While the average cost of car insurance in the United States is under $100 a month, many Americans pay closer to $150-$200 for their insurance.
If you’re paying $200 a month or more for your insurance, you might be wondering, “Why is my car insurance so high?”
The truth is that there is no simple answer to that question. There are many factors that can impact the cost of your car insurance, including where you live, what car you drive, how old you are, and more.
That said, there are ways to save on your insurance. Check out this guide to learn more about what could be making your insurance payments so high, and what you can do to lower them.
Factors that Impact Car Insurance Cost
There are a variety of factors that impact your insurance rates. Some of these you will have control over, and some you won’t.
To determine how much to charge you, insurance companies calculate the risk that you will make a claim. The more likely you are to make a claim, the more expensive you are to have as a customer.
Your Driving History
One variable insurance companies will consider is your previous driving history. A person who has had accidents or traffic citations in the past is more likely to have them in the future. If you have a history of at-fault accidents or speeding tickets, insurance companies may consider you a “high-risk” driver.
Typically, insurance companies look at your driving history for the past five years. So, if you do have accidents or citations on your record, make it a goal to improve your driving to bring your rates down in the future.
Previous Insurance Claims
Regardless of whether or not the accidents were your fault or not, making claims on your insurance costs the insurance company money. So, if you have a history of making claims on your insurance, the company might view that as a risk. To prevent your insurance from rising, consider paying for small expenses out of pocket.
As a rule, car insurance companies charge younger drivers more for insurance. This is because teen drivers are simply more likely to be involved in car accidents. In fact, motor vehicle accidents are the leading cause of death for teenagers in the United States.
Unfortunately, there’s not much you can do about your age, other than wait. Once you reach age 25, your rates will likely level out.
What You Drive
Another factor that impacts your risk is the car you drive. If your car is older, it may not have the same level of safety technology as a newer car.
By contrast, a higher-end car can also be more expensive to insure. That’s because insurance companies know that it is costly to repair these vehicles or to replace them if they’re stolen.
Where You Live
Where you live and drive your vehicle will also impact how much insurance companies charge you. If you live in an urban area with a lot of other vehicles, you will be considered at higher risk than if you live out in the country.
Insurance companies will also consider the profile of other drivers who live around you. If you live in a high-crime or a high-claim area, they may raise your rates.
Ways to Lower Your Car Insurance
As mentioned in the previous section, there are some factors that impact car insurance that you have control over. Here’s an overview of some of them.
Check for Discounts
Insurance companies offer several kinds of discounts. Typically, you have to know to ask for these options.
If you’re in school, you can often get a discount for getting good grades. This is especially a good option if you are under 25, and are getting charged more for being young.
Many insurance companies also offer deals for bundling insurance. So, if you purchase homeowners or renters insurance, consider buying it from the same company where you get your car insurance.
Levels of Coverage
As the old saying goes, “You get what you pay for.” If your policy offers a high level of coverage, chances are that it is going to cost more. While it might be worth it to pay for this increased coverage, cutting back can be an easy way to lower your bill.
Most states have a minimum for coverage on bodily injury and property damage. If you are insured for above the minimum, you can lower it. Also, uninsured driver coverage protects you against drivers without insurance but is optional.
What’s Your Deductible?
Your deductible is the out-of-pocket cost you will have to pay if you make a claim on your insurance. If you have a low deductible, you will have higher monthly payments.
The tradeoff for a high deductible is lower monthly payments. If you are not the type of person who often makes insurance claims, it may be worth it to take the higher deductible.
Stop Wondering, “Why is My Car Insurance So High?”
If you’ve been wondering, “Why is my car insurance so high?” you don’t need to wonder any longer. With the help of this guide, you can identify the factors that are raising your premiums, and seek out discounts to get better rates.
Are you a new driver looking to get a good deal on your first insurance policy? Check out this guide to learn to find great insurance deals for new drives.