We all need car insurance these days to provide financial protection in the event there is an accident. Car insurance provides funds to pay for the damage to our car, the other guy’s car if it is our car or you live somewhere no-fault-insurance is in place.
This post will help you answering the question: Why is my car insurance so high? Sometimes a car accident damages other people’s property, which the driver becomes liable for and then there are the medical bills which can be very expensive.
Don’t drive without auto insurance coverage. State laws require minimum car insurance coverage, however, the amounts are usually not enough to cover some of the above-mentioned expenses.
Drivers need to have the following insurance products – Liability coverage, comprehensive coverage, collision, personal injury, and uninsured coverage.
We will explain these terms a bit later in this post. Our post covers why car insurance so expensive and keeps rising and how you can have some control over the total cost of car insurance.
10 Reasons Why Your Car Insurance Is So High
You may have noticed that every year your life insurance and car insurance go up. There are many reasons why car insurance fluctuates. We are going to focus on car insurance in this post.
Believe it or not, sometimes it declines, however, most people will find that this is a rare event. There is a lot that goes into calculating the cost of car insurance.
Auto insurance companies consider a host of factors including personal details about you and the way you drive, where you live, and if there have been accidents with damage to your vehicle.
Insurance companies can raise their insurance, if they are having a bad year i.e. a lot of claims. We will examine a few of these in more detail to help you decide if any of these factors are influencing the cost of your car insurance.
1. Where you live
Where you live and whether you park your car inside or outside every night can influence the cost of car insurance. Living in a high crime neighborhood, with vandalism and stolen cars a frequent event can drive up the cost of insurance. Parking your car inside at night away from potential vandalism or theft can reduce your cost.
2. Your date of birth
Age does matter. The car insurance companies have crunched all of the statistics for claims and accidents vs. age and young teen drivers tend to have more accidents. As we age and maintain a good driving history, rates for car insurance can drop.
3. Your driving records
A bad driving record will cause your auto insurance rates to skyrocket, especially if insuring young college students. Accidents, speeding tickets, and other serious events involving you and your vehicle cause the car insurance company to consider you a bad risk. As risk increases, so do the rates they will charge you to cover your liability and collision car insurance.
4. Previous insurance history
Factors such as previous accidents, payment frequency, delayed payments, and delays in providing requested documentation can cause your insurance to increase especially if there is a frequent pattern. In addition to raising rates, your insurance company could simply refuse to renew your insurance and provide coverage.
5. Policy and coverage limits
The policy and amount of coverage play a large part in the amount of your car insurance premiums. For example, coverage with a low deductible, under $1000 will drive your costs higher. Adding your teenage son or daughter to the policy will also drive up car insurance coverage costs.
6. Martial status
Married couples tend to have fewer accidents and claims and receive corresponding lower car insurance costs. Couples with families are also more careful with their driving habits and are rewarded with lower annual premiums.
All the other factors such as deductible levels, driving records, and where you live continue to play a part in determining the rate you pay for car insurance.
7. Driving experience
The number of years you have been driving accident-free will be rewarded with lower rates. Traffic moving violations also play a part in determining lower rates along with the number of points you have lost due to speeding tickets.
New drivers who have taken driver training are also rewarded with lower rates than someone who has not taken training of any kind.
8. Where you drive around
The more you drive and the more often you are on the road, the higher the risk for accidents. People who commute to work by car every day pose a higher risk than those who take mass transit or some other means of getting to work. They also learn how far you drive every year and factor this into your rates.
9. The type of car your drive
Are you driving a sports car that is known for higher speeds, thefts, and accidents, or are you driving a car with a low record of auto theft and accidents?
The type of car you drive makes a huge difference in the car insurance rates you pay. Insurance companies have many statistics that tell them claims tend to be higher with high-end fast sports cars.
10. Your credit history
Insurance companies check credit histories before offering car insurance coverage. They want to know the risk level associated with your ability to meet your monthly payments on your vehicle as well as pay your insurance coverage.
A poor credit score can increase the risk of nonpayment and cause your car insurance costs to increase. Always stay current with all of your payment options. Maintaining an emergency fund helps to make sure payments are not missed.
Different Type of Insurance Coverage
There are five types of car insurance coverage available and most people will take advantage of all five when they request a quote for car insurance. In some jurisdictions, there are minimum coverages that you must take, for your protection and protection of other people and property that may be involved in an accident.
Also, most companies who provide auto loans will require the buyer to show evidence of insurance coverage. The banks and other lenders want to know they will not be left with debt after an accident.
While liability car insurance coverage is mandatory in most locations, collision and comprehensive coverage on older vehicles may not be needed. What are your insurance requirements?
Liability coverage provides coverage of claims on property damage and medical bills of individuals from the accident for 3rd parties, especially if you caused the accident.
Some locations have specified minimum amounts of coverage. However, you are often better to increase the amount of coverage well beyond this amount to avoid being left on the hook for amounts above your coverage.
Personal Injury Protection
Personal injury protection provides coverage for all medical bills for you and your passengers, regardless of who is at fault in an accident. Medical bills can be very high. This is coverage drivers should include in their car insurance package to protect themselves and passengers.
Unfortunately, not all motorists have liability insurance and in many cases, those that do have coverage, only have the minimum car insurance requirements as per state laws.
In an accident, you might receive less than you need to cover the cost of repairing your car or covering medical bills. Uninsured motorists and underinsured car insurance coverage can help with these situations.
Comprehensive and Collision
Collision insurance pays for the repairs to your car after an accident. Comprehensive insurance covers damage to your car for situations other than an accident, often including roadside assistance.
Examples include stone chips to windshields, stolen vehicles, or hitting animals on the road. Collision and comprehensive insurance coverage is usually mandatory by law and also by your car loan lender.
Why is my car insurance so high?
There are many reasons car insurance can suddenly increase and consumers question why their rates are also high, to begin with. We have covered some of the factors contributing to high rates in the previous section.
However, if there is a sudden change in rates from one year to the next, take a look at what has changed recently in your life relative to car insurance. For example:
- Purchased a new expensive sport type car
- High mileage each year or driving to work more often
- Accident claims or traffic violations
- High incidents of stolen vehicles in your area
- Added new high-risk drivers
What are the best car insurance companies?
Price is often the primary factor for many people when they choose an insurance company. However, there are many other criteria that rating agencies use to rate car insurance companies, which may help you decide between one company vs. another, especially if prices are similar. Factors that are usually considered such as:
- Shopping experience
- Amount of coverage vs. price
- Discounts based on where you live, driving record, or who you work for
- Claims process
The best approach is to decide what coverage you need and then obtain several auto insurance quotes from different companies and compare car insurance quotes, the amount of coverage, and any other factors important to you.
How can you lower your car insurance?
Drivers can lower the cost of car insurance in several ways:
- Drive safely, be accident-free and avoid traffic violations
- Sign up for a defensive driving course and advise your insurance company
- Ask for quotes from several companies
- Drive less by using mass transit, walking, cycling, and car sharing
- Drive a less expensive average car
- Raise the deductibles on your insurance
- Keep your credit rating high
- Evaluate your location for high crime rates, heavy traffic vs. moving
- Evaluate if comprehensive coverage is needed on older cars
- Ask for discounts – anti-theft devices, driver training, multi-driver, multi-car/house
- Seek advice from your car insurance agent
What state is considered the most expensive for car insurance?
Where you live can affect car insurance rates. The three biggest factors affecting car insurance rates based on location are:
- Frequency of natural disasters
- High crime rates – stolen cars, accidents
- Your location relative to high traffic areas, distance to work, and local state laws
The top five states that are considered the most expensive from a car insurance perspective are:
- New York
- Rhode Island
How can I find out why my car insurance is so high?
Call your agent or insurance company and review the premiums for each area of your car insurance. Note significant increases from previous years.
Have there been any changes in your driving record, the type of car insured, were driven and miles were driven in the past year. Accidents and traffic violations can cause rates to increase significantly.
Review car insurance discounts that may be available to you. Can you bundle your house insurance with the same company to obtain further discounts? Request quotes from other car insurance companies and compares like coverage to save money.
What makes a car more expensive to insure?
A brand new, high performance, loaded with options, popular with car thieves, driven by a young male in high traffic, with previous accidents and traffic violations, a high crime area in an area prone to natural disasters usually cause the car insurance premiums to be substantially higher than a car that does not fit any of these criteria.
While most drivers will not experience all of these conditions at the same time, any one of these conditions can cause your car insurance rates to increase year over year. Before you purchase a new car, call your car insurance company to assess the impact on your premiums.
How do you beat high car insurance?
There are several ways to obtain lower car insurance rates. Bundling multiple cars and your home insurance policies together with the same insurer enables discounts on all insurance coverage. Discounts are usually available for safe drivers and those who take defensive driving courses.
If you move, get married, change cars, reach a milestone in terms of age or retirement, it may be worthwhile to review your coverage with the car insurance company for additional reductions in the cost of coverage and lower your rate.
Reducing coverage and increasing deductibles is a further way to reduce car insurance rates. However, your risk of needing to pay for repairs out of your pocket increases as low deductibles are increased.
Where can I find the best car insurance rates?
There are several ways to find the best car insurance rates. These include:
- Call a car insurance broker. They are similar to a financial advisor for insurance.
- Use a website that searches for the best rates
- Call at least three or more companies and compare like to like coverage and prices
An insurance broker writes insurance coverage using multiple insurance companies. He or she is aware of rates, who are offering discounts, and other criteria which may help in obtaining cheap car insurance rates for coverage.
There are online websites that are fulfilling the broker function. You can enter the pertinent information and the insurance calculator provides you with quotes from several companies. Once you choose one, the company will verify the details and provide a more detailed quote.
If you feel like you are not getting a fair price on your policy, now it would be a perfect time to go online and search through some of the offers you can get for cheap car insurance.
Car insurance premiums are based on many factors, some are based on your situation, while others are based on the insurance claims made in your area. If your rates are increasing year over year, check with your agent to assess why and what discounts you may be eligible for.
Changes in your personal life can also affect your car insurance rates. Where you live, work, how you commute, vehicle changes, adding drivers, accidents, and traffic violations are just a few of the items that cause your insurance rates to increase or lower your insurance costs.
Completing an annual review with your insurance company will help to ensure you are always paying the lowest rates for the coverage you need. Apply these same concepts to purchasing motorcycle insurance.
Last Updated on: March 20, 2023