Why Is My Car Insurance So Expensive?
A variety of common elements might explain your high rates if your auto insurance is too costly. The following are some of the most typical reasons for excessively expensive insurance premiums: your age, driving history, credit history, coverage choices, and the vehicle you drive and where you reside.
If you’ve been in an accident and filed a claim, your auto insurance rates will go up. Anything that insurers can link to a higher chance of being in an accident and filing a claim is considered.
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Factors that can make car insurance expensive
Most insurance companies calculate premiums for each driver based on their likelihood of making a claim and the anticipated cost of that claim. If your insurer believes you are likely to file a claim, your rates will increase. There are a variety of elements that insurance companies consider while setting rates, but the most prevalent reasons why some drivers pay so much for automobile insurance are as follows.
Your insurance company
Rates differ considerably among insurance carriers, and you may be paying far more than you should if you get a policy from a high-cost insurer.
The typical cost of insurance among the top 10 insurers in the country is $500 for six months of basic coverage for a safe driver.
However, the same driver may cost as little as $300 from State Farm or as much as $600 from Allstate. That driver’s price would be dropped by 51% if you switched from Allstate to State Farm.
Shop around and get quotations from a number of insurance providers to guarantee you’re paying the lowest price available.
Age And Gender
Drivers under the age of 25 pay significantly more for auto insurance than older drivers — we discovered that young driver’s car insurance was 4.5 times more costly than mid-30s adult drivers’ car insurance. The majority of these high rates are attributed to the fact that young drivers are more likely to have automobile accidents that result in costly insurance claims.
Car insurance is typically more expensive for men. We discovered that a 20-year-old man pays around 16% more than a woman of the same age.
The pay gap decreases as drivers get older, and older women actually pay somewhat more than males of comparable age; however, by a few dollars each month.
How to save: Sharing a policy with an older family member is one of the most efficient methods for younger drivers to lower their premiums. We discovered that doing so can save you 58% on your overall insurance cost. Younger drivers may qualify for generous student discounts or attend extra training courses to help them pay less.
The cost of vehicle insurance varies considerably across the United States. Michigan residents may expect to pay six times more for coverage than those who live in Maine, the least expensive state for auto insurance.
There are a number of elements that influence insurance rates in a state, including minimum coverage requirements, the number of uninsured drivers, and even how well-maintained roads are.
The cost of insurance might vary from place to place. You may end up paying more if you live in a city with high rates of vehicle theft or narrow streets that result in a lot of accidents, than if you lived somewhere else.
For example, in San Francisco, we discovered a $618 difference between the cheapest and most expensive ZIP codes for auto insurance.
How to save: We don’t usually advise moving to a new location, city, or state just to save money on auto insurance. If you’re thinking of relocating, obtaining a few example insurance rates may be worthwhile to see how premiums vary in your new home.
Here are the different types of car insurance coverage.
The more car insurance you buy, the more you will have to pay. We found that a full coverage policy, which includes comprehensive and collision insurance, costs our profile driver 170% more in annual premiums than one with liability coverage only.
You can buy a plan that will cover the cost to fix your car if you have an accident. That way, you don’t have to pay anything if something happens.
You can get a policy that has low deductibles and high liability limits. This is more expensive than a policy with only liability coverage, but it is worth it for the extra protection. Our profile driver paid $1,053 more per year for this kind of policy when compared to one with just liability coverage.
How to save: You can choose how much house you want to pay. But if you are in an accident, it’s your responsibility to make sure it doesn’t go over the amount on your insurance.
Your driving record
Those who have had accidents or infractions in the recent past generally pay higher automobile insurance premiums than those with spotless records.
According to our study, adult drivers who have had a recent accident or violation pay 42% more for auto insurance than those without any accidents or infractions. The disparity in rates is due to the fact that these drivers are statistically more likely to be involved in a future accident.
Those who have been convicted of a major traffic infraction, such as driving under the influence (DUI), may be charged more for vehicle insurance due to SR-22 requirements.
This is a sort of insurance coverage required of high-risk drivers, in which their insurer must file an SR-22 form on their behalf to attest that they have adequate basic vehicle insurance.
How to save: Certain jurisdictions allow you to reduce the impact of a traffic violation on your driving record by completing a defensive driver training course. Unfortunately, the only method to temper your rates following an accident is to wait.
When insurance companies calculate rates, they consider the sort of vehicle you drive. Some vehicles are more likely to safeguard you in a collision, resulting in lower premiums. Meanwhile, a fast or powerful vehicle may encourage aggressive and reckless behavior, resulting in higher fines.
We discovered that larger, safer cars, such as minivans and tiny SUVs, tend to have the most affordable insurance, while smaller vehicles have surprisingly high rates. This may be due to the fact that smaller automobiles are more prone to damage in a collision.
Cars that cost more to insure are cars with the following qualities:
- Faster/more powerful
- More expensive
How to save: If you have a car that is very expensive, like a luxury vehicle, convertible or muscle car, you may be able to save money on your insurance if you switch cars.
When you are shopping for auto insurance, your credit score is taken into account by the companies. Poor credit or no credit history subjects drivers to greater premiums. The same logic applies here: Those with terrible credit are more likely to file a claim against their insurance than those with excellent credit, therefore they pay more for auto insurance.
However, several states, such as California, Hawaii, and Massachusetts, have prohibited the use of credit scores in determining automobile insurance premiums. Your rates will not be affected if you live in one of these states.
How to save: It’s possible that your credit score is suffering as a result of incorrect or fraudulent entries on your credit reports, so check your credit reports on a regular basis to ensure they’re correct. The most essential thing is to pay off your credit card and other obligations on time.