Price Hike: Why Is My Car Insurance So High?

by Nick Versaw Updated March 4th, 2022

Why is my car insurance so high: smiling man with his head poking out of his car window

If you’ve ever wondered, “Why is my car insurance so high?” you aren’t alone. Whether you’re a first-time car owner or you have some speeding tickets on your driving record, there are several reasons why your auto insurance company might raise your rates.

You don’t have to be a high-risk driver to be charged a fortune for car insurance: your location, vehicle type, and even your credit score can contribute to higher rates.

This article will answer the question, “Why is my insurance so high?” and provide you with some tips for lowering your car insurance premiums.

Why is My Car Insurance So High?

If you’re asking, “Why is my car insurance so high?” then you’re probably talking about the premium. This is the amount you pay every month to maintain your insurance policy, and it’s based on the type of insurance coverage you have. You may also have a high deductible, but this only comes into play when you file a claim.

According to the National Association of Insurance Commissioners, the average cost of car insurance in the U.S. has increased from $786.65 per year in 2009 to $1,056.55 in 2018, with higher premiums in some states than others.

Car insurance companies are competing for your business, though, so it’s a good idea to shop around to get the best rates. You can use our handy comparison tool to get car insurance quotes from multiple insurers all in one place:


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Now, let’s look at some reasons why your car insurance might be so high and how you can get a lower rate:

Age

Insurance companies base their prices on how likely they think you are to get into a car accident and file a claim. Unfortunately, that means young drivers pay much higher premiums simply because they don’t have much experience on the road.

If you maintain a clean driving record for several years, your insurance company will consider you a safe driver and move you out of the high-risk category.

Adult drivers tend to pay the lowest rates, but you may see your premium go up again as you get older and reach retirement age.

Location

One reason you might be paying high rates for car insurance is because of where you live. Auto insurance rates vary from state to state and even from city to city. For example, California, Michigan, and Massachusetts have relatively high rates (over $1,000 per year), while you can expect to pay around $600-800 in Maine or Hawaii.

It’s not just about the cost of living in your state, though. Other factors, such as living in a neighborhood with high crime rates or the risk of natural disasters such as earthquakes and floods, can also raise your rates.

Driving History

Your driving habits also play a role in how much your insurance costs. Having multiple moving violations, being in an at-fault accident, or getting a DUI are all things that may leave you wondering, “Why is my car insurance so high?”

Speeding tickets won’t stay on your record forever, but depending on where you live, you can expect them to impact your car insurance rates for at least a few years.

A DUI is more serious and may require you to obtain high-risk car insurance for the foreseeable future.

Credit Score

Insurance companies can use your credit history to determine your car insurance rates in some states, although at least a few have banned this practice. It makes sense that a lender would check your credit score, but why would an insurance provider care?

Basically, they want to know whether you’re likely to pay your auto insurance premiums on time and whether you’re likely to cost them money by filing a claim. If you have poor credit, you may end up paying higher insurance rates.

Vehicle Type

The type of car you drive also plays a role in the cost of insurance. New cars cost more to insure than used cars, and sports cars and SUVs cost more to insure than sedans.

Why the difference? Sports cars are more likely to be driven fast or get stolen, and they cost more to repair if they get into an accident.

Similarly, SUVs are built to protect you and your passengers, but they may cause more damage to any cars they come into contact with, requiring greater liability coverage.

Your Marital Status

You might save money by switching to a single car insurance policy if you get married, but this isn’t always the case. For example, if one spouse drives a more expensive car or has a better driving record than the other, keeping the policies separate may make more sense.

Likewise, adding teenagers or other household members to your policy can increase the cost of insurance, at least temporarily.

Policy Type

Finally, the type of policy you have will determine how much you pay for it. Policies with a low deductible cost more, but you’ll have lower out-of-pocket costs if you get into an accident. Policies with higher deductibles have lower premiums.

In some states, you may be required to have collision coverage, but in other states, you’re only required to have liability coverage.

While going without collision coverage may seem like a good idea at the time, it means your insurer won’t pay to fix or replace your car if it gets damaged.

How to Lower Your Car Insurance Rates

Why is my car insurance so high: woman wearing sunglasses happily driving her car

Now that we’ve answered the question, “Why is my car insurance so high?” the next question to ask is, “What can I do about it?” Fortunately, lowering your car insurance rates may not be as hard as you think.

In some cases, it may be as simple as switching to another insurance company, but you can also try one of these other strategies:

Move to a Cheaper Location

Moving to a new state may not be the most cost-effective way to save money on car insurance, but if you’re thinking of moving anyway, you can compare prices in each destination before you decide where to move.

Remember, it’s not just the state that matters: living in a densely-populated city with a lot of cars on the road will often mean higher prices than living in a small town.

Develop Good Driving Habits

Your age may be out of your control, but your driving habits aren’t. Many insurers offer car insurance discounts for drivers who meet one of the following criteria:

These discounts can help offset any increase due to your age or previous moving violations.

Maintain a Good Credit Score

Having a good credit score can save you money on car insurance and make it easier to take out a loan the next time you buy a car.

You can check your credit report for free at least once per year. If you don’t have much credit history, paying your utility bills on time is a great place to start building your score.

Change Your Insurance Policy

Some types of coverage may be optional or unnecessary in your state. For example, if you drive an old vehicle that you plan to replace soon anyway, you might choose to set coverage limits or do without uninsured motorist coverage.

This limits what your insurance company will cover in the case of an accident with an uninsured driver or hit-and-run, but it can save you money on your premium.

Bundle Your Insurance

Another option is to buy multiple types of insurance from the same provider. For example, your insurance company might offer a multi-policy discount when you bundle auto insurance with homeowners, renters, or even pet insurance. 

Often, bundling multiple types of coverage into a single package can result in lower costs than if you kept your auto insurance policy separate.

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Man happily driving

Only your insurance provider can answer the question, “Why is my insurance so high?” but these factors should give you some idea of how your rates are determined and what you can do about it. If you can’t change where you live or the type of vehicle you drive, you can always change your car insurance provider.

Check out our Auto Insurance Guides to learn more, or use our comparison tool to search for lower car insurance rates today.


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