Why Is Car Insurance So Expensive? How To Pay Less

Why Is My Car Insurance So High?

For 11 straight months, people have paid less for new cars, while car insurance has marched on a steady climb for 28 straight months. So why is car insurance so expensive?

Your car insurance may be high for a myriad of reasons. There’s no one factor to point to that explains the increases. But here are personal factors that influence what car insurance companies charge you for insurance:

Driving Record

Auto insurance companies typically reward drivers with clean driving records. You are more likely to see higher costs if your driving record shows incidents, such as moving violations, speeding tickets, at-fault crashes and charges for DUI.

Experience and Situation

New and young drivers under the age of 25 often see higher insurance rates than more experienced, older drivers. People who are married tend to receive lower rates.

Changing Coverages

Buying a new vehicle or adding a new driver to your policy can increase your car insurance rates. You also can add other coverages that can push your rate higher.

Location, Location, Location

Real estate doesn’t have a sole hold on location as a major factor. Where you park your car can significantly impact what you pay for insurance. Rates vary by state, from city to city, within cities, and among urban, suburban and rural areas.

Insurance Lapse

If you allow your car insurance to lapse, insurance companies are more likely to increase your rate. If you’re switching car insurers — which you’re permitted to do — don’t cancel your current policy until you have another policy.

Credit Score

A car insurance company may assign you an insurance score based on your credit score. The insurance score reflects the likelihood you will file a claim. If you have a low credit score, you are considered at higher risk of filing a claim, and that gets reflected in your rate.

Your car insurance rates can also go up based on the make and model of the car you drive, how often you drive and how far you drive regularly.

Why Is My Car Insurance So High With a Clean Record?

You may want to throw up your hands and ask: Why did my car insurance go up without an accident? But matters beyond your control also impact car insurance rates. Economic factors in recent years, such as inflation and supply-chain problems, just happened to coincide with increases in damaging weather and dangerous driving.

Those factors are squeezing the profit margins of car insurance companies — and their ability to pay claims — forcing them to raise rates.

Inflation

Insurance rates typically lag behind economic factors, such as inflation and supply-chain issues, that influence pricing. Car pricing is showing signs of weakening.

However, inflation in 2023 saw the prices of cars and car parts soaring. The rise in those prices was bolstered by supply-chain problems, as manufacturers and auto repair shops were unable to get parts. The cost of labor and other equipment also increased.

Damaging Weather

A record 28 weather and climate events that each caused at least $1 billion in damage crisscrossed the United States in 2023, according to the National Oceanic and Atmospheric Administration. The total cost was $92.9 billion.

2023 sits in first place when it comes to damaging weather, with six more billion-dollar weather and climate events than the previous record year of 2020.

Dangerous Driving

While the number of fatalities from car accidents — an estimated 44,450 — dropped by 4% from 2022 to 2023, dangerous driving has risen by 13.6% since 2019, says the National Safety Council. The council blames speeding and distracted and impaired driving, including texting and driving statistics that were falling through 2022, as contributing factors to the fatal car crashes.

All of it has resulted in a growing number of claims, lawsuits and auto insurance fraud that are pressuring insurers to raise rates. “How much does insurance increase after an accident?” is an important related question whose answer also depends on a variety of factors.

Ways You Can Save on Your Car Insurance

While the price you pay for car insurance might still be higher than you want, you can take steps to pay less. Here are a few ways you can save:

• Compare competitors’ quotes
• Check insurance costs before you buy a vehicle
• Pay your annual premium in full
• Ask for a higher deductible
• Reduce coverage on older vehicles
• Bundle car insurance with other insurance
• Consider a pay-per-mile policy
• Raise your credit score
• Ask about discounts

Many factors roll into setting the price you pay for car insurance. While several of those issues are out of your hands, you can reduce the sting of a car insurance price spike by taking advantage of the matters in your control, such as maintaining a clean driving record.

Get a Car Insurance Quote From ConsumerShield

If you’re still asking, “Why is car insurance so expensive?” understand that a lot goes into car insurance companies setting rates for drivers, and it can be bewildering. At ConsumerShield, we empower you by sharing knowledge about insurance and the law.

If you want a car insurance quote or just have a question, we’re here for you. Get in touch today.