The 9 reasons why your car insurance is so expensive
Having auto insurance is a necessary evil for most drivers. No one wants to have to pay for coverage, but unfortunately, it’s a required expense if you want to drive legally in most states. But why is car insurance so expensive?
Car insurance companies set your car insurance premiums based on your risk profile. This means they will try to into your individual risk profile and determine how likely you are to get into an accident and how much it would cost to cover you if you claim.
Auto insurance companies use a few common factors to help them assess your risk and set your rates. Here are nine of the most common reasons your car insurance rates might be higher than you’d like.
9 Reasons Your Car Insurance is Excessively High
1. Your Car
Auto insurers will consider the type of car that you drive when setting your rates. A powerful, fast car is more likely to encourage reckless driving and get into an accident than a sedate family sedan. Likewise, a car with a lot of safety features is less likely to be involved in an accident than one without.
As a result, family orientated individuals will most likely chose to drive a small to medium size SUV with safety features such as airbags, seat belts and anti-lock brakes. These individuals would most probably be responsible drivers with years of experience.
As such, their rates would be significantly cheaper than those of a young driver who just got their license and is driving a small hatchback with few safety features.
2. Your Driving Record and Claim History
Your driving record is one of the most important factors that car insurance companies look at when setting your rates. So if you have a serious traffic violation such as DUI or speeding, you can expect your rates to be much higher than someone with a clean driving record.
Additionally, if you have had multiple accidents or traffic violations, your rates will most likely be higher. Furthermore, if you previously claimed on your insurance, this will also be taken into account and could result in higher premiums.
3. Your Age
Young drivers are statistically more likely to get into an A young driver is more likely to have an accident than an experienced driver, and so their rates will reflect that. Data shows that young drivers under the age of 25 are more likely to pay 4.5 times more than their older counterparts for annual premiums.
4. Your Gender
Believe it or not, but gender is also a factor that car insurance companies take into account when assessing your rates. Studies have shown that men are more likely to get into accidents than women, and so they tend to pay higher rates.
5. Your Location
Where you live can also affect your car insurance rates. If you live in an urban area, you’re more likely to pay more for car insurance than someone who lives in a rural area. This is because there’s more traffic and congestion in urban areas, which means there’s a greater chance of being involved in an accident.
Your auto insurer will also take into account crime rates in your area. If your neighborhood has a high crime rate, you’re more likely to have your car stolen or vandalized, and so your rates will reflect that.
6. Your Credit Score
Your credit score is another factor that car insurance companies take into account when setting your rates. A good credit score indicates that you’re a responsible individual who is less likely to file a claim. Individuals with bad credit scores are considered to be high-risk, and so they pay higher rates.
7. Your Coverage
The type of coverage you choose will also affect your car insurance rates. If you choose a basic liability policy, you’ll pay less than someone who chooses a comprehensive policy with all the bells and whistles.
8. Your Job
Your job can also affect your car insurance rates. If you have a high-stress job or a job that requires you to travel frequently, you’re more likely to get into an accident than someone with a sedentary job. This is because you’re more likely to be stressed out and distracted while driving.
9. Your Car Insurance Company
Finally, the insurance company you choose can also affect your rates. Some insurance companies charge more than others. So if you’re looking for cheap car insurance, it’s important to compare rates from multiple insurers.
There you have it, nine factors that can affect your car insurance rates. The question now is, how can you cut the cost of your car insurance?
How to cut the cost of your car insurance by up to 40%
Paying excessive rates for auto insurance can be frustrating. If your premiums seem unreasonably high, there are a few things you can do to cut the cost of your coverage.
1. Shop around for Car Insurance
One of the best ways to find cheap car insurance is to shop around and compare rates from multiple insurers. It’s not wise to immediately choose the first company you find. Research various rates and discover who has the best offer before making a decision.
2. Raise your deductible
By increasing your deductible, you will pay more if you do have an accident. Even though this is the case, your monthly premiums will be lower.
3. Take advantage of discounts
Some insurers provide discounts to motorists who fulfill certain requirements. For example, you may be able to get a discount if you’re a good student or if you haven’t had any accidents in the past. Your insurance company may offer you discounts – be sure to ask them about it.
4. Drive safely
The best way to keep your rates low is to avoid accidents and traffic violations. Drive safely and always obey the speed limit to keep your premiums down.
5. Bundle your policies
If you have more than one policy with the same insurer, you may be able to get a discount. Many companies offer discounts for drivers who bundle their auto insurance with other types of coverage, such as homeowners or renters insurance.
6. Stay insured
Finally, remember that it’s important to stay insured. Don’t let your coverage lapse or cancel your policy, as this will only lead to higher rates in the future.
By following these tips, you can lower your car insurance rates and save money on your coverage. Just be sure to shop around and compare rates from multiple insurers before you make a decision.
There you have it, nine factors that can affect your car insurance rates.