Let’s face the facts – auto insurance does not come cheap! We bet you’ve found yourselves asking the question many times over – “Why is car insurance so expensive?”. The reasons are many – from your driving history is taken into account to the assessment of your credit scores; we’re breaking it all down in this post titled “Why is car insurance so expensive?” – read on to know more!
How the price of auto insurance is determined
The price of your auto insurance policy comes down to more than just your driving history. You may have a stellar driving background but might find yourself paying considerably higher premiums than individuals with an accident-filled history of driving. Here’s a list of the many considerations involved when car insurance companies determine your car insurance rates.
- Your driving history/record: Insurance firms want to know your whole history of driving before issuing you a policy. This covers any past accidents or injuries that have occurred as well.
- Your commute frequency: How long do you drive to get to work every day? How many miles do you cover annually? Car insurance companies, by default, determine that the more you drive, the more risky your driving activity is.
- Your financial history: Your credit history has a powerful influence on your insurance premiums.
- Your geographical location: Drivers in some states pay substantially more than drivers in others. We’re not just concerned about drivers in harsh winter climates.
- Your demographic: Your age, sex, and marital status all affect your insurance premiums. These variables are typically out of the policy holder’s control. However, your insurance provider can look at previous driving records to settle on a realistic and affordable rate for your insurance package. If a 23-year-old male driver is deemed a higher risk than a 58-year-old female driver, the younger male driver may have to pay more for auto insurance.
- Your vehicle: Your vehicle is clearly one of the most significant aspects of determining your auto insurance price. The sort of vehicle you drive has a huge influence on the price you pay. When you’re driving a $200,000 luxury car, you’re going to pay a higher price than someone driving a $10,000 economy vehicle.
- Your options on policies: Here are some questions to keep in mind when shopping for car insurance. How much protection does your auto insurance policy get you? How much do you pay for the deductibles? Have you opted for a low deductible with a high monthly premium? Have you bought a robust plan that includes all the bells and whistles? Or did you want a better option with minimum liability insurance coverage? The sort of insurance you select – and the choices for that policy – can profoundly affect the amount you pay.
More reasons why your car insurance is so expensive
Some people have gone their entire life without getting in a crash – but they still face high insurance premiums month after month. Here are some of the reasons why you would need to pay high auto insurance premiums even if you don’t have a bad driving history:
- Bad driving record, including offenses such as speeding tickets or traffic violations
- History of massive and frequent claims
- Bad credit background
- DUI or a similar offense in your name
- Single, male, and unmarried
- Live in a state or area with high insurance premium rates
- Drive a car that is considered to be dangerous
- Paying less on your deductible
- Paying for more coverage than you need
States with the highest insurance rates
Many states have higher insurance rates than the general majority. Each state determines its own insurance laws and premium rates. That’s why Ohio drivers tend to spend only $1,050 a year on car insurance, while Michigan drivers spend over $2,800 a year.
The most expensive auto insurance states in America for drivers with a clear record (or any driving record) include:
- Colorado: $1,898 a year.
- Connecticut: $1,892 a year
- Delaware: $1,888 a year
- Texas: $1,983 a year
- California: $1,981 a year
- Georgia: $1,932 a year
- Rhode Island: $1,931 a year
- Florida: $2,389 a year
- Louisiana: $2,412 a year
- Michigan: $2,864 a year
These aforementioned rates are based on the average insurance costs for a middle-aged driver without a history of accidents/injuries. Keeping a clean record is important when trying to find inexpensive car insurance policies. Clean driving histories without a history of accidents or injuries can help lower auto insurance rates in most states. While auto insurance can sound pricey in states like Louisiana and Michigan, drivers with crashes on record may be required to pay higher premiums – so keep it clean and tidy when you’re driving out there!
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