Car Insurance Reviews

Why Is My Car Insurance So Expensive? – ValuePenguin

If your auto insurance is too expensive, a number of common factors could explain your high rates. Common causes of overly expensive insurance rates include your age, driving record, credit history, coverage options, what car you drive, and where you live. Anything that insurers can associate with a higher chance that you will have an accident and file a claim will result in higher auto insurance premiums.

factors that can make car insurance more expensive

Insurance companies set rates for each driver based on the likelihood that the driver will file a claim and the cost of that claim. If your insurer thinks you’re likely to file a claim, your rates will go up. Insurers consider many factors when setting rates, but here are some of the most common reasons some drivers pay so much for car insurance.

your insurance company

It may seem obvious, but insurance rates vary dramatically between insurance companies, and if you’re buying a policy from an expensive insurer, you could be paying a lot more than you need to.

Among the top 10 national insurers, we found that the average price of insurance is $438 for six months of basic coverage for a good driver. however, that same driver could be paying as little as $309 from state farm or as much as $625 from allstate. switching from allstate to state farm would reduce driver price by 51%.

The only way to ensure you’re paying the best price available is to shop around and collect quotes from multiple insurance companies.

your age (and your gender)

Younger drivers pay much more for car insurance than older drivers. we found that car insurance for young drivers is 4.5 times more expensive than for adult drivers in their thirties. The main reason for these high rates is that young drivers are statistically more likely to have car accidents that result in expensive insurance claims.

Young men are especially likely to pay a lot for auto insurance. we find that a 20-year-old man pays around 16% more than a woman of the same age. the difference evens out as drivers age, with older women paying slightly more than men of the same age, though only a few dollars a month.

How to save: One of the best ways for younger drivers to lower their premiums is to share a policy with an older family member. we found that doing so can reduce your overall insurance bill by 58%. younger drivers can also qualify for nice student discounts or take additional training courses to lower rates even further.

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where do you live

The cost of car insurance varies greatly in the United States. Residents of the most expensive state for auto insurance, Michigan, can expect to pay six times more for coverage than people who live in Maine. There are many factors that affect insurance rates in a state, including the minimum amounts of coverage, the number of uninsured drivers, and even how well-maintained the roads are.

The cost of insurance can also vary within a state or even within a city. If you live in an area with high rates of auto theft or narrow roads that cause many accidents, you may be paying more than you would anywhere else. For example, we found a price difference of $618 between the cheapest and most expensive zip codes for auto insurance in San Francisco.

how to save: We don’t necessarily recommend moving to a new neighborhood, city, or state just to lower your auto insurance bill. But if you’re already thinking about moving, it may be worth getting some sample insurance quotes to understand how rates will be different in your new home.

your auto insurance coverage options

The more auto insurance you buy, the more you can expect to pay. we found that a full coverage policy, including collision and comprehensive insurance, costs our driver profile 170% more in annual premiums than one with liability coverage only. Comprehensive and collision insurance covers the cost to repair or replace your vehicle if it’s damaged, less your deductible, which is the amount you must pay out of pocket before your coverage kicks in.

Policies that include high liability limits, as well as comprehensive and collision coverage with low deductibles, are particularly expensive. we found the cost of a policy like this to be $1,053 more per year for our profiled driver compared to the cost of a liability only policy.

how to save: You have full control over your policy coverage, so you can easily lower your limits, as long as you’re above the legal limit and meet your lender’s requirements . but if you have an accident, you will be responsible for any claims that exceed your insurance limits.

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your driving record

Drivers with recent accidents or traffic violations on their records typically pay significantly higher auto insurance rates than drivers with clean records. Based on our analysis, adult drivers who were recently at-fault in an accident pay 42% more for auto insurance than those with no accidents or violations. The reason for this discrepancy in rates is that these drivers are statistically more likely to be involved in a future accident.

Those who have been convicted of a serious traffic violation, such as DUI, may find themselves paying higher rates for auto insurance because they have to obtain SR-22 insurance. This is a type of insurance policy for high-risk drivers, for which your insurer is required to file an SR-22 form on their behalf certifying that they have the minimum required auto insurance coverage.

How to save: Some states allow you to reduce the effect of a ticket on your record by taking a defensive driving course. Unfortunately, the only way to lower your rates after an accident is to wait.

your car

Insurers consider what type of car you have when setting rates. Some cars are more likely than others to keep you protected in a crash, resulting in lower rates. meanwhile, a very fast or powerful car can encourage aggressive and reckless driving, resulting in higher rates.

We found that the largest and safest cars, like minivans and small SUVs, tend to have the most affordable insurance, while smaller cars have surprisingly high rates. This could be because smaller cars tend to take more damage in a crash.

Cars with the following qualities tend to be more expensive to insure:

how to save: If you have a car that has particularly high rates, such as a luxury vehicle, a convertible, or a muscle car like a ford mustang, switching vehicles can result in big savings on your insurance bill.

your credit score

Car insurance companies sometimes take your credit score into account when setting your premiums, and drivers with poor credit or no credit history often pay more for insurance. The reason drivers with bad credit pay more for car insurance is the same as the other qualifying factors: statistically, they’re more likely to file an insurance claim than those with good credit.

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However, several states, including California, Hawaii, and Massachusetts, have banned the use of credit scores to calculate auto insurance rates. if you live in one of these states, your rates will not be affected by your credit score.

how to save: Your credit score may be affected by incorrect or false entries on your credit reports, so check your credit reports regularly to make sure they are accurate. Beyond that, the most important thing is to pay your credit card and other bills on time. see here for more tips on how to increase your credit score.

more ways to save on insurance

If your auto insurance is too expensive, there are several steps you can take to lower your rate. The most important thing you can do is shop around for quotes from multiple insurance companies – just because one company is charging you high prices doesn’t mean you won’t be able to find a great price elsewhere.

Adult drivers can slash their expensive car insurance rates by comparing quotes to find the cheapest company and using discounts. Plus, young drivers can get cheaper rates if they choose to add to their parent’s policy instead of getting their own.

compare quotes from several companies

The insurer you choose has a huge effect on what you pay for auto insurance. we’ve found that the insurer with the highest rates can be up to 81% more expensive than the cheapest insurer for identical coverage. Because of this discrepancy, we recommend that you compare quotes from multiple companies to get the lowest auto insurance rates.

look for discounts

Most auto insurance companies offer policyholders a reduction in their auto insurance premiums if they meet certain criteria. Below, we’ve included some of the best auto insurance discounts your insurer can offer. Keep in mind that how much you can save and how you qualify will vary by insurer.


valuepenguin’s analysis used insurance rate data from quadrant information services. These rates were obtained publicly from insurer filings and should be used for comparison purposes only; your own quotes may be different.

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