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Why Is Your Car Insurance So High?

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Maria Neira
April 5, 2021

There are many factors that can affect your car insurance premium, including how many accidents you’ve been in, how many tickets you have, and your driving record in general. 

However, even if your driving record is spotless and you’ve never so much as scratched a bumper, your insurance rates may still seem abnormally high. 

Here are some factors that could be making your car insurance rates so expensive.

Your driving record 

Your driving record is a large contributing factor to your insurance rates. Car accidents, DUIs, or even smaller infractions such as speeding or traffic tickets can cause your insurance rates to increase.

Accidents and tickets can cause an increase from 23% to 78% in your annual insurance rates. And these jumps in your rates can stick around for as long as three years.

Speeding tickets, failure to stop at a stop sign, passing a school bus, and even tailgating can result in up to a 30% spike in your insurance costs.

While speeding tickets and other minor traffic violations are not as hefty of an increase, DUIs come with a much more serious consequence. Studies have shown DUIs to increase insurance rates by as much as 71%.

Hit-and-runs rank as the highest increase in insurance rates at a whopping 78.3%.

As tempting as it might be to speed and cut corners, stay within the speed limit and always be aware of your surroundings. Stop at stop signs and obey the traffic laws and road signs in your area. This could end up saving you hundreds.

Your age 

Age is a huge factor in how much you pay for car insurance. The younger you are, the fewer years of driving experience you have, and thus the higher your insurance rate will be. If you’re between 18 and 25, your insurance rates may be significantly higher simply because of your age.

Your gender 

If you’ve ever heard your parents arguing over who’s the better driver, you likely understand this debate. Gender has a surprising influence over insurance rates. Studies show that men are more likely to receive speeding tickets, DUIs, and get in serious accidents than women, so it’s been understood that women have lower rates than men.

However, recent studies have shown that women still tend to pay higher rates in certain locations than men despite having safer driving records. Ten different cities were studied, and results showed insurance rates for women could be up to hundreds of dollars higher than the rates for men.

Your location 

Location is one of the biggest factors that influence insurance costs. Costs vary from state to state but also depending on what area you live in. For instance, if you live in an urban area, your insurance may be higher because of your car’s increased risk of damage. There are more people in cities, which means more traffic and a higher risk of accidents. There is also a higher risk of theft or property damage in a city than there would be in a rural area.

The cost of auto insurance also varies state by state. States with higher crime rates have higher insurance costs so they can cover vandalism, theft, or property damage. States prone to natural disasters such as earthquakes, hurricanes, or tornadoes, have higher insurance costs to cover damages incurred by weather-related events. Colder states may have higher insurance rates due to the risk of driving in dangerous winter weather.

The three most expensive states for car insurance are Michigan, Louisiana, and Florida.

Michigan rates 

Michigan’s insurance rates are 90% more expensive than the average insurance rate in the U.S. This is due to the state’s unique liability coverage policy, covering an auto accident victim’s medical bills for a lifetime. This drastically increased their insurance rates.

Louisiana rates 

Louisiana auto insurance rates rank at 57% above the national average. This is because of how many uninsured and underinsured drivers the state has. Because so many drivers don’t have enough insurance, they end up engaging in long, messy accident settlements that cost the insurance companies thousands, and the driver’s insurance coverages skyrocket.

Florida rates 

Florida car insurance rates are also high because of uninsured drivers, but the number of elderly people and college students also influences the rates. These factors cause Florida’s average insurance cost to sit at 48% above the national average. Tourists that aren’t familiar with Florida roads and traffic are also a factor that increases insurance costs.

Location is one of the biggest determining factors in how much or how little you will pay on your car insurance. While it’s difficult to move states simply because your insurance rates are high, it’s still a good idea to be aware of a location’s average insurance costs and what factors influence, especially if you are moving soon. 

For instance, if you’re moving to a state with a high rate of uninsured drivers, consider finding an uninsured or underinsured motorist coverage plan. If you’re moving to an area with high risks for hurricanes or other natural disasters, you can protect your vehicle by purchasing some form of comprehensive coverage. 

Your payment consistency 

As you are paying for your car insurance, you may notice a random increase in your bills. This could be because you missed a payment. You may be thinking, why can’t I just pay it late? While you certainly can pay late, missing a payment is a big deal to insurance providers and can cause them to increase your premiums significantly.

To avoid this altogether, set your payments on an automatic payment schedule! This way, you won’t have to worry about missing a payment date. You can also ask if your provider offers any discounts if you pay your six-month or annual premium upfront!

Similarly, if there is a lapse in your insurance coverage because you haven’t paid or haven’t renewed your insurance contract, this could cause your insurance rates to skyrocket. This is especially dangerous if you get in an auto accident while uninsured.  

What car you drive 

Another factor that could be increasing your auto insurance costs is what kind of car you drive. Depending on the make, model, and manufacturer, insurance providers may charge you more for different vehicles. For instance, if you drive a sports car, you will likely have a higher insurance rate than someone who drives a minivan.

How to keep your costs as low as possible 

There are many factors that can make your insurance rates go up, and unfortunately, some are unavoidable. However, there are some factors you can control. Below are our best tips on how to keep your car insurance rates as low as possible. 

1. Keep your record clean 

Car accidents, DUIs, and tickets look bad to insurance companies when they’re evaluating you and will also negatively impact the rates your provider will give you. The more accidents you’ve been in, the higher your rates.

So, be careful while driving! Put your phone down, wait until you get home to eat your takeout, and stay focused on the road. This could save you up to hundreds of dollars a year.

2. Shop around 

 Unlike medical or dental insurance, you can change auto insurance plans anytime you want! So be sure to know all your options, and don’t feel bad if something better comes along and you want to switch providers.

Exploring at least three insurance companies is a great way to analyze your options and understand what coverage is available for you. There may be discounts and deals with some policies too, so ask your provider and see which deal is best for your budget.

3. Carpool 

More miles on your car likely means higher insurance rates. When available, using public transportation is a great way to save miles on your car, but if you live in a rural or suburban area, you may want to consider carpooling.

Find a parent at your child’s school who’s willing to take turns driving or find a coworker to carpool with and start saving money! Be sure to ask your insurance provider about mileage and how that affects your insurance policy costs.

4. Make consistent payments and keep your credit score high 

A whopping 35% of your FICO credit score is based on your payment consistency. So, missing a payment on your car insurance can mean a huge spike in your premium costs. To avoid this, you can set your payments on an automatic payment schedule. You can also talk to your insurance provider about any discounts available for paying your fees upfront.

Your credit score is also an important factor for insurance providers to look at. If you have a poor credit score, this reflects negatively on you and your reliability as a customer, so you will likely get a higher rate than someone with a perfect credit score.

There are some ways you can increase your credit score. Purchasing a home and making consistent payments on it can boost your credit substantially and help you qualify for lower premiums. Getting a credit card is also an effective way to boost your credit score while letting you benefit from points and rewards from the credit as well.

To sum up 

Car insurance can be a hefty expense, especially if you’ve been in multiple accidents in the past few years or live in a high-risk area. These tips can help you lower your car insurance rates and help you understand what factors influence your insurance the most, so you can find what insurance coverage is best for you.

>>READ MORE: How to get the best auto insurance in 2021