Many factors contribute to expensive car insurance. Your age, driving record, credit history, coverage selections, the car you drive, and where you live are all factors of expensive car insurance. Anything that gives rise to the chance of an accident and a claim will result in higher auto insurance costs.
Factors that make new car insurance expensive
Insurance companies calculate premiums for each driver based on the likelihood of a claim and the cost of that claim. If your insurance anticipates a claim, your rates will rise. When determining prices, insurers consider a variety of factors, but these are some of the most prevalent.
Your insurer
It may seem obvious, but insurance costs vary widely between providers, and you may be paying far more than you need to.
The average cost of insurance for a competent driver for six months is $438 among the top ten insurers countrywide. But the same driver may cost $309 with State Farm or $625 with Allstate. Switching from Allstate to State Farm would save the driver 51%.
The best way to confirm you’re getting the best deal is to shop around and compare rates.
Age (and your gender)
Younger drivers pay 4.5 times more for vehicle insurance than adult drivers in their mid-30s. The main reason for the high rates is that youthful drivers are more prone to cause costly vehicle accidents.
Car insurance is expensive for young males. Men pay roughly 16% more than women of the same age. Drivers get older and pay slightly more than men of the same period, but only by a few dollars a month.
Sharing a policy with an older family member is an excellent method for younger drivers to save money. This can save you up to 58% on your insurance price. They can also qualify for student discounts or complete additional training courses to further reduce charges.
Your home
Car insurance rates vary significantly across the US. Michigan residents should expect to spend six times more for coverage than Maine residents. Factors affecting insurance premiums in a state include minimum coverage requirements, uninsured drivers, and even road maintenance.
Insurance rates might vary throughout a state or even within a city. You may pay extra if you live in an area with high car theft rates or narrow roads that are prone to accidents. For example, in San Francisco, the cheapest and most costly ZIP codes for car insurance differed by $618.
It’s not necessary to relocate only to save money on vehicle insurance. If you’re considering relocating, getting a few sample insurance quotes will help you understand how rates will vary in your new house.
Options for auto insurance
More auto insurance means more money. Our profile driver’s annual premiums for full coverage (including comprehensive and collision) were 170% higher for liability only. Comprehensive and collision insurance pays for repairing or replacing your car if it is damaged.
High liability limits with low deductibles and comprehensive and collision coverage are particularly costly. Coverage like this would cost our profile driver $1,053 more per year than a liability-only policy.
That’s because you have complete control over your policy’s coverage – as long as you’re above the legal limit and meet your lender’s requirements. You are responsible for any claim that exceeds your insurance limitations.
Driver’s license
Insurance providing companies charge higher premiums to drivers with recent accidents or traffic infractions. Adults who recently caused a car accident pay 42% more for vehicle insurance than those who have never driven a car accident. A driver who is more likely to cause an accident is classified as a “high-risk driver.”
Criminal convictions, such as DUI, may result in higher vehicle insurance premiums because of the requirement to obtain SR-22 insurance. Insurers must file an SR-22 form on behalf of high-risk drivers, certifying that they have the required minimum auto insurance coverages.
In some places, taking a defensive driving school might help decrease the impact of a ticket. After a crash, the only method to lower your rates is to wait.
Car
When determining rates, insurers analyze your vehicle. Some cars are safer than others in a crash, resulting in lower rates. A fast or powerful car may encourage aggressive, reckless driving, increasing rates.
Minivans and compact SUVs have the cheapest insurance, whereas smaller automobiles have the highest premiums, possibly because smaller cars suffer more damage in crashes.
Insuring cars with certain features tends to be more costly:
- Newer
- Faster/stronger
- Costlier
- Smaller
For example, going from a premium car to a convertible or a muscle car like a Ford Mustang may result in significant savings on your insurance bill.
Credit rating
Drivers with bad credit or no credit history are often charged more for insurance. Bad credit drivers pay more for vehicle insurance for the same reason as other rating factors: Insurance claims are statistically more likely to be filed by people with low credit scores than people with good credit scores.
Your premiums will not be affected by your credit score if you live in California, Hawaii, or Massachusetts, as these states have banned using credit histories to establish insurance prices.
Erroneous or false entries may lower your credit score on your credit reports, so check them often for accuracy. Above all, pay your credit card and other bills on schedule.
Savings on expensive new car insurance
If your auto insurance is excessively high, there are several ways to reduce it. The most crucial thing you can do is compare insurance quotes: No one says you can’t get a better deal elsewhere just because one firm charges exorbitant pricing.
Adults can significantly lower their auto insurance costs by comparing quotes and taking advantage of discounts. Young drivers can also save money by being added to their parent’s coverage rather than acquiring their own.
Obtain numerous bids from firms
Your choice of insurer significantly affects your auto insurance costs. The most expensive insurer might be up to 81% more expensive than the cheapest for the same coverage. Due to this disparity, we advise you to shop around for the best vehicle insurance rates.
Look for discounts
Most vehicle insurance providers offer consumers a discount if they meet specific conditions. We’ve included some of the finest vehicle insurance savings available. The amount you can save and how you qualify will vary by insurance.
Hope you got the idea why new car insurance is expensive. Click here to learn more about your insurance.
