Why Is My Auto Insurance So High?

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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.

Why Is My Auto Insurance So High?

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:

  • Your driving record – a history of crashes, tickets, or DUIs would increase the amount you pay. Also, constantly switching car insurance providers is a warning sign to companies.
  • Your car – the age and make of your car can affect your premium. Sports cars and trucks tend to be more costly, due to their increased likeliness of getting in crashes. Also, providers may consider the safety features on your car when giving you a policy. More safety features are a good thing.
  • Your credit score – not every company will check your credit score, but, in some cases, a bad score can have an effect. Companies don’t like it if you have a bad history of making timely payments.
  • Where you live (city and state) – people who live in big cities can pay more for insurance. This is due to more traffic, which means a higher likeliness for accidents or insurance claims, or a higher chance of car theft and vandalism. 

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:

  • Your gender – males often pay more for insurance. While it may feel fair, research shows that men are more likely to crash and more likely to be in a fatal crash than women.
  • Your ageyounger drivers are a greater risk since they cause more accidents, so they generally cost more to insure.
  • The national economy – many large-scale economic factors can, unfortunately, affect your policy price. Rising medical and car repair costs nationwide could contribute to higher premiums. Also, if gas prices are cheaper, more people could be driving, which could cause more accidents, thus more claims and likely more costs. Chain reactions like this can contribute to your insurance policy. 
  • Number of claims your insurance provider has experienced recently – if your provider has experienced a large number of claims that caused unexpected profit loss, this could reflect in a change in the price of your policy.

Why Does My Car Insurance Keep Going Up?

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.

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Am I Paying Too Much For Car Insurance?

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.

Insurance Cost With No History

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.

Ready to Save Money on Auto Insurance?

Rethink your auto insurance premium with a free quote from the nation's top companies.

The editorial content on Clovered’s website is meant to be informational material and should not be considered legal advice.

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