You answered all the questions and provided every last detail. Then that sinking feeling hits you.
That’s when you realize how much you’re going to be spending on car insurance.
Getting an auto quote that is more than you were hoping to pay is a downer.
If you’ve been on a parent’s car insurance and recently switched to buying your own coverage, you could be surprised to find out how much insurance costs.
Is there anything you can do?
There are two key things. First, work out why your insurance is so expensive. From there you can see what your options are to get the quotes down.
Second, learn the tactics to help you find the best car insurance rates whatever your circumstances.
So first up, why is your car insurance so expensive?
Reasons why car insurance is expensive
Here are some of the main things that affect car insurance rates. But remember, there might not be one single factor to blame.
There’s a pretty long list of things that influence your rate. We can’t give you one simple answer.
In fact, it might not just be down to your driving – across the industry costs are going up. But here are some of the main culprits.
1. You’re under 25
There’s no escaping it; young drivers pay more for insurance – especially male drivers.
Why are average car insurance rates higher for younger drivers? Insurance companies see them as a bigger risk. According to the Insurance Institute for Highway Safety (IIHS) drivers aged 16-19 are three times more likely to be in a fatal collision than drivers over 20.
So when can you expect your rate to start coming down? Studies vary but generally from 25 onwards things should get a little easier.
2. You don’t get the discounts your parents do
If you used to be on your parents’ auto policy, you will probably see a higher rate once you buy your own policy.
This is because the discounts your parents were eligible for might not apply to you on your own. Multi-vehicle, or multi-policy (e.g. homeowners and auto) discounts can save a lot of money.
Losing out on these could mean you are suddenly paying a lot more in premiums.
3. You’re a guy
Men, particularly young men, pay more for car insurance. Until age 21 male drivers will pay about 20 percent more, but the picture is much more mixed for drivers over 30.
As with age, this is generally to do with how risky insurance companies think male drivers are.
According to the IIHS, male drivers between the ages of 20 and 29 are more than twice as likely to be in a fatal accident.
4. You live in a city
Where you live impacts your rate, and urban areas have higher car insurance than more rural areas. Neighborhoods with high rates of vehicle theft or heavy traffic congestion could also cost you more.
Right down to zip code level, your address impacts your insurance rate.
There are huge variations in auto insurance costs between states. For example, Michigan is renowned for higher premiums, but states like Maine or Idaho are generally more affordable.
5. Your driving history
Insurance companies don’t like drivers with tickets. While a parking ticket shouldn’t increase your premiums (unless you didn’t pay a fine on time) moving violations are a different story.
Your insurance company is trying to work out how safe you are as a driver. Tickets for moving violations don’t help your case – especially when you have more than one.
As well as the number of violations, the impact will depend on the type of offense. Texting while driving could increase premiums by 22 percent, while a DUI could increase your rate by 77 percent, according to The Zebra.
6. Your past insurance claims
If you caused an accident that resulted in an insurance claim this could push your premiums up.
Not every claim is guaranteed to increase your rates. If you make a smaller claim or have a policy that includes some kind of accident forgiveness provision a claim might not be the reason your insurance is expensive.
An at-fault accident with over $2,000 damage could increase your premium by almost 50%.
7. Your credit score is low
Bad credit has a surprisingly big effect on your insurance premiums. A good driver with a bad credit score will pay potentially twice as much for insurance as someone with a clean record but a strong credit rating.
Why? Insurers claim there is a correlation between a person’s credit score and their driving record.
The relationship between credit score and driver safety isn’t a given. Some states such as California don’t permit using credit scores to set rates. Unless you live in one of these states a low credit score could be why your insurance is expensive.
8. You have an insurance gap
Insurance companies prefer drivers with long, uninterrupted insurance coverage. If you haven’t had insurance before or stopped your coverage this can make your policy more expensive.
This is why you should stay insured when possible. If you let your insurance lapse – even for a short time such as when you switch car insurance companies or leave your parents’ coverage, this could also increase your rate.
This is also the reason why people who have recently moved to the US can see higher rates. With no insurance history, your rate will be higher.
9. Your car
What you drive also plays a role in your rate. However, the big differences aren’t between broadly similar cars like a Corolla or a Civic.
What matters here is type of car. SUVs tend to be cheaper to insure, while luxury and performance cars can cost more than twice as much.
It isn’t just you
While one or some combination of these things could see you paying more for car insurance, keep in mind that rates overall are trending upwards.
If your car insurance went up for no reason – or at least not an obvious one – there could be something else going on.
Americans are driving more miles, having more accidents, in cars that cost more to repair than they were a few years ago.
Add to this mix the rising cost of medical repairs bills and an increasing proportion of uninsured drivers. Even drivers without insurance cost insurance companies money. Uninsured motorist claims totaled $2.6 billion in 2012.
As the cost of providing insurance goes up the premiums these companies charge will increase.
How to get a better rate
You don’t have to just accept your new increased auto premium rate. There are a few things you can do, like consider increasing your deductible, or when it makes sense, opting for liability rather than full coverage.
But one of the best ways to save on car insurance is to keep shopping around. There’s plenty of competition for your auto insurance dollars so it could pay well to shop around and find a better deal. This doesn’t have to be time-consuming experience it used to be.
The Cover app can get you a quote in a matter of minutes. Just answer a few short questions, and we will send you an initial quote within two minutes.