Why is Car Insurance so Expensive?
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Are you wondering “Why is my car insurance so high?” If so, you’re not alone. Car insurance rates have been on the rise for years and consumers are feeling the financial pinch.
Car insurance premiums are eclipsing the rate of inflation for a few notable reasons, like increased traffic congestion and more expensive vehicle repairs. This translates into higher premiums for insurance consumers like you. Fortunately, there are many things you can do to reduce your auto insurance premiums.
Why Is Car Insurance So Expensive?
A multitude of factors contribute to high car insurance rates. Some of these factors are under your control, whereas others are not.
Let’s examine what elements may be inflating your auto insurance rates.
In most states, car insurance companies consider your age when determining your premium. You can expect to pay more if:
You’re 25 or younger: Even if you’re a great driver, young people tend to have more accidents. Drivers who are 16 to 19 years old are three times more likely to be in a fatal accident than drivers who are older than 20! Car insurance companies know this and factor it into your premium.
You’re 69 or older: Likewise, older drivers see their premiums rise once they turn 69. That’s because this demographic has more accidents due to poor vision, reduced hearing, and slower reflexes.
In many states, car insurance rates also differ based on gender. Young male drivers have higher rates of severe accidents and are more likely to die during collisions. In fact, men in their 20s are two times as likely to get into a fatal accident.
As a result, young men usually have higher insurance premiums than young women. For example, car insurance for over 50 female may differ from a younger male. However, this gender difference, both in terms of accidents and insurance premiums, disappears once people enter their 30s.
Auto insurance rates vary drastically depending on where you live. The first reason for this is that states have their own laws about how much auto insurance coverage you need.
Furthermore, every zip code includes unique risk factors, such as:
Rates of vandalism and theft
Levels of traffic congestion
If you live in a safe, rural town with sunny weather, you're less likely to get in an accident than if you live in a congested city where hurricanes and vandalism run rampant. As a result, urban areas usually have higher premiums.
The type of car you drive has a notable impact on your insurance premiums. Depending on whether you drive a hybrid SUV, an old truck, or a luxury sports car, your vehicle has its own degree of risk of:
Needing costly repairs
Being prone to accidents
Having fewer safety features
As a result, cars that are less safe or more expensive come with higher insurance rates. That’s because they’re a greater financial burden to auto insurers when they’re stolen or damaged.
Your Driving Record
There’s a saying that goes, “The best indicator of future behavior is past behavior.” This sentiment is not lost on insurance companies. They carefully consider your past driving record to predict how you’ll be as a driver under their policy.
If you have a safe driving record, with no traffic violations or accidents, you’ll enjoy a lower insurance rate. The inverse is true as well. If you frequently rack up speeding tickets, have a DUI, or cause collisions, your rates can increase by as much as 75%!
Fortunately, most insurance companies only look back 3 years, so you have a chance to fix your driving record if it needs improvement.
Your Auto Insurance History
As with your driving record, your auto insurance record is used to “size you up” by new auto insurance companies. Anything that could paint you as a “high-risk” diver will be noted and factored into your premium.
Here are some red flags that they look for:
A lapse in auto coverage: If you’ve gone without auto insurance, even for a day, you will face higher auto insurance rates. Being uninsured is very risky if you own a vehicle.
You’ve filed a lot of claims in the past: If you’ve filed an excessive number of claims with past insurers, your insurance premiums will likely be higher going forward.
Your Driving Mileage
The more you drive, the more likely it is that you’ll get in an accident. In turn, insurance companies charge higher premiums to drivers who rack up more miles.
Keep your insurance company updated on your mileage, especially if it decreases notably during your policy.
Your Credit History
Auto insurance companies often review your credit score when determining your premiums. They view drivers with credit scores below 600 to be riskier, since they assume that they are less responsible with their credit, thus less responsible overall.
Improving your credit score has huge incentives, since a bad credit score can double your premiums, even if you are a good driver. Take steps to boost your credit score and the car insurance savings will follow.
How to Lower Car Insurance: Visit Online Auto Insurance
Now you understand the factors that are causing you to ask “why is my car insurance so expensive?” Some of these factors are fixed, whereas other methods on how to lower car insurance are under your influence.
To find a more competitive car insurance rate, explore your options with other auto insurance companies. A little research can save you thousands of dollars. Compare hundreds of rates with Online Auto Insurance. Enter your zip code below to see quotes from different companies, review their coverage options, and find the insurer that’s right for you!
If you want more information on other auto insurance topics, like “Does your car insurance and registration have to be under the same name?” check out more of our blog!
Insurance Institute for Highway Safety (IIHS). Fatality Facts 2018: Teenagers https://www.iihs.org/topics/fatality-statistics/detail/teenagers
Insurance Institute for Highway Safety (IIHS). Fatality Facts 2018: Gender https://www.iihs.org/topics/fatality-statistics/detail/gender
Find Law. Car Insurance Laws by State https://injury.findlaw.com/car-accidents/car-insurance-laws-by-state.html