Why is car insurance so expensive? | finder.com

Why is car insurance so expensive?

Put the brakes on your high insurance premium by knowing what drives up your rates

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Expensive car insurance could be caused by things you can control like the car you drive and your mileage. On the flip side, how much you pay can be influenced by things you can’t change like your age and the state you live in. Find out if you qualify for discounts and what you can do to lower your rate.

Reasons why car insurance is so expensive

If your insurance bill is setting you back more than you’d like, a few factors could be driving up your rate.

You’re missing out on discounts.

Many insurance companies apply discounts at the start of your policy. But if yours offers more discounts than before or you changed cars or drivers recently, you could qualify for more than you’re getting. It’s easy to save by going paperless or setting up automatic payments.

You’re under 25.

Statistically, newbie drivers under age 25 get into more accidents than their more seasoned counterparts. Generally, you’ll see steep savings into the thousands when you turn 18, 22 and 25.

You drive a lot.

If your four-wheeled friend has ventured across the country with you, you might have racked up higher mileage than is standard. And while that makes you more experienced behind the wheel, it also means you have more chances for an accident.

Your state has high requirements.

Every state has different insurance requirements for the types of coverage and their limits. For example, some states require only liability, while others add underinsured motorist or personal injury protection (PIP). Also, if your state has no-fault laws that let drivers cover their own liability damage, you’ll likely have high requirements and a more expensive premium.

Your coverage is high.

Just like having high requirements leads to higher rates, you also might prefer wide damage protection. Or you might need extra coverage because your car’s loan or lease contract stipulates full coverage. In either case, expect your cost to go up as you add more coverage.

You’ve had a lapse in coverage.

When you fail to stay legal with continuous car insurance, your rates might jump up. Even if you meant to keep coverage, your insurance company sees a lapse as negligent or risky behavior, which could translate into risky driving.

You have poor credit.

A low credit score could affect your rates more than you think. This is because insurance companies find that drivers with poor credit tend to file more claims. You could save up to $1,000 by improving your credit score 100 points. But drivers living in California, Hawaii and Massachusetts bypass this factor altogether since these states bar insurers from using credit at all.

You’ve had a few accidents.

Any at-fault accident can bump up your premium significantly, from a full-force collision to a minor fender-bender. Two minor accidents might cause a small increase, while one or more moderate, at-fault collisions could pile a hefty surcharge on to your premium.

Your car is expensive or really old.

The sticker price of your car has an impact on your premium because it could cost your insurer more money to repair after an accident or require special repair knowledge or replacement parts. On the flip side, an old clunker might also spike your rates if it doesn’t include as much safety tech, antitheft features or universal parts as other cars.

Find a cheaper car insurance policy

Name Product Roadside assistance New car protection Accident forgiveness Safe driver discount Available states
Optional
30%
All 50 states
Save up to 31% with safe driver discounts and bundling all your rides in one convenient policy.
Optional
30%
All 50 states
Enjoy premium perks like better car replacement and accident forgiveness plus local agent support.
Optional
49%
AZ, CA, IL, NJ, OR, PA, VA, WA
Only pay for how much you drive with the Metromile app. Get rates from $29/month plus pennies per mile.
Optional
26%
All 50 states
It's quick and easy to get an online quote with Geico, and you might be surprised at how much you could save.
13%
All 50 states
Enjoy having your own dedicated agent to help you get the best discounts and coverage.
Optional
Optional
55%
All 50 states
Get free quotes from top insurers for the exact coverage you need in minutes.
52%
AZ, AR, CO, CT, DE, GA, IL, IN, IA, KY, LA, MD, MI, MS, MT, NE, NM, ND, OH, OK, OR, PA, SC, TN, TX, UT
Root offers simple, affordable insurance that’s ideal for good drivers. Try the Root app for 2 weeks and see how much you could save.
Optional
Yes
All 50 states
Drivers over 50 and AARP members enjoy special car insurance pricing and benefits.

Compare up to 4 providers

Bottom line

Car insurance rates vary a lot based on your driving record, age and characteristics of your car. If a factor increases your accident risk or could cost more in insurance payouts, you might see a higher premium than you’d prefer. No matter what’s affecting your rates, you can shop around with different providers for the best value you can find.

Frequently asked questions about car insurance costs

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