On many occasions, our car insurance is too expensive, which can be due to multiple factors. It is common to ask why my car insurance is so high. And this can depend on multiple factors making our vehicle rates too high.
Factors such as age, driving history, credit, coverage options, type of car, and where we live can all play a role. All factors that insurers can relate to us having a higher risk of being in an accident will result in higher insurance rates.
Factors that can make our car insurance more expensive
Different rates depending on how likely the driver is to make a claim and how expensive it may be. If our insurer believes that we will likely make a claim, the rates will increase, which may be one of the main reasons our car insurance may be too high. Among the common factors of a high price will be:
Insurance company
Rates vary drastically between different insurance companies, so sometimes paying an expensive insurer can mean we end up paying much more than we need to. The average price of insurance for a good driver is usually around $440 for a six-month coverage.
However, some insurers, such as State Farm, will offer prices as low as $309 for the same coverage, while at Allstate, we may pay as much as $625 for the same coverage. The only way to get the best price is to gather quotes from several insurance companies until you find the cheapest one.
Age and gender
Typically younger drivers will end up paying more than older drivers, which can be as much as 4.5 times more than drivers over the age of 30. This is because younger drivers are more likely to have car accidents resulting in costly insurance claims.
On the other hand, young men are likely to pay more than women, with about 16% higher policy rates for a man than for a woman in their 20s. This difference evens out as drivers age because older women will pay slightly more than men of the same age.
One way for younger drivers to save is to share a policy with an older family member. Doing so could reduce the cost of insurance by 58%, and these rates can be reduced even further for students or if additional training courses are taken.
Where we live
The costs of auto insurance policies vary greatly in the US. A prime example is that Michigan drivers can pay up to six times more than Maine drivers for the same coverage.
Factors such as state minimum coverages, the number of uninsured drivers, or the condition of the roads can make our policies more expensive. Even within the same city, the cost can vary depending on where we live because if there are high car theft or accidents, we will have to pay more for insurance.
Coverage Options
The more car insurance we buy, the more money we pay. A full coverage policy, including comprehensive and collision, can be up to 170% more expensive in premiums than one with liability-only coverage.
Policies with high liability limits comprehensive and collision coverage with low deductibles are expensive. This translates into an extra cost of up to $1,053 per year versus a liability-only policy.
To lower the policy, we may reduce the limits as long as we are above the legal limits and the lender with whom we finance our car. However, if we have an accident and the repair costs exceed the insurance limits, we will have to pay out of pocket.
Driving History
Drivers with recent accidents or violations on their records will have significantly higher rates. It is estimated that they will pay 42% more for car insurance than those with no accidents or violations.
Those convicted of a serious traffic violation such as DUI could pay higher insurance rates because they must obtain SR-22 insurance. This insurance policy for high-risk drivers requires the insurer to file an SR-22 form. The only way to reduce rates after a crash is to wait.
Type of vehicle
Insurers consider the type of car we have when setting rates. Some are more likely than others to keep us protected from a crash. A fast or powerful car may encourage aggressive and reckless driving, increasing rates.
Larger cars tend to have more affordable insurance, while smaller cars have higher rates. This is because smaller cars tend to suffer more damage in a collision. In the case of luxury vehicles, convertibles, or sports cars, the only way to lower insurance bills will be to change vehicle.
Credit Score
Insurance companies always consider our credit score when setting premiums. Drivers with bad credit or no credit history usually pay more for insurance.
However, some states, such as California, Massachusetts, or Hawaii, prohibit using credit scores to calculate car insurance rates. If you live in these states, your credit score will not affect your insurance rates.
If we are in a state where they check our credit score, improving it will be one of the ways to save on rates. For this, credit cards and other bills must be paid on time. Also, looking for discounts can be a great opportunity for savings.