Shop Around For Car Insurance
Think about it: When was the last time you shopped around for car insurance? Was it when you bought your car? A year or two ago? Maybe longer?
If you have a clean driving record, comparing quotes could save you hundreds of dollars.Thats why its a good idea to look for a better deal at least once each year. You have nothing to lose and potentially hundreds of dollars to gain!
How Is Car Insurance Calculated
On average, your car insurance bill can range from about $100 to $300 per month.
Car insurance rates arent random calculations that insurers pull out of thin air. Its a mathematical conclusion based on risk and lots and lots of data.
Heres how it works:
The insurance carrier looks at different areas to determine your rate:
- Driving record: One of the main factors that impact your car insurance is your driving record. If you have a history of getting into car accidents or have tickets on your record, youll likely pay a much higher rate. Auto insurance underwriters usually look at the last three to five years of your record, but a DUI could impact your rates for 10 years.
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- Driving habits: You cant always control how often you drive, but more time on the road can increase your car insurance premium. Insurers will look at things like where you work, the length of your commute, and where you live.
- Coverage history: Having gaps in auto insurance coverage can increase your rates.
- Car type: While cheaper cars dont always have lower rates, some vehicles are more expensive to insure than others. Are you driving a safe, reliable car? Or do you have a sports car or a high-end luxury car?
tips for success!
Want to save money?
Use a higher deductible for Collision coverage. Maybe $1,000 or more. This will give a good discount. Use a lower deductible for Comprehensive. The highest I would suggest is $500.
Is There A Way To Lower My Auto Insurance Premiums
Most insurance companies have discounts they can offer drivers to lower their premiums. Many of these discounts are based on behavior or the ways insurance plans can be bundled. To learn more about discounts and other ways to reduce your auto insurance costs, visit our webpage on how to lower your auto insurance premiums.
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Why Is Car Insurance Expensive
Updated on Monday, November 29 2021 | 0 min. read| by Aaron Besson
You can have a high car insurance rate for many reasons, such as your driving record and the age of your vehicle.
Car insurance is expensive for multiple reasons. You can control some of these factors, such as your driving history and the deductible you choose. There are also factors you can’t control that may lead to a high car insurance premium, like your age and the crime rate in your area.
In this article:
What States Have The Highest Insurance Rates
Some states have higher insurance premiums than others. Each state sets its own insurance laws. Thats why drivers in Ohio pay around $1,050 per year for car insurance, on average, while the average driver in Michigan pays over $2,800 per year.
The most expensive states for car insurance in America for drivers with a clean record include:
All prices above are based on estimated insurance premiums for a middle-aged driver with no accidents.
Fortunately, having a clean record is important in every state. A clean driving record with no accidents will lower car insurance premiums in all states. Although car insurance may seem expensive in states like Michigan and Louisiana, drivers with accidents on their record will pay even higher rates so be thankful you have a clean record with no accidents.
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Your Car Is Expensive To Insure
Expensive cars and luxury vehicles cost more to insure than inexpensive ones because the cost to repair or replace is higher. Small sports cars are involved in accidents more often than family sedans, so they come with higher premiums. Even if you only purchase liability coverage, you’d pay more to insure a big truck than a small hatchback because the truck can do more damage in an accident.
Why Is My Insurance So High With No Accidents
So youre a good driver. Youve never been in an accident. Youve never even made a claim on your car insurance policy. Why are you paying so much for car insurance?
There are a number of reasons why your insurance may be so high with no accidents. Today, were explaining all of these reasons to help you understand why youre paying high prices. Sometimes, youre legitimately paying too much. In other cases, insurers are charging a competitive price for your policy and you just dont understand how insurance pricing works.
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Reasons Your Car Insurance Rate Changes
While it can seem arbitrary, there are actual reasons you can see your price go up and down.
Car insurance rates can change based on factors like claims, driving history, adding new drivers to your policy, and even your credit score. But they can also change based on a variety of reasons that are largely out of your control.
Speeding Tickets And Other Moving Violations
Violations on your motor vehicle report, especially a DUI or multiple speeding tickets, tell your insurance company that you’re more likely to have an accident than a driver with no violations. The more violations you have, the higher your risk to file a claimresulting in auto rate increases. Even a minor moving violation could increase the cost of your auto policy. Keep in mind that insurance companies won’t increase your rate due to a non-moving violation like a parking ticket.
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Practice Good Driving Habits To Lower Car Insurance Cost
Following safe driving habits and holding an accident-free driving record is perhaps the most straightforward and evident approach to reducing your insurance rates. A few states provide safe driver courses that can restrict the points on your license, and you may be able to reduce your rate if the insurance agency accredits the course.
Many insurance companies offer discounts for signing up for defensive driving courses. Be sure to inquire with your insurance company regarding this offer before registering. Each state has its ordinance and requirements regarding accredited defensive driving courses, and you may check throughGEICO more about this.
If you choose to sign up for the class, either in-person or online, the violation may be lessened or excluded from your record entirely. Hundreds of money annually can be saved by avoiding mishaps and tickets altogether.
How To Lower Your Car Insurance Rates
Now that weve answered the question, Why is my car insurance so high? the next question to ask is, What can I do about it? Fortunately, lowering your car insurance rates may not be as hard as you think.
In some cases, it may be as simple as switching to another insurance company, but you can also try one of these other strategies:
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Your Limits And Deductibles
A limit is the maximum amount your policy will pay toward a covered loss. Typically, each coverage in a policy has its own limit, and you may be able to adjust it based on your needs. You’ll likely find that the more coverage you purchase, the higher your premium may be. Your deductible the amount you agree to pay before your insurance kicks in to help pay for a covered loss also plays a role in the amount of your premium. Generally, you may find that setting a higher deductible means you’ll pay less for your policy.
Your insurance provider can help you decide which limits, deductibles and coverages are right for you. They can also help identify any discounts for which you may qualify.
Reason: Coverage Levels And Types
The type of coverage you choose and the level of insurance you have can greatly influence your insurance rates. Every state decides its own rules and requirements for minimum coverage requirements on any type of policy.
For example, some states have basic minimum requirements for property damage and bodily injury coverage. Others require additional coverages such as underinsured and/or uninsured motorists and personal injury protection or medical payments coverage.
A state like South Carolina, for instance, requires drivers to carry the following:
- A minimum coverage of $25,000 per person for bodily injury
- $50,000 per accident
- $25,000 in uninsured motorists coverage and property damage coverage within the same limits
Since the minimum requirements for drivers differ by state, you may start with different rates and coverages just on a basic liability insurance policy alone. Furthermore, if your car has a lien, you may need to have additional coverage or higher limits, which would affect your annual rates.
The answer to the question Why is my car insurance so high? may lie in the type of coverage you have. Generally, the more coverage your car has, the more you should expect to pay.
For example, do you have a full coverage insurance policy, which includes collision and comprehensive coverage? If so, it may cost you about 170% more in premiums than a policy with liability coverage only.
What to Do About It: Change Your Coverage
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Move To A Cheaper Location
Moving to a new state may not be the most cost-effective way to save money on car insurance, but if youre thinking of moving anyway, you can compare prices in each destination before you decide where to move.
Remember, its not just the state that matters: living in a densely-populated city with a lot of cars on the road will often mean higher prices than living in a small town.
How Are Car Insurance Payments Calculated
Lets jump right into how car insurance premiums are calculated.
Insurance is a business based on risk assessment. There are a lot of factors that go into creating a policy and calculating the customers payment amount. While some factors that determine a car insurance payment amount may seem random, they do have a real, provable effect on risk.
However, there are some things that should never impact your car insurance payment. These things include race, religion, and political party.
Your car insurance payments are decided by your insurer. The final amount is based on a complete breakdown of a lot of factors about you. Those factors are broken down into three categories: you, your car, and your coverage.
Lets talk about how your general profile could potentially affect your car insurance payment:
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How Does Your Vehicle Affect Your Car Insurance Payment
After your insurance provider has figured you out, theyll take a look at your car next.
- Car Make and Model Some people think that the newer your car is, the less youll be charged for insurance. Newer cars need fewer repairs and have more up-to-date safety specs. That means theyre a lower risk and cost less to insure. This is not the case. Remember every bell and whistle comes with a price tag to repair or replace if a claim is filed.
- Amount of Use If you drive every day for long distances, youll likely be charged higher premiums than if you drive short distances or only on the weekend. The more miles, the more risk, so this is an important factor for your auto insurer.
- Car Location It may not seem fair at first, but if you drive and keep your car in a big city or high risk location, youre likely to be charged more for insurance. This is because some cities are riskier places than others. If there are more car thefts and accidents, insurance premiums could potentially cost more.
Want To Lower Your Car Insurance Switch To Freeway
If youre one of the people wondering, Why is my car insurance so high?! youre not insured by Freeway Insurance.
Freeway offers the lowest rates, even for drivers who have a bad driving record. Why pay more than you need to for auto insurance? Get cheap car insurance online from Freeway Insurance quickly and easily and find out how much you can save. Or, give us a call at 777-5620, and our friendly, experienced agents will help you find the best car insurance at the lowest price.
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Reason: You Pay For Coverage You Dont Need
If you think your car insurance is too costly, you need to take a closer look at your policy. Do you need to pay for things such as car rental coverage and roadside assistance? Although such coverage can provide some convenience, they are not the most important things to pay for.
What to Do About It: Remove the Unnecessary
Go over your insurance policy line by line and ask your provider about removing anything you do not need. If you pay for roadside assistance, for example, you should check with your credit card company to determine whether it offers the same benefit to cardholders. If it does, you can drop this service from your car insurance policy.
How To Lower Your Rates
Shopping around is essential to find the lowest car insurance rates for you. Many factors affect an insurance quote, and each company calculates the factors relative importance differently. So the cheapest insurer for your neighbor likely wont be the cheapest for you.
Unless you compare prices, you wont know which company will offer someone in your situation the best rate. NerdWallets car insurance comparison tool can help.
Drive carefully. Your rates will be lower if you keep your record clear of accidents, speeding tickets and other violations.
Pay bills on time. In most states, having a good credit history can save you hundreds of dollars a year on car insurance compared with a driver with poor credit.
Choose your vehicle thoughtfully. When you buy a car, the sticker price and monthly payments arent the only costs to think about. Some models can be much less expensive to insure than others, so check rates before you buy.
Consider a higher deductible. If you can afford to pay a bit more out of your pocket after a claim, opting for a higher deductible will reduce your insurance rates. Then, if you dont make a claim, youre certain to come out ahead.
Ask for discounts. You might save money because of organizations you belong to, equipment on your car, setting up automatic payments or dozens of other factors.
Although dozens of factors go into your final insurance premium, these are among the most important:
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What Goes Into The Price Of Car Insurance
The price of your car insurance is about more than just your driving history. You might have a clean driving history yet still pay significantly higher premiums than someone with an accident-filled driving history.
Some of the factors that go into the price of car insurance include:
Your Driving Record: Insurance companies want to know your complete driving history before offering you a policy. This includes any accidents or incidents from your past. If youve never had an accident, then you might still pay high prices because of previous speeding tickets or traffic violations.
Your Driving Activity: How far do you drive to work every day? How many miles do you put on your vehicle every year? The more you drive, the riskier your driving activity is.
Your Credit History:Your credit history has a powerful effect on your insurance rates. Your insurance company may ask to see your credit history, including your debts, tax liens, personal judgments, and medical bills.
Your Location: Drivers in some states pay significantly more than drivers in others. Were not just talking about drivers in rough winter climates. Drivers in Louisiana, for example, pay some of the highest insurance rates in the nation. Your state can have a significant impact on your insurance rates.
Other Reasons Why Your Car Insurance May Be High With No Accident History
Some people have gone their whole lives without being in an accident but they still pay enormous insurance premiums. Here are some of the reasons why you might pay high car insurance prices with no accidents:
- You have a terrible driving record, including points-related offenses like speeding tickets or traffic violations
- You have a history of big claims
- You have a long commute and/or put a lot of miles onto your vehicle every year
- You have a poor credit history
- Youve canceled auto insurance in the past
- You have a DUI or other similar offense
- Youre a young, unmarried male
- You live in a state or region with high insurance premiums
- Youre driving a car thats perceived to be unsafe or riskier than an ordinary vehicle
- Youre paying too little for your deductible
- Youre paying for more coverage than you need
- Youre not bundling insurance plans together
- Someone has stolen or abused your identity
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Why Is My Truck Insurance So High
It can be more expensive to insure trucks than cars, but it really depends on the above factors, along with which truck and car were talking about. If a truck is much more valuable than a car, its more expensive to replace it, so that alone will be a factor.
Beyond that, trucks are larger and can cause more damage. If you hit someone with a huge truck, instead of with a small car, theres more potential for injury and damage to be caused, which the insurance company wants to factor in to the rates they charge people who own trucks.
A larger vehicle is also more prone to come into contact with various obstacles, or to be hit by another driver. Something that might be a near-miss in a small car could end up being a collision in a truck.
Still, if youre a responsible truck driver with a clean driver record, it may feel costly but those two things alone will help keep your rate low. Use our tools to find the best rates, and keep driving safely, and youll end up paying as little for car insurance as possible while still retaining the level of coverage that you need.