Why Is My Auto Insurance So High?

Having car insurance is necessary to own a car. It’s another expense you factor into your adult life, but it’s not unusual to feel your payments are expensive or excessive.

Does the insurance company just think you’re not a good driver? That’s probably not the case; several factors contribute toward your car insurance premium. Let’s take a look at some of the reasons behind your auto insurance rate.

There is no exact formula known to the public that insurance companies use to calculate their rates. What we do know, though, are the components of the formula. Every provider’s method is a little different, but these are some factors companies use to determine your rate:

Things you can control, to an extent, that affect your policy:

Also, insurance costs vary widely state by state, anyways. Florida, Michigan and Louisiana generally have the most costly auto insurances. Each state has different requirements for the minimum amount of coverage, and your premium will be affected depending on how much you purchase. 

Things out of your control that affect your policy:

Like with car insurance pricing factors, there are some things you can and cannot control that may have raised your premium. If you added another car or teenage driver to your policy, your insurance is likely going to become more expensive. Also, receiving a traffic ticket or moving violation could cause a rate increase.

Even if you haven’t had an accident or filed a claim, your insurance can still go up. It’s very annoying, but there could be a few other reasons why.

A recent move to a new house can cause your car insurance to go up, too. A change in zip code can affect how much you pay, especially if you moved to a more urban area or to a place with higher speed limits.

Speed is a major factor in car crashes, and insurance companies certainly keep an eye on the local speed limits when pricing policies. According to recent research, 26% of all motor vehicle fatalities occurred in speed-related crashes.

As mentioned earlier, national economic factors or losses your insurance company has experienced could also increase the price of your policy.

All factors considered, and there are certainly quite a few to think about, you may be less than happy about how much you’re paying. Are you paying too much for your car insurance, and what can you do about it?

One of the easiest ways to save on car insurance is to bundle your home and auto insurance together. Insurance providers can, and usually do, reward consumers who use the same company for both policies with a discount.

Other than bundling, there may be several other discounts available. Safe driving, low usage, and student-related discounts exist at many top insurance companies. It is important to understand what your providers offer and what you may be eligible for. 

A more calculated possibility would be to drop coverage you don‘t need. For example, if you have an old car that’s worth less than the deductible and annual coverage you pay on it, it may be time to get rid of that vehicle.

Or, if you have collision or comprehensive coverage on it, which may only reimburse you a small amount in case of an accident due to the car’s age and value, you could look into getting rid of that coverage because it may not be worth what you’re paying.

If you’re previously uninsured or purchasing car insurance for the first time, it can be especially hard to save on your premiums. Since you have no history with insurance companies, providers don’t know what to expect. So you may end up paying a little more than a long-time customer.

In every scenario, the best way to save on insurance is to shop around and compare companies. You should always do your homework; the more time you put into researching quotes, the higher your odds of finding a better rate.