parts and labor, Triple-I says. The sensors and cameras in newer vehicles can complicate what might have been a simple repair before. The average estimate for a drivable, front-end claim in 2022 was $3,706, up 39.4% from 2019, according to insurance industry analyst CCC. It costs about $1,000 less to repair the same damage in vehicles more than 7 years old.

Expensive car prices

The average price for new cars reached a 10-year peak in December 2022, but vehicle affordability is improving, according to industry analyst Cox Automotive. Prices dropped by 2.2% year-over-year in February, Kelley Blue Book says.

The number of median weeks of income needed to purchase the average new car declined by 6.2% in March to 36.9 weeks, according to Cox Automotive. Prices remain unaffordable for many consumers, and low used-vehicle stock further limits affordable options, according to KBB.

Costly climate catastrophes

Changing weather patterns and population growth in vulnerable areas are costing insurers billions.

U.S. insurance companies covered a record $60 billion in losses from strong winds, heavy rain, hail, and tornadoes in 2023, according to reinsurance broker Gallagher Re. The U.S. experienced 26 “billion-dollar disaster events” in 2023 related to storms.^[4]

Claims related to severe weather have led to major insurers raising prices, pulling back coverage, denying renewals, or ceasing sales, especially in high-risk states like Florida, Louisiana, and California.

Legal system abuse

In some states, policyholders and their attorneys may abuse the legal system by intentionally increasing the time and cost of claims settlements, according to Triple-I. That contributes to rising costs for all consumers.

While insurance system abuse can include illegal actions, laws in some states make it easier to take advantage. Since 2019, 10 insurers who sold policies in Florida became insolvent due to the high cost of excessive litigation, according to Triple-I. Florida passed laws to reduce legal system abuse last year, and the state’s Department of Insurance has approved at least 15 new insurers to do business in the state since then.

How to lower your car insurance rate

Applying for discounts, paying your full premium up front, and increasing your deductible can help lower your rate. The following steps also could help you save a lot over time:

• 

  Maintain a clean driving record

  Practice safe driving habits and avoid speeding, tailgating, and hard braking. A clean driving record is the most effective way to get lower rates.

• 

  Bundle insurance policies

  If you purchase home or renters insurance in addition to auto insurance, bundling policies can save you a lot of money.

• 

  Improve your credit score

  Auto insurers in most states use credit history to predict your likelihood of filing claims, so having a higher credit score can secure lower premiums.

• 

  Compare car insurance

  Shopping around will help you find the best car insurance quote, especially as your needs change.

Why car insurance is so expensive FAQs