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8 Reasons Why Your Car Insurance Costs Are So High (Updated 2022)

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Charlie Mitchell

By: Charlie Mitchell

Edited by Jackie Cohen | Reviewed by licensed insurance agent, Amber Benka

Last Updated June 15, 2022

Why you can trust Insurify

Insurify partners with top insurance companies and is a licensed agent in all 50 states. However, the insurance experts writing our content operate independently of our partners. Check out reviews from over 3,000 satisfied customers, how we make money, our data methodology, and our editorial standards.

Are your car insurance premiums higher than you’d like? It totally stinks to feel like you’re overpaying for an insurance policy. If you’re confused about your high rates, read on to understand more about how insurance companies dictate the cost of car insurance so you can do what you can to lower your own car insurance rates.

Some of the factors raising your car insurance premiums will be out of your control. Others are in your power to improve. But here’s one thing you can do today with minimal effort: log on to Insurify and spend only a few minutes answering a brief questionnaire. Then, in an instant, you’ll be served with a list of the best car insurance quotes to compare. It’s totally free—try it!

See More: Best and Worst Sites to Compare Car Insurance

Quick Facts

  • Car insurance companies set rates based on driving record, credit score, age, the car you drive, the coverage you need, and more.
  • If you have a bad driving record, taking a defensive driving course is a great way to lower your rates.
  • Comparing insurance quotes is a surefire way to find lower premiums quickly.

1. Your ZIP Code

The first thing insurance providers want to know about you before giving you an auto insurance quote is where you live. Take Michigan, for example, where every driver is required to carry personal injury protection (PIP) coverage, 20 percent of drivers on the road are uninsured motorists, and fraud is rampant. Michigan auto insurance rates are the highest in the country.

You might live in a densely populated state, like Massachusetts or California, where high premiums are common in cities. Insurance companies evaluate rates of vehicle theft and car accidents in your ZIP code to determine if you’re at a higher risk of filing an insurance claim. Rural states like Maine and New Hampshire tend to benefit from low insurance premiums.

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2. Your Driving Record

This is a big one. Insurance companies take a close look at your driving history, and if they see a DUI, speeding tickets, an at-fault accident, or other traffic violations and moving violations, you’ll get flagged as a high-risk driver. If you can steer clear of accidents and violations for five years, you’ll have a clean driving record and, hopefully, the low rates that come with it.

3. Your Demographic Profile

Just like it would be foolish to move just to save money on auto insurance, you definitely shouldn’t get married just to lower your premiums, even though marital status is a factor that insurance providers consider when setting your rates. Some demographic traits will earn you higher premiums—men are charged slightly higher rates than women, for example.

Age is another influential factor. Young drivers under 25, and especially teenage drivers, are considered high-risk drivers and pay astronomical rates compared to more mature auto insurance customers in the same location. Keep in mind: younger drivers who are in high school or college and earn a GPA of 3.0 or higher typically qualify for good student discounts.

4. Your Vehicle

The type of car you drive has an important bearing on your auto insurance rates. New cars have a much higher cost of insurance than older ones. Safer cars with updated safety features also get better rates on liability insurance and personal injury protection coverage than cars with lower safety ratings.

When you’re buying collision coverage, the value of your car will be related directly to your cost of insurance. If your car is expensive to repair or replace, you’ll pay higher premiums. When it comes to comprehensive coverage, some cars are stolen more frequently than others, and if you’re driving a vulnerable car with limited security options, you might pay higher rates, too.

5. Your Credit History

In general, poor credit could hurt your auto insurance premiums. Some states disallow insurance companies from taking your credit score into account, but most of them will use your credit score as a proxy to determine your financial reliability and guess whether you’ll pay your car insurance premiums on a consistent basis.

6. You’re Overinsured

There’s a chance your car insurance rates are high because you are paying for a full-coverage policy or other types of coverage that you don’t need, such as an add-on like uninsured motorist coverage or roadside assistance. Here are a couple of ways you might be overinsured:

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You Have Too Much Coverage

Why is my car insurance so expensive?

Details about your demographics and your driving history may impact the cost of your car insurance policy. If you have a spotty record or are very young, you should expect to pay more in premiums.

Needless to say, high coverage limits translate to higher insurance rates. If you have limited assets, you might not need high liability coverage limits. You may also have a full-coverage policy when liability insurance only would suffice. If you drive an old car, it usually makes sense to drop full coverage for a lower rate.

Reducing your coverage is a delicate decision because while it can save money in the short term, it could leave you vulnerable to huge losses in the case of an accident. Talk to your insurance agent before making a move that dramatically reduces your coverage, especially if you drive frequently.

You’re Paying for More Miles Than You Drive

Many car insurance companies don’t do a great job of charging infrequent drivers lower rates than they would daily commuters. Insurance providers are loath to do this because people tend to lie about how much they drive when they know it will save them money. But some car insurance companies go out of their way to reward infrequent, low-mileage drivers.

Metromile is an example of a company entirely geared toward reducing insurance premiums for low-mileage drivers, offering pay-per-mile policies. If you drive sometimes but don’t own a car yourself, consider a non-owner policy. Telematics programs can also prove to insurance companies that you don’t drive too often.

7. You Missing Out On Bundling

If you also buy life insurance, renters insurance, homeowners insurance, or any other type of insurance coverage, you can usually leverage a bundling discount by signing multiple policies with the same insurance agency. If you aren’t already bundling, doing so will almost always help you save on your auto insurance policy.

8. Your Deductible

A quick way to lower your car insurance premiums is to take a higher deductible on your current policy. There will be some difference, but it may be marginal. Make sure you can pay the new deductible out of a savings account in an emergency if you have to. If you are short on cash, a lower deductible may be necessary to get out of a tight spot and not worth the decrease.

See More: Cheap Car Insurance

How to Lower Your Car Insurance Rates

There are a bunch of ways to save money on your auto insurance policy. Some require more effort than others. Keeping your eye on a few of these will help reduce your rates over time.

Keep a clean driving record and credit score.

Insurance companies love safe drivers. The longer you can go without at-fault accidents, speeding tickets, and especially DUIs, the lower your car insurance premiums will be over time. Ditto on your credit score. As soon as you can pay down that debt, insurance companies will have more confidence in your financial reliability.

Take a defensive driving course.

If you have a poor driving history, you can still show car insurance companies that you’re committed to being a good driver and cultivating safe driving habits. One of the most effective ways to do this? Ask your insurance provider if your insurance provider has defensive driving courses that will qualify you for a discount, and complete it ASAP.

Check your coverage.

Make sure that your deductible is right for your budget because a higher deductible can lower your monthly rate, and if you’ve changed cars or sold a house recently but haven’t reviewed your coverage limits or types of coverage on your policy, you may want to. A call to your insurance agent can yield some great advice and help you save money.

Pay upfront and go paperless.

Paying the bill for your whole policy term instead of monthly and signing up for paperless billing will typically earn you a discount from most insurance companies.

Shop around, then shop around some more.

Drivers should always be on the lookout for a better deal and willing to jump ship for better car insurance rates. Comparing quotes is the name of the game. And Insurify is the best quote-comparison tool on the internet, saving you hours of soliciting your own insurance quotes by doing it for you in just a few minutes. Compare quotes with ease on Insurify.

See More: Best Car Insurance Companies

Frequently Asked Questions

  • Your driving record, credit score, location, age, and the car you drive are the most important factors that set your car insurance rates. Others include the type of coverage you need, whether there’s been a gap in your insurance history, and whether you qualify for that particular insurance company’s discounts.

  • Unfortunately, age is a strong predictor of the average cost of car insurance, as is your driving history. Usually, these can’t be altered without the simple passage of time. But there are always ways to ratchet down your rates, and if you’re not comparing quotes regularly, you can’t be sure you have the best car insurance rates to begin with.

  • If your driving record stinks, a defensive driving course can help neutralize your insurance company’s concern. Take a good look at the type of coverage you have to see if you can trim your coverage limits, along with your deductible. Ask your insurance agent what you can do to earn lower rates.

  • Different insurance companies will charge the same driver wildly different rates. So to know if your insurance premiums are higher than they need to be, you’ll want to solicit insurance quotes from as many companies as you can. Luckily, Insurify does this for you, totally free, and it only takes a few minutes. Try it out!

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  • The car insurance quotes displayed are based on an analysis of Insurify’s database of over 40 million quotes from 500 ZIP codes nationwide. To obtain representative rates, Insurify’s data science team performs frequent comprehensive analyses of the factors car insurance providers weigh to calculate rates including driver demographics, driving record, credit score, desired coverage level, and more.

    Insurify’s analysis also incorporates the Insurify Composite Score (ICS) assigned to each insurance provider. The ICS is a proprietary rating that weighs multiple factors reflecting the quality, reliability, and health of an insurance company. Ratings used to calculate the ICS include Financial Strength Ratings from A.M. Best, Standard & Poor’s, Moody’s, and Fitch; J.D. Power ratings; Consumer Reports customer satisfaction surveys and customer complaints; mobile app reviews; and user-generated company reviews. 

    With the above insights and ranking methods, Insurify is able to offer car insurance shoppers insight into how various insurance providers compare to one another in terms of both cost and quality. Note, actual quotes will vary based on unique attributes including the policyholder’s driver history and their garaging address.

Charlie Mitchell
Charlie Mitchell

Insurance Writer

Charlie Mitchell is a journalist, researcher, and writer specializing in personal finance subjects. He holds a degree from Middlebury College. His work can be found in Vox, Mother Jones, The New Republic, and other publications. Charlie uses his expertise in home, renters, and auto insurance subjects to help inform people to make better financial decisions. Connect with Charlie on LinkedIn.

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