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Why is my car insurance so high?

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Whether you pay your premium monthly or annually, the cost of your car insurance is worth paying attention to, as the price can increase for a variety of reasons. The national average car insurance premium is $1,555 annually, but you might pay even more than that if you live in a high-cost state, have poor credit or have incidents on your driving record. 

The good news is, if your car insurance is too high, there are many ways to lower your rate. First, it’s important to understand why your car insurance might be so expensive. Several factors can influence the cost of your policy, some of which are in your control, while others are beyond immediate influence. This article explores why car insurance is so expensive and what you can do to get the lowest rate. 

Reasons why your car insurance is so high

A multitude of factors influence your car insurance rate, according to insurance and personal finance expert Laura Adams.

“If your car insurance premium is higher than you like, consider the various factors that affect your rate,” Adams advised.

“Not only does the type of car you drive play a role, but so does your coverage amounts, deductibles, driving record, claims history, annual mileage, credit, age, gender, marital status, and address. In other words, there’s a lot that goes into your rate, so it’s not easy to pinpoint one reason why your premium is high.”

If you’re wondering why your car insurance is so expensive, consider both factors within and outside of your control. While you can drive carefully, you can’t immediately remove accidents from your driving record. Personal factors such as your age and gender will influence your rate no matter what. But you may be able to reduce your mileage, improve your credit score or change your deductible amount to get a lower rate. 

Age

The younger you are, the more you’ll pay for car insurance. Insurance providers recognize inexperienced drivers as being a statistically-higher risk to insure. And it’s not just your age that influences your premium, but also the ages of other drivers listed on your policy. So if your teen recently acquired a driver’s license and you need to add them to your policy, expect to see a huge price increase. Research shows that adding a teen driver to your policy results in an average premium increase of 130%. That means parents are typically responsible for an additional $2,300 annually when their teen reaches driving age and is added to the policy. 

Gender

A common myth is that men are riskier to insure and incur higher premiums than women. But that’s only true when it comes to comprehensive coverage. Men pay slightly less than women each year for liability coverage, while women pay slightly less than men each year for full coverage. 

The gap is wider when it comes to teen drivers, however, since research shows that the death rate for male teen drivers is double that of female teens. The premium difference varies by state, but parents can expect to pay 30% more on average for a male teen driver than for a female teen driver. 

State

If your car insurance is too high, your location could have a lot to do with it. The average cost of car insurance varies by state. For example, a full coverage policy in Maine costs an average of just $831 a year, while a full coverage policy in Florida would set you back an average of $2,587 a year. Your neighborhood can play a role as well; if you live in a high-crime area, expect a higher insurance premium, since the risk of theft and vandalism will be greater in the eyes of your insurance provider. 

Driving record

Perhaps the most obvious factor influencing your car insurance premium is your driving history. When your policy renews, your insurance provider checks your driving record for speeding tickets, accidents and DUIs. If your car insurance premium increased, it could be due to one of these incidents. 

For example, car insurance premiums increase an average of 20% after a speeding ticket and an average of 34% after an accident. That’s nothing compared to what a DUI or DWI will cost you. In addition to attorney fees and fines, you’ll be subject to an average premium increase of $800 if you’re caught driving under the influence. 

Claims filed

The number of claims you file generally has an impact on rates as well, whether accidents are your fault or not. On average, a no-fault accident will cause a 10% increase in your rate and stay on your record for three years. Although some states aren’t legally allowed to increase your premium after an accident that wasn’t your fault, filing a claim for a not-at-fault accident still counts towards your claim total. If the damage isn’t extensive, consider the cost for repairs out of pocket compared to a potential premium increase from extra filed claims.  

Credit score

The only states that prohibit the use of your credit score in setting your premium amount are California, Hawaii and Massachusetts. In all other states, poor credit could mean getting stuck with an even higher premium. The cost increase will depend largely on which state you live in and the insurance provider you choose. It’s a good idea to get new car insurance quotes if there’s a change in your score close to the expiration of your existing policy as you may be able to secure a lower rate. 

Other factors

There are several other factors outside of your control that can raise or lower your car insurance premium. If you’re wondering why your car insurance is so high with a clean record, it may be due to the following factors:

  • Your occupation
  • Your mileage
  • The make and model of your vehicle
  • Marital status
  • Your years of driving experience
  • Any lapses in coverage
  • Leveraging discounts

If you’re aware of how these factors affect your premium, you may be able to lower your rate by making some changes. “For instance, getting married, driving fewer miles, changing occupations, or being a good student can reduce your rate–if there aren’t any negative issues, such as getting a moving violation or into an accident, on your record,” suggested Adams. 

Reasons why car insurance rates overall are increasing

Why is car insurance so expensive? In many cases, car insurance premiums have increased due to higher repair costs on newer vehicles, more costly medical expenses and recent natural disasters, which cause an increase in overall claims. And when insurance companies change underwriting standards, or when state laws shift to require residents to purchase more coverage, rates can go up as well. 

How to lower your car insurance

  • Contact your insurer about discounts. “Insurers typically offer many discounts, but they won’t always know if you qualify for them,” said Adams. “So, make sure to review your information annually and update changes with your insurer.” That’s especially true if you’ve seen a recent premium hike, Adams added. “If you’ve seen an increase in your auto insurance rate, contact your insurer to determine what they recommend for cutting the cost. There may be discounts you qualify for or changes in your profile they should know.” Common discounts include multi-policy discounts, billing discounts, and good student discounts.
  • Drive less. Your mileage will affect your rates in some states more than others. But there’s a chance you could save up to 27% on your annual premium by lowering your mileage from 12,000 to 2,000 miles per year. 
  • Compare rates across insurers. The best car insurance company for you will depend on several individual factors, which is why you should compare car insurance quotes from different providers to make sure you’re getting the lowest possible rate. It’s a good idea to get customized quotes every six months. Adams explained that “carriers evaluate you differently, so be sure to shop around and compare quotes. You may find that your current insurance provider is giving you the best deal, but you won’t know unless you shop.” 
  • Pay as you drive. Some insurance companies provide telematics devices that measure how safely or how often you drive. If they determine you’re less risky to insure, you may be able to secure a lower premium. “If you’re unsuccessful lowering your rate, enrolling in a pay-as-you-drive program could be a solution,” said Adams. “If your insurer deems you a safe driver, you may qualify for substantial savings.”

The takeaway

  • Some factors affecting your car insurance rate, such as your age and gender, are out of your control. Other factors, such as your credit score, can be improved to help lower your rate. 
  • If your car insurance rate is too high, you may qualify for discounts that could lower your annual premium. 
  • You should compare car insurance premiums every six months to make sure you’re getting the best possible rate. 

If you’re wondering why your car insurance is so high, know that it’s based on a combination of different factors. Take actionable steps where possible to get a lower rate, like calling your car insurance company to discuss discounts or comparing quotes by providers. If that doesn’t work, consider a pay-as-you-drive program, which can also be a good fit for drivers looking to pay only for the coverage they need on a usage basis.

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