Why Is My Car Insurance So High?
Wondering why your car insurance is so expensive? Here are some reasons — plus what you can do to lower your rates.
Your car insurance premiums could be high for any number of reasons.
You can control some of the factors that often raise — or lower — the cost of auto insurance, such as:
You have less or no control over other factors that positively and negatively impact insurance rates, like:
Regardless, you will learn more about these and other common reasons why you may be paying too much for auto insurance in this article.
You will also learn how to lower your car insurance costs.
Possible reasons why your car insurance is so high
Several rate factors determine what you pay for auto coverage at any given time. One or more of them may be what’s causing your car insurance to be so expensive.
1. Your age
One reason your car insurance is so high may be your age — especially if you’re under 25 or over 75.
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 typically charge higher rates to teenagers.
In fact, most companies charge young drivers higher car insurance rates until they turn 25. After that, their rates tend to level off until they turn 75. That's right — senior drivers who are 75 and older may pay more for auto insurance because of:
- Diminishing cognitive capabilities.
- An increase in prescription medication use.
- A decrease in motor function.
2. Your credit score
Bad credit can make your car insurance go up, too.
Specifically, information from your credit report impacts your credit-based insurance score. And this auto insurance score, as some call it, can impact what you pay for car insurance.
If you have a high auto insurance score, which usually means you also have a high credit score, you’re more likely to pay a lower car insurance premium. If you have a low auto insurance score, and thus probably a low credit score, you’re more likely to pay a higher premium.
3. Where you live
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 each of these factors when pricing a plan:
- Number of claims in your area. If drivers in your neighborhood file more claims than average, insurance companies may believe you will, too.
- Crime rate. Are a lot of cars in your area stolen? Does a lot of vandalism occur? Is property damage common? Insurers often charge higher rates to people in high-crime neighborhoods.
- Density. Busy neighborhoods with lots of residents usually have more cars. More cars on the road usually means more accidents — and more expensive car insurance.
4. The type of car you drive
Your vehicle also may be to blame for your expensive car insurance.
Basically, 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 performs 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.
One aspect of the vehicle you drive that isn’t making your auto insurance expensive is its color. In particular, and contrary to popular opinion, red cars don’t cost more to insure.
5. Your driving history
Another possible reason your car insurance is so high: you’re a bad driver or you have a bad driving record.
Good drivers usually 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.
6. Your claims history
Your car insurance might 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.
7. Your coverage
One more potential reason your car insurance is so expensive is that you have more than the state-minimum level of coverage.
Every state except New Hampshire and Virginia requires drivers to buy at least a minimum amount of liability car insurance coverage. If you get more than your state’s minimum level of coverage, you’ll pay more for auto insurance than you would if you stuck to basic coverage.
8. Your deductible
Does your policy have a low deductible? If it does, that could be why your auto 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 auto 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 should lower your monthly bill.
Just be aware that you’ll pay higher out-of-pocket costs if you get into an accident and have a high deductible.
9. You didn’t compare quotes before buying a policy
If you bought the first policy you came across while looking for auto coverage, you’re probably paying more for car insurance than you should.
Shopping around and comparing quotes from multiple companies is the key to getting your best car insurance rate. Why? Because every insurer determines rates in a different way.
10. You didn’t check for discounts
Ignoring car insurance discounts can cause your premium to be a lot higher than it would be otherwise.
That’s too bad, as insurers offer tons of different discounts. A few examples:
- Student drivers with good grades qualify for discounts at most insurance companies.
- If you go accident-free for a set amount of time, you could nab a good driver discount.
- Do you belong to any clubs or organizations? Many insurers give discounts for that, too.
- Another common car insurance discount is tied to low mileage. In other words, if you don’t drive much, you might save some money.
How to lower your auto insurance costs
Is your car insurance too expensive? Doing some or all of the following could lower your premium.
Lower your car insurance rates by comparing quotes from different insurers
Bundle your coverage
One way to lower your car insurance rate is to bundle your auto policy with another type of policy from the same company. Our research shows you could save $600 a year or more if you bundle your car and home insurance policies with American Family, for example. Bundling your auto and renters insurance policies also could lower your overall costs.
Look for discounts
Another way to save money on auto insurance: see if you qualify for any other discounts from your current insurance company. See if you qualify for any discounts from other insurers, too.
Raise your deductible
Increasing your deductible could lower what you spend on car insurance, too. Before you take this route, though, make sure you can afford the higher out-of-pocket costs that might come along with it.
Drop some coverage
Decreasing your coverage may help cut your auto insurance costs as well. When should you consider doing this? One example is when you can’t afford full coverage. Another example is when you have more collision or comprehensive coverage than you need.
Get and compare quotes
One of the best ways to save money on car insurance is to shop around and compare quotes from a number of insurance companies.
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