Why Is My Car Insurance So Expensive?

If you think your car insurance is too expensive, there are a number of common factors that could explain your high rates. These include your age, coverage options, driving record, credit history and where you live. Anything that insurers can link to an increased likelihood that you will be in an accident and file a claim, will result in higher car insurance premiums.

  • What Factors Make Your Car Insurance So High
  • How To Lower Your Car Insurance

What Factors Make Your Car Insurance So High

Insurance companies set rates based on how risky they deem you to be as a driver. Individuals that are seen as likely to get into an accident that could result in filing a claim against their insurance will pay more for coverage. Insurers consider many factors when setting rates, so there could be a number of aspects of your driving profile that contribute to your expensive car insurance. Below, we outline some of the most common reasons some drivers pay so much for car insurance.

You Are a Young Driver

One of the most impactful aspects, among those that insurance companies consider, is your age. We found car insurance for young drivers to be 4.5 times more than for adult drivers in their mid-thirties. The main reason for these high rates is that young drivers are statistically more likely to get into car accidents that result in costly claims for insurers.

You Have Chosen Expensive Coverage Options

Car insurance policies that have optional coverages will cost drastically more than those with just the liability coverages. We found that a full coverage policy, which includes comprehensive and collision insurance, costs our profile driver 67% more in annual premiums than one with liability coverage only. Comprehensive and collision insurance cover the cost to repair or replace your vehicle if it is damaged, less your deductible—which is the amount you have to pay out of pocket before your coverage kicks in.

Policies that include both high liability limits as well as comprehensive and collision coverage with low deductibles will be particularly expensive. We found costs for a policy such as this to be $1,053 more per year for our profile driver compared to the rates for a liability only coverage.

You Have a Bad Driving Record

Drivers with recent accidents or traffic violations on their records will usually have among the most expensive car insurance rates. According to our analysis, adult drivers with a bad driving record pay 66% more for full coverage auto insurance than those with no accidents or violations. The reason for this discrepancy in rates is that these drivers are statistically more likely to be involved in a future accident.

Those who have been convicted of a serious traffic violation, such as DUI, may find themselves paying higher rates for auto insurance because they have to get SR-22 insurance. This is a type of insurance policy for high-risk drivers, in which they are required to have their insurer file an SR-22 form on their behalf that attests that they have the required minimum car insurance coverages.

You Have Bad Credit

Car insurance companies will sometimes consider your credit score when setting your premiums, and drivers with poor or no credit history are often charged more for insurance. The reason drivers with bad credit pay more for car insurance is the same as it is for other rating factors: They are statistically more likely to file a claim against their insurance than those with good credit. If you live in California, Hawaii, or Massachusetts, however, your rates will not be affected by your credit score, as these states have banned using credit histories to set insurance rates.

You Live in an Area With Frequent Car Accidents or Thefts

Insurance companies charge you more for coverage if you live in an area with a history of frequent or costly car insurance claims. Insurers do this because they see you as more likely to file a claim that costs the company money. Often, rates by location are set by zip code, so even drivers within the same city can pay different insurance rates.

How to Lower Your Car Insurance

If your car insurance is too expensive, there are a number of steps you can take to lower your rates. Adult drivers can drastically reduce their expensive car insurance rates by comparing quotes to find the cheapest company, and utilizing discounts. Additionally, young drivers can get cheaper rates by opting to be added to their parent’s policy instead of getting their own.

Compare Quotes From Multiple Companies

The insurer you choose has a huge affect on what you pay for car insurance. We have found that the insurer with the highest rates can be as much as 81% more expensive than the cheapest insurer’s rates for identical coverage. Because of this discrepancy, we recommend that you compare quotes from multiple companies to get the cheapest car insurance rates.

Driver ProfileProgressiveGEICOStateFarmDifference Between the Cheapest and Most Expensive Insurer
Adult liability only$698$689$95639%
Adult full coverage$988$1,209$1,70573%
Adult with high limits and low deductibles$1,466$1,773$2,26454%
Adult bad driving record and full coverage$1,474$2,671$2,33281%
Young driver liability only$2,780$4,812NA73%

Utilize Discounts

Most car insurance companies will offer their policyholders a reduction in their car insurance premiums for fulfilling certain criteria. Below, we’ve included common car insurance discounts that your insurer may offer. However the amount you can save and how you qualify will vary by insurer.

Discount typeHow you typically get itPotencial savings
Defensive drivingTake a defensive driving class10% to 15%
Vehicle anti-theftEquip your car with an anti-theft device, such as a GPS vehicle tracker5% to 15%
Good studentBe a full-time student with a GPA of 3.0 or better5% to 25%
OccupationBe a member of a professional organization, such as the Freelancers Union2% to 10%

Young Drivers Get on Their Parent’s Car Insurance Policy

Teenage drivers that purchase their own policy typically pay some of the highest car insurance rates among all drivers. However if they opt instead to join their parent’s car insurance policy, their car insurance costs could be reduced by 66%. Our research has shown this could result in an annual savings on car insurance premiums of $5,096.

Methodology

Rates represent the annual cost of car insurance premiums for male profile drivers living in Chicago, Illinois based on quotes we gathered from top insurers for a 2015 Toyota Camry. Adult drivers were 35 years old and young drivers were 16 years old.

WhyRatesHighV2 Uuswvu
WhyRatesHighV2 Uuswvu

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