Have you been asking yourself "why is my car insurance so high?" without really understanding what you're paying for and why you're being charged the rates that you are? If so, you're not alone. Many people don't fully understand what affects their insurance rate or why premiums fluctuate. There are several factors that contribute to the cost of your insurance. Money Under 30 shares a few of them:
- Driving history
- Where you live
- Age
- Type of vehicle you drive
- Credit score
- Coverage
All of these things and more will determine what an insurance provider will charge you for your insurance policy. You'll find that there are a number of reasons why car insurance can seem high.
Driving History
Your driving history plays a big part in how much car insurance will cost you. If you have been in even a minor accident, had any traffic violations, or had other issues that caused you to get a ticket or make a claim to your insurance provider, it will cause you to pay a higher rate. Drivers that have been involved in only minor collisions, such as fender benders, are a much lower risk than those that have been in more serious accidents in which a vehicle may have been severely damaged or even totaled.
This means that even the types of accidents you've had will affect the rate you are going to pay. In most states, moving and traffic violations will be on your driving record for three to five years, so it's important to do your best to maintain a clean driving record if you want to keep your car insurance rate low.
Where You Live
The state you live in is another determining factor for how much your car insurance will cost. Each state is allowed to set its own rates, and they do this based on a number of criteria. Mainly, it's related to population density, crime rates, and traffic conditions. Moving to a new state isn't always an option, but if you really need to lower your car insurance, you could consider relocating.
States that have the lowest average car insurance rates, Dave Ramsey tells us, include:
- Maine: $896
- Virginia: $918
- North Carolina: $947
- Iowa: $988
- Idaho: $1018
So you could consider one of these states as your new home base, especially if you currently live in:
- Michigan: $2693
- Louisiana: $2339
- Rhode Island: $2110
- Florida: $2059
- Nevada: $1915
These are some of the highest car insurance rates you will pay in the United States. The rates in other states will vary, but if moving is an option for you, try shopping around to see which state can give you the best rate.
Age
Your age definitely comes into play when insurance providers are figuring out the rate they will charge you. This is partly due to the fact that younger drivers have not yet had the opportunity to prove that they are good drivers. Cover explains that drivers over the age of 20 are three times less likely to be involved in a fatal car crash than those aged 16 to 19. With this perspective, you can understand why an insurance provider would charge higher rates for younger drivers.
On the same note, male drivers between 20 to 29 years old are almost twice as likely to be in a fatal accident than their female counterparts. This results in higher premiums for males in this age range.
Type of Vehicle You Drive
The type of vehicle you drive can also affect your car insurance rate. This includes both the make and model of the vehicle. You'll pay different rates for driving a Ford, Honda, Toyota, or other makes. Obviously, the more expensive the car, the more you will pay to insure it, but for some, it's worth the price. High-end sports cars, such as an Alfa Romeo, will cost a pretty penny to insure, while a nice safe minivan or small SUV will be much cheaper.
Credit Score
Insurance companies claim that your credit score is correlated to your driving record, which is why they want this information when quoting you a price for coverage. Even drivers that have a clean driving record will pay more for their car insurance if their credit history does not meet the insurance provider's standards for what is acceptable says Nerdwallet. Cleaning up your credit score could potentially save you money on your monthly insurance bill.
Coverage
When it comes to car insurance, there are a number of different types of coverage available. Depending on the type of coverage you need, you may be able to do away with certain options in order to lower your monthly premium. Full coverage is required if you lease or have a bank loan on your vehicle, and this type of coverage will be more expensive. However, if you own your vehicle outright, you can decide exactly what coverage you want to have, as long as you carry at least the required minimum in your state.
There are a few types of coverage you can consider doing without if your state does not require you to have them.
- Guaranteed Asset Protection, or GAP, insurance
- Extended coverage
- Personal Injury Protection
With GAP insurance, your loan will be paid off in the event you're car is totaled in an accident. If you don't have a loan, you don't need this type of coverage. Extended coverage will help pay for damages that aren't normally covered under a typical insurance policy, such as vandalism or mechanical issues. This is not always necessary, and by doing away with this coverage on your policy, you may be able to cover the costs of repairs of this nature on your own.
Personal injury protection will pay for medical bills incurred from a car accident. You may feel safer having this type of coverage, but it can save you money to do away with it. If you haven't been involved in an accident recently, you may feel comfortable not carrying this coverage on your car insurance policy.
Once you have determined what is causing your insurance rates to be so high, you can figure out what your options are to get the price lower and more manageable.
Sources:
https://www.nerdwallet.com/blog/insurance/auto/good-driver-auto-insurance-quote-high/
https://cover.com/blog/why-is-my-car-insurance-so-expensive/
https://www.daveramsey.com/blog/why-is-my-car-insurance-high
https://www.moneyunder30.com/why-is-my-car-insurance-so-high
https://www.caranddriver.com/reviews/a23145269/alfa-romeo-giulia-quadrifoglio-reliability-update/
https://www.caranddriver.com/shopping-advice/a15595299/how-to-negotiate-your-next-new-car-lease-like-a-pro/
Hearst Autos Research
Hearst Autos Research, produced independently of the Car and Driver Editorial staff, provides articles about cars and the automotive industry to help readers make informed purchasing choices.
