Why Isn’t My Car Insurance Getting Cheaper?

Updated September 27, 2021

why car insurance rates go up

You’re going through the filing cabinet, and you come across an old car insurance bill. You’re about to toss it out, but then you look more closely at the numbers. To your surprise, your car insurance premium seems to have increased.

Wait a minute! Eight years ago, you paid $720 for a year’s worth of car insurance. This year, you paid $916. You haven’t been in an accident or filed claims. You’re still driving the same old car you bought years ago. So you’re left wondering: why would my rates increase? If anything, they should reward you for your safe driving, right? Unfortunately, that’s not always the case.

So why isn’t your car insurance getting cheaper? Here’s the simple and unfortunate truth:

Because auto insurance companies don’t want to lower your premiums. Why would they? They’re not obligated to give you cheap car insurance just because you’re a loyal customer or a consistent driver. A lot of providers will try to find any and every opportunity to raise your rates.

Our experts at Compare have put together some of the most common reasons why your insurance rate isn’t going down to help you better understand that pesky car insurance bill. Plus, we offer some methods to fight back and get cheaper car insurance and discuss how some companies reward consistent good driving over time.

Five Reasons Why Car Insurance Rates Go Up

Of course, your car insurance will probably get more expensive if you get a speeding ticket, make a claim, buy a new car or move from the suburbs to the city. But what if nothing in your life has changed, and it’s still more expensive? Here are 5 reasons why that might be the case.

Because car insurance companies know you’ll put up with it

They have a sneaky practice called price optimization, which means analyzing data about you, the customer, to determine just how much they can raise your rates without making you angry enough to cancel your policy. For example, if you’re not a very price-conscious shopper in other parts of your life (like your mobile phone provider), your insurance company knows that. “Then your insurer applies its trade-secret algorithms to predict how much of a price increase you’ll tolerate without quitting the company and shopping for a better deal elsewhere,” as Consumer Reports explains. And to make matters worse, another downside to this practice is that loyal customers can be the most vulnerable since your insurance provider collects the most data about long-term customers. Is this reasonable behavior? Not at all. Legal? In most states, yes.

Because car insurance companies hope you’ll be satisfied with loyalty perks instead

Most insurers have a tiered rewards system, where you earn more perks the longer you’re a customer. But look closely at these rewards because they’re not necessarily that valuable. Stick with Progressive for 10 years, for example, and you earn Emerald status. Sounds good, but the only difference between Diamond (5 years) and Emerald is that the company supposedly will respond to your phone calls faster. After 10 years, they’d better do more than just pick up the phone on the 3rd ring!

Because your neighborhood has become riskier

One factor that affects your car insurance rate is your zip code and neighborhood. For example, if you live in an urban area with higher rates of crime and accidents, your rate will be higher, while if you live in a more suburban or rural area, your rates will likely be less. So, if vehicle thefts or collisions have recently increased in your part of town, your car insurance rates might go up too.

Because your car is more expensive to fix

Yes, your car is eight years older, which means its value has probably gone down, meaning it’s less likely to be stolen, and your rates might drop because of it. But the flip side of having an older car is that the cost to repair it may have gone up over time, which can increase your insurance rates.

Because the insurance company raised rates across the board

Insurance companies have good years and bad years, just like the rest of us. If your car insurance company paid lots of claims the previous year and is trying to make up some ground financially, it may raise everyone’s rates.

How To Make Your Car Insurance Rates Go Down

OK, so we’ve looked at all these reasons why car insurance rates go up — what can you do about it? When do car insurance rates go down?

When you compare cheaper car insurance quotes.

The absolute easiest way to lower your rates is to get quotes from multiple competing insurance companies. You can use a site like Compare.com to compare many rates at the same time- for free! That way, you can see the range of prices available to you and learn how low insurance companies will go for the policy you need.

When you ask your insurer to lower them.

You’d be surprised at the difference you can make with just a quick phone call. If you know you’re paying too much, but you like your insurance company, get an agent on the phone. You can say you’re considering switching insurers and ask (politely, of course) if they can lower your premiums to match their competitor’s rate. This tactic is most effective if you have a competitor’s offer in hand, so compare multiple car insurance quotes first. For instance, if you find out another company can give you the same policy at a lower price than what you’re currently paying, it’s never a bad idea to bring it up to your insurance agent.

When you drop collision/comprehensive coverage.

If you drive an older car that’s barely worth repairing anyway, it might make sense for you to drop collision and comprehensive coverage from your policy so you can save on your insurance premium. For example, we ran the numbers and found that a 2001 Honda Civic driver could save $168 to $204 annually by dropping collision/comprehensive coverage.

When you raise your deductible.

Choosing a higher deductible is a simple way to make your car insurance rates go down. But be careful: if you raise your deductible, it means you increase the amount you’ll have to pay out of pocket for any repairs you may need. So this is only a good option for you if you can afford to pay $500 or $1,000 out of your personal funds in case your car is damaged.

When you lower your insurance coverage.

Lowering your limits will also make your car insurance rates go down, but just like raising your deductible, it can be a risky move. If you get into a serious accident and don’t have enough insurance, that could wreck your finances, and it could be much worse than just $1,000 if you end up in a lawsuit. Your liability insurance limit should be equal to the total value of your assets, so you’re protected if someone sues you.

Car Insurance Providers that Reward Good Driving Over Time

Here’s some good news: even though it’s common for your car insurance rates to increase over time, some insurance providers will offer you a discount as a reward for consistent, safe driving.

Different companies go about providing these rewards in varying ways, but one common practice is to allow customers the opportunity to sign up for a tracking program. For example, at Liberty Mutual, you can sign up for their RightTrack program that will enable the provider to track your driving either through an app on your phone or through a small device you put into your car. Then, you’ll receive a reward for safe-driving practices! You can save up to 30% with this program.

Another common way to reward good driving is through an accident-free discount. These typically kick in after three to five years of driving without any accidents. One company that provides an accident-free discount is Nationwide; you can get a safe driver discount through Nationwide if you’ve had a clean driving record for at least 5 years.

It may not seem fair that your car insurance rates can go up over time even if you haven’t made any driving mistakes, but it’s the unfortunate reality of the situation. The good news, though, is that there are many other ways to find cheap car insurance. One of the easiest and most effective ways to do that is to make sure you regularly compare quotes from different companies to make sure you’re finding the best rate and the best policy to fit your needs.

Car Insurance Rate FAQs

How can I get cheaper car insurance?

One of the best ways to get cheaper car insurance is to compare quotes provided by different companies. You can also take advantage of insurance discount programs, ask your company to match competitor’s rates, drop comprehensive/collision coverage, raise your deductible and lower your coverage amount.

Why doesn’t car insurance go down as the car gets older?

As your vehicle gets older, the likelihood that it’ll need more costly repairs increases. The fact that parts are harder to find the older the car gets impacts the increase in your insurance premium.

What factors affect my car insurance rate?

Factors that affect car insurance rates include your driving history, credit history, age, gender, insurance claim history, education and occupation, marital status, and vehicle age and type.

At what age do car insurance rates increase?

As you move past your early twenties, your rates will start to drop, but when you reach 65 or 70, they’ll begin to increase again.

What discounts can I get on my car insurance?

Insurance providers offer a wide variety of discounts for specific situations. Some of the most common ones include good student, paid in full, paperless, accident-free, low mileage, military, and senior discounts.

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