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Why Is Car Insurance So Expensive?- Reasons Why It’s So High & How To Save Money

Why Is Car Insurance So Expensive

Every month when you go to pay for your car insurance do you ever think to yourself “Why is this so expensive?” If this sounds like you, you are not alone. There are many other individuals who feel the same way. Like many other monthly bills, car insurance is one that tends to increase as time goes on. You might be wondering why? Well, cars are continually more expensive to repair and the medical costs continue to increase as well. Car insurance companies need to account for these increases. 

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Although you can’t avoid paying for car insurance, there are some things you can do to lower your car insurance premiums. Some of these factors are out of your control but it is important to be aware of all the different things that will affect your car insurance premium. If you focus on the factors that you can control, you will be able to lower your premiums and ultimately have lower monthly payments. Listed below are some of the main factors that affect the cost of your car insurance. 


The City You Live In


One of the biggest factors that will affect the cost of your car insurance is where you live. Different locations have different rates for vandalism, vehicle theft, or storms that will generate insurance claims. They will base these common claims on where individuals are located. For example, if you live in Florida where hurricanes are more prominent than a location like Michigan, you will see those costs in your premiums. 


Another example is if you live in a major city, your rates will likely be higher than if you live in a quiet small town. You have a higher risk of being involved in an accident in a bigger city with more traffic congestion. For that reason, they will charge a higher premium. It is important to be aware that insurance companies will typically use your zip code to determine the risk level of your location.


Why does this matter? Well, if you live in a small town but commute to a larger city your rates will likely be higher than if you worked and lived in a smaller town. Again, this is all due to the fact that driving into a busier city means a higher risk of getting in an accident becasue of larger traffic volumes. 


What Is Your Driving Record Like?


Have you been in a lot of accidents? Do you have a lot of points or tickets on your driving record? If so, this will greatly impact an increase in your car insurance. It will definitely be more expensive if you have been involved in a lot of accidents. Insurance companies will use your driving record to calculate your rates. 


This means any speeding ticket, accident, or driving violation will be reported to your car insurance agent and they will most likely raise your rates. Furthermore, if you have multiple bad situations on your driving record you might have a hard time finding a car insurance company that will cover you.


The good news is that your driving record can improve over time. If you prove that you can drive safely with no tickets or driving violations for a period of time, your record will improve. With this improvement, your car insurance premiums will lower as well. Your insurance company might even offer different incentives for safe drivers who either don’t have a bad record or individuals who are working on getting a better record. 


What Is Your Deductible?


It is very important for you to be aware of your car insurance deductible. This deductible amount is what you are responsible for in the event of an accident. You are responsible for any charges up to your deductible and then once you meet it, your insurance company will cover the other costs. You will want to be aware of the amount you are responsible for in case you need to pay for any car repairs. 


So, it is important to note that the lower your deductible is the higher your insurance premium will be. Why is this? If you have a low deductible and get in an accident, your insurance company will have to cover the remaining costs. They ultimately will make you pay for lower deductible amounts by higher premiums so they still get the money they need out of you. 


If you set your deductible amount very high, you might have a hard time paying the repair bills if an accident does occur. This is why you want to come up with a reasonable amount that you can afford to pay if you do need to put money towards car repairs in the event of an accident. You want to always be prepared to pay your deductible amount so you know you can financially afford to repair your car.  


The Year You Were Born


Your age has a huge impact on the cost of your insurance. If you are younger than 25, you will have a much higher cost of insurance. Why is this? Statistically speaking, individuals who are younger than 25 are more likely to be in a car accident. They are not as experiences therefore are a higher liability. This also happens to elderly individuals. As we start to age, we might become less aware of our surroundings and car accidnets could occur. Insurance companies are aware of this and will start to increase your insurance when you start getting into your elderly years. 


The truth is, there is no way to avoid this factor. You cannot control your age. This is one of those factors that you just have to accept and put up with. Once insurance companies see you have more driving experience after the age of 25 they will lower your premium for a good amount of time. 


How Often Do You Drive Your Car And Where To?


The more often you have to drive your car, the higher risk you have of getting into an accident. If you have higher mileage then you might face a higher car insurance premium. Car insurance companies know that the more you drive the more at risk you are to accidents. Often car insurance agents will ask you to disclose your annual mileage when you sign a new policy. This number will play a factor in the overall premium amount. 


How Experienced Are You And What Type Of Car Do You Drive?


As you can imagine the more experienced you are, the less risky you are to insure. The insurance company will definitely take this into account when they are formulating your car insurance premium. The longer you have been driving accident-free, the better off you are at having lower premium rates. Obviously, over time as you start to get more experienced and drive you will start to see lower car insurance rates as long as you keep your driving record clean. 


The type of car you drive will also greatly impact the overall cost of your car insurance. Some cars are more expensive to repair than others and some cars are more likely to get stolen. Insurance companies take note of this and charge higher rates for cars that fall into those categories. Additionally, vehicle safety will affect these numbers. If your car has extra safety features then you might be able to get some sort of safety discount depending on your insurance companies rules. 


How Can I Save Money And Pay Less?


There are a few different options that you have to try and save some money on your monthly car insurance. One way is to explore the option of pre-paying your car insurance upfront. Some insurance companies will charge you less if you do this rather than making monthly payments. This can be difficult for individuals to afford as it is a large lump sum of money upfront. 


Another way to save some money is to talk to your insurance agent about any discounts that they offer. Some insurance companies will offer discounts to individuals who bundle their insurance. For example, going through the same company for car insurance and homeowners insurance. This option does not always work for individuals but it is worth asking your agent about. 


Shop Around And Seek Other Options


Do you feel like you are paying too much for your car insurance? If this sounds like you, definitely seek out your other options. Shop around to see what else is out there and what other companies offer. Every insurance company has its own rules and own packages with different incentives. You need to find the right package that works best for your situation. 


Use your connections when you are trying to look into other companies and other options. You can also research on google to find the different companies that you want to look into. Once you have determined which companies you want to target, contact their insurance agents. The easiest way to handle this is a quick phone call to talk about all of your options. There are plenty of companies out there with different offerings it can just be difficult to find the right company that best fits your situation. 


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