Here’s why your car insurance is so high and what you can do to lower your rates.
Did something recently make you ponder, Why is my car insurance so high? If so, you’ve come to the right place.
In this article, you’ll find information on the most common reasons why auto insurance is so expensive, including:
You’ll also learn what you can do to lower your car insurance costs.
Several factors determine what you pay for car insurance at any given time.
You can control some of these rate factors — like your car’s make and model or your driving history. You can’t control others, though — like your age or even nationwide increases in claim frequency or medical costs.
Regardless, if you just looked at your bill and it’s got you wondering, Why did my car insurance go up? — here are some of the most likely reasons.
One reason your car insurance is so high may be your age. Especially if you’re under 25 or over 65.
Younger drivers pay more for car insurance than older drivers. Teen drivers, in particular, pay more for auto coverage.
Why? Drivers between the ages of 16 and 19 are three times more likely to get into accidents. Teen drivers are more likely to be involved in fatal accidents, too. Because of this, car insurance companies charge higher rates to teenagers.
In fact, most companies charge young drivers higher car insurance rates until they turn 25. After that, their rates level off until they turn 65. That's right — senior drivers who are 65 and older pay more for auto insurance because of:
Bad credit can make your car insurance go up, too.
The reason: studies have shown that people with poor credit scores file more claims and get higher payouts. As a result, people with bad credit often pay more for car insurance than people with good credit.
If you’re questioning why your auto insurance is so high, you’ve also got to look at where you live.
The state and city you call home plays a major role in what you pay for car insurance coverage. This is because insurers consider all of these geographical factors when pricing a plan:
Your vehicle also may be to blame for your expensive car insurance.
So, if you drive an expensive car, it’s likely your car insurance will be expensive, too.
This is true whether you have a classic car, a sports car or a luxury car. These vehicles usually cost more to repair, so companies charge higher car insurance rates for them.
Car insurance companies also look at a vehicle's safety record, as well as how likely it is to be stolen when pricing a policy. If your vehicle does poorly on safety tests or has known malfunctions, expect to pay more for auto insurance coverage. Expect the same if your car make or model is frequently stolen.
Another possible reason your car insurance is so high: you’re a bad driver or you have a bad driving record.
Good drivers pay less for auto insurance because they're less likely to file a claim. But if you get a lot of tickets or get into a lot of accidents, your insurer may label you a high-risk driver. And high-risk car insurance costs substantially more than basic coverage.
Not sure if you’re a high-risk driver? Contact your insurance company and ask. You can ask your state's DMV for a copy of your driving record, too. Heads up: citations for things like speeding or reckless driving usually stay on your record for three to five years.
Your car insurance may have gone up because you’ve filed too many claims.
Claims cost insurance companies a lot of money, so it makes sense they pass along some of that cost to their customers. Especially their customers who file a lot of claims.
If you're worried your insurer will jack up your auto insurance rates for filing too many claims, pay for minor car accidents out of pocket whenever possible.
One more potential reason your car insurance is so expensive: you have more than the state minimum level of coverage.
Every state except New Hampshire requires its drivers to buy at least a minimum amount of these three types of coverage:
If you get more than your state’s minimum level of coverage, you’ll pay more for car insurance than you would if you stuck to the basics.
Does your policy have a low deductible? If it does, that could be why your car insurance is so high. After all, having a low deductible usually means having a high premium, or monthly payment.
Still, it's tempting to go with a low deductible when you buy car insurance. But a low deductible can be expensive in the long run. If you think your insurance premium is too high, consider raising your deductible. It will lower your monthly bill.
Just be aware that you’ll pay higher out-of-pocket costs if you get into an accident with a high deductible.
If you bought the first policy you came across, you’re probably paying more for car insurance than you should.
Shopping around and comparing quotes from multiple companies is the key to getting the best car insurance rates. Why? Because every insurer determines rates in a different way.
Ignoring car insurance discounts can cause your bill to be a lot higher than it would be otherwise.
That’s too bad, because insurers offer tons of different discounts these days. A few examples:
You’re not the only person asking themselves, Why is car insurance so high?
Reports suggest that car insurance companies across the board are raising rates because they’re seeing diminishing financial returns due to factors like:
Think your car insurance is too expensive? Do the following and it could lower your rates:
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