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Why Is My Car Insurance So High? A Complete Explanation

Let’s explore the average car insurance rate in the US, how car insurance is calculated, the reasons behind high insurance premiums, and what you can do if your car insurance is expensive.
why is my car insurance so high
Why Is My Car Insurance So High? A Complete Explanation
Car insurance companies use several different factors to calculate insurance premiums. The blog explains why your car insurance is so high and how to reduce the costs. Read on to know more!
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Car insurance is necessary for every vehicle owner to ensure financial protection in the aftermath of any accident or damage. However, why is my car insurance so high? Many factors contribute to calculating car insurance rates; understanding them can help you make calculative decisions about your coverage. Been is here to help you get quotes from different insurance companies to compare prices and make the right decision. Let’s explore the average car insurance rate in the US, how car insurance is calculated, the reasons behind high insurance premiums, and what you can do if your car insurance is expensive.

What is the Average Car Insurance Rate in the US?

Before diving into the reasons for high car insurance rates, it’s essential to have a benchmark. According to recent data, the average cost of full coverage car insurance, including optional theft and damage coverage, is $2,150 per year. Full coverage car insurance includes liability, collision, comprehensive, and uninsured motorist coverage.

However, remember that this amount can vary significantly depending on your location, age, driving history, and the type of vehicle you own. 

Motor vehicle crashes are the primary reason behind the death of US teens. The risk of vehicle crashes is potentially higher among teens ages 16–19 than another age group. That is why the average car insurance cost for 16-year-old drivers with their policy is $8,765, and the average rates for 17-year-olds are $6,829. 

How is Car Insurance Calculated?

Car insurance companies use several different factors to calculate insurance premiums. Some common factors include:

  1. Personal Information: Your age, gender, marital status, and occupation can influence your car insurance rate. Statistically, younger drivers, especially males, tend to have higher insurance premiums.
  2. Driving History: Your driving record includes any accidents, tickets, or violations, that may affect your insurance rates. If you have a driving history of accidents or traffic offenses, you may be considered higher risks by insurers.
  3. Vehicle Type: The make, model, year, and safety features of your vehicle are also considered. High-performance cars or vehicles are more prone to theft typically have higher insurance costs.
  4. Coverage and Deductibles: The coverage and deductibles you opt for can impact your premiums. Higher coverage limits and lower deductibles often lead to higher premiums.
  5. Location: Car insurance rate may vary based on where you live. Areas with higher traffic congestion, crime rates, or severe weather conditions may incur higher insurance costs.

Why is My Car Insurance So High?

Several factors can contribute to higher-than-average car insurance rates. Here are some common reasons:

  1. Age and Driving Experience: Younger drivers, especially those under 25, are considered higher risks due to their lack of driving experience. As a result, they often face higher insurance premiums.
  2. Traffic Violations and Accidents: A history of traffic violations, accidents, or insurance claims can significantly increase your car insurance rate. Insurance companies view these incidents as indicators of a higher likelihood of future claims.
  3. Poor Credit Score: In some states, insurers consider credit scores when determining insurance rates. A low credit score is seen as a sign of financial instability, resulting in higher premiums.

also know about: car insurance for teens

What to Do if My Car Insurance Is High?

Everyone wants to get affordable auto insurance. If you find that your car insurance rates are higher than expected, consider the following steps to manage your premiums:

Shop Around

Compare insurance quotes from different providers to find the best rates for your needs. Each insurer evaluates risk factors differently so that prices can vary significantly.

Review Coverage Options

Assess your coverage needs and ensure you’re not paying for unnecessary extras. Adjusting your coverage and deductibles can help lower your premiums.

Improve Driving Record

Focus on driving responsibly and avoiding traffic violations or accidents. Over time, a clean driving record can lead to lower car insurance rates.

Deductibles

Consider raising your deductibles since they are paid out of pocket before you receive the insurance coverage. You can lower your monthly premium. You’ll need the deductible available in case of an accident or damage.

Look for Discounts

Insurance companies often offer various discounts that can help reduce your premiums. Some standard deals include good driver discounts for keeping a clean driving record, bundling auto insurance with other policies like home or renter’s insurance, or installing safety features in your vehicle.

Consider Usage-Based Insurance

Usage-based or pay-as-you-go insurance programs have gained popularity in recent years. These programs track your driving habits using telematics devices or smartphone apps and adjust your premiums based on your mileage, driving behavior, and other factors. This insurance can save money if you’re a low-mileage driver or have safe driving habits.

Improve Credit Score

Improving your credit score by paying bills on time, reducing debt, and maintaining a good credit history can help reduce insurance rates. Check with your insurer if they consider credit scores and inquire about ways to improve your rates based on your creditworthiness.

Consider a Different Vehicle

Your vehicle type significantly determines insurance rates. High-performance cars, luxury vehicles, or models with a high theft rate generally have higher insurance premiums. If your current vehicle is expensive to insure, consider switching to a more affordable and less risky option.

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Conclusion

Do you still wonder, “why is my car insurance so high?” Note that car insurance rates are influenced by several factors, including personal details, driving history, vehicle type, coverage options, and location. By understanding how car insurance is calculated and taking steps to mitigate risk factors, you can work towards obtaining more affordable premiums. Regularly review your policy, compare quotes, and maintain a good driving record to ensure you get the best car insurance rate. You can also use Beem’s online comparison tool to find the best policy for your needs. Consider the coverage options, deductibles, and premiums offered by different insurance companies and pick the best one that suits your needs.

FAQs:

Why is My Car Insurance Rate Higher Than My Friend’s? 

Car insurance rates are based on individual risk factors. Age, driving history, vehicle type, and location differ between individuals, resulting in varying insurance rates.

Can I Lower My Car Insurance Rate by Taking Defensive Driving Courses?

Completing a defensive driving course may help reduce car insurance rates. It is worth noting that certain insurance companies offer discounts to drivers who complete approved driving courses.

Will My Car Insurance Rate Decrease as I Get Older? 

Insurance rates drop as drivers gain more experience and maintain a clean driving record. However, other factors, such as your vehicle type, may also influence the rates you receive.

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Author

Picture of Aniket Kulkarni

Aniket Kulkarni

A seasoned Product Manager specializing in car insurance content, Aniket has a passion for simplifying complex insurance concepts. His strategic approach to content development reflects years of experience in the product development industry, coupled with a commitment to providing accurate, reliable information.

Editor

This page is purely informational. Beem does not provide financial, legal or accounting advice. This article has been prepared for informational purposes only. It is not intended to provide financial, legal or accounting advice and should not be relied on for the same. Please consult your own financial, legal and accounting advisors before engaging in any transactions.

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