8 Reasons Why Your Car Insurance Costs Are So High (Updated 2022)
Updated June 15, 2022
Are your car insurance premiums higher than you’d like? No one likes to overpay for an insurance policy. If you’re confused about your high rates, read on to understand more about how insurance companies decide the cost of car insurance. That way, you can do what you can to lower your own car insurance rates.
Some of the factors raising your car insurance premiums are out of your control. Others are in your power to improve. But here’s one thing you can do today with minimal effort: spend a few minutes comparing car insurance quotes online.
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.
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% of drivers on the road are uninsured, 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 it’s common to have higher premiums 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.
This is a big one. Insurance companies look closely at your driving history. And if they see a DUI, speeding tickets, an at-fault accident, or other traffic 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.
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 and pay astronomical rates compared to more mature drivers in the same location. But drivers in high school or college who earn a GPA of 3.0 or higher typically qualify for good student discounts.
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 than cars with lower safety ratings.
When you’re buying collision coverage, the value of your car will be directly related to your insurance costs. 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, so you might pay higher rates if you drive one of these.
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 consistently.
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. This could include uninsured motorist coverage or roadside assistance. Here are a couple of ways you might be overinsured:
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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.
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 alone 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.
Many car insurance companies don’t do a great job of charging infrequent drivers lower rates than they would daily commuters. Insurance providers are reluctant 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 nonowner policy. Telematics programs can also prove to insurance companies that you don’t drive too often.
If you also have life insurance, renters insurance, homeowners insurance, or any other type of coverage, you can usually leverage a bundling discount by signing multiple policies with the same insurance agency. Doing so will almost always help you save on your auto insurance policy.
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 your savings in an emergency. If you’re short on cash, you may need to stick with a lower deductible, as the decrease in rates might not be worth it.
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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.
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. The sooner you can pay down debt, the more confidence insurance companies will have in your financial reliability.
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 is to ask your insurance provider about defensive driving courses that will qualify you for a discount and complete them as soon as you can.
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.
Paying the bill for your whole policy term up front instead of monthly and signing up for paperless billing will typically earn you a discount from most insurance companies.
Drivers should always be on the lookout for a better deal and willing to jump ship for better car insurance rates. Comparing quotes with an online tool is the name of the game, saving you hours of soliciting your own insurance quotes by doing it for you in just a few minutes.
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Your driving record, credit score, location, age, and car are the most important factors that set your car insurance rates. Other factors include the type of coverage you need, whether there’s been a gap in your insurance history, and whether you qualify for a 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 lower 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 leaves something to be desired, a defensive driving course can help relieve your insurance company’s concerns. Take a look at the type of coverage you have to see if you can trim your coverage limits, along with your deductible. Ask an insurance agent what you can do to earn lower rates.
Different insurance companies will charge the same driver different rates. So to know if your insurance premiums are higher than they need to be, you’ll want to get insurance quotes from as many companies as you can.
Data scientists at Insurify analyzed over 40 million auto insurance rates across the United States to compile the car insurance quotes, statistics, and data visualizations displayed on this page. The car insurance data includes coverage analysis and details on drivers' vehicles, driving records, and demographic information. With these insights, Insurify is able to offer drivers insight into how their car insurance premiums are priced by companies.
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.Learn More