Why is auto insurance so expensive?

Why is car insurance so expensive? Car insurance is so expensive for some drivers depending on where they live, how old they are, what make and model year their car is, etc. However, just as there are many factors that increase your insurance policy cost, there are also those that offer you discounts from car insurance companies. Read this guide for more information on how to obtain affordable car insurance.

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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  • The average auto insurance expenditure has steadily risen each year since 2010.
  • Shop around for the right discounts before settling with a car insurance company.
  • Clean driving records will lower your auto insurance costs.

Why is car insurance so expensive?

Car insurance is expensive for a lot of different reasons. While drivers would like car insurance to always be affordable, that’s not always the case. If you live in a populated city and drive the newest electric vehicle, you’re bound to pay more for insurance than the rural resident driving a 2008  Ford pickup.

There is a myriad of discounts and ways drivers can save on auto insurance. Follow this guide to learn more about why your car insurance policy is so expensive and how you can lower your premium costs.

How high can car insurance get? Learn more about car insurance rates and the aftermath of car accidents with free legal advice or insurance advice by entering your ZIP code.

Why is car insurance so expensive?

Forbes reported that in the past year, car insurance policies have shifted away from setting premiums and toward user-based insurance due to the COVID-19 pandemic. However, despite this good news, auto insurance prices keep increasing year after year.

In 2017, according to the Insurance Information Institute’s most recent data, the countrywide average that drivers spent on auto insurance policies increased. From 2016 to 2017, the nation’s average auto insurance expense raised 6.4 percent, or from $944 to $1,004.

Aside from normal factors that raise the cost of service, insurance premiums have been associated with population increases in certain areas, insurance claims after natural disasters, and the increased reporting of distracted or impaired driving. AAA reports these behaviors as top risks on the road.

But what directly affects your car insurance policy?

What factors determine the cost of my car insurance?

When insurance providers are considering your coverage, they will take into consideration several factors that speak to your ability to pay and what level of risk you pose on the road and for the company.

Your credit history will play a huge role in determining the amount you pay. Drivers with poor credit history tend to pay more for their policy. In some cases, it could be nearly double the amount.

Your age will be something that insurance companies will consider. A longer driving history — or, generally, being a driver older than 25 — will lower rates. Younger, less experienced drivers could pay more than double for the same policy as an older driver.

Why is car insurance so expensive for young drivers? Fewer years on the road. Young drivers tend to pose more risk to the insurance company.

Similarly, your driving record will fluctuate your rates. If you have a history of speeding, have a DUI, or have been in an accident, your insurance provider is likely to increase your rates for several years. Your claim history is included in this.

Keep in mind that that where you live also determines how much coverage you are required to have to protect your car.

III’s top 10 most expensive states to have car insurance in (2017) are:

1 Louisiana $1,443.72
2 Michigan $1,358.62
3 Florida $1,356.90
4 New Jersey $1,350.28
5 New York $1,349.72
6 D.C. $1,334.11
7 Rhode Island $1,300.60
8 Delaware $1,221.29
9 Connecticut $1,168.33
10 Maryland $1,149.42

III’s top 10 least expensive states to have car insurance in (2017) are:

1 North Dakota $659.94
2 Maine $667.38
3 Iowa $674.33
4 Idaho $678.57
5 South Dakota $693.42
6 North Carolina $705.56
7 Wisconsin $731.20
8 Wyoming $742.20
10 Vermont (N/A)

Check out our state minimum liability coverage chart to get an idea of what car insurance policy you need.

Is insurance more expensive for new cars?

Though car insurance providers offer various discounts that may lower monthly insurance bills, drivers may still find that their new cars simply cost more to insure.

Make and model will be one of the major factors insurance companies will consider for your policy. This is due to the accessibility of parts, the cost to replace, and other factors. However, new cars also have updated and new safety features that could help lower your car insurance premium.

And, ultimately, the company you choose will determine your insurance cost.

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Who actually has the cheapest car insurance?

The company with the cheapest car insurance will likely offer discounts you fall into. Generally, though, the big-name companies have the most affordable rates.

GEICO is known for its cheap insurance, good driver discounts, and safety features that lower insurance costs.

State Farm is highly reviewed by customers, and Liberty Mutual is highly rated for its discounts.

You will find the right car insurance provider for you and your wallet. Car insurance doesn’t need to be expensive. If you feel you’re paying too much for car insurance, maybe there are factors on your side you haven’t considered.

Why is my car insurance quote so high?

When you signed up for a car insurance quote, you and your driving record were assessed for risk. You may have tallied up enough points against your driving record to increase your rates — or you may have simply chosen the wrong insurance provider.

Do you drive often? Can you get a safe driver discount? Or maybe you are a young driver with straight As. Make sure you are looking for car insurance based on what you can offer, as well.

Do more expensive cars cost more to insure?

Yes. This will fall into the make and model category when your insurance company is assessing your policy.

Why is my car insurance so high with a clean record?

If you live in a high-risk or heavily populated area, your car insurance quotes will be higher than in other areas. Perhaps you’ve missed a car loan or insurance payment. Double-check with your insurance provider to see what you can do to lower your rates.

Why is full coverage so expensive?

This may seem obvious, but full coverage (i.e. bundles or comprehensive and collision type policies) offers the most insurance in the event that your car is stolen, you’re in an accident or any other incident that may cause you to lose your vehicle.

“Full coverage” does just that, covers the full cost of your car.

Why is my car so expensive to insure and how can I lower my auto insurance costs?

Well, we now know the various factors as to why your car is so expensive to insure or why your insurance quotes are higher than expected.

The first thing you’re going to want to do is shop around. See what is available for drivers like you in your area. From there you can determine how to lower your car insurance costs.

How can I lower my car insurance premium?

First, you can look at your policy. Do you need all the coverage you are paying for? If not, you may be able to drop pieces of your policy, which will lower your costs.

You can also ask for a higher deductible, which will lower your costs. The III says that increasing deductible costs from $200 to $500 could reduce coverage costs by between 15 to 30 percent.

If your car is not worth much, consider lowering your coverage on it. This will lower your premiums.

Other ways you can lower your premium is to ensure you are getting the discount mandated in your state.

Forbes, for example, reported that in New York, a 10 percent discount for liability and collision coverage for three years is available when drivers take a defensive driving course and send a certificate of completion to the insurance company.

Other common discounts include:

  • Bundling options
  • New car discounts
  • Anti-theft features
  • Car safety features
  • Multi-car discounts
  • Company discounts
  • College discounts

There are many more, even too many to list. So when you’ve found a company you think you’d be happy with, do your research and compare it to others in your area.

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Try These Tips

If you’ve been worried because car insurance is too expensive, now you know what discounts are out there and why your car insurance is so expensive. It’s time to apply that to your insurance search.

Don’t forget:

  • Compare insurance companies before and after you’ve bought a car
  • Ask for a higher deductible
  • Keep a clean record
  • Research discounts

Ready to buy car insurance? Compare car insurance quotes to get the best rate, and learn more about the aftermath of car accidents with free legal advice or insurance advice by entering your ZIP code.


  1. https://www.iii.org/fact-statistic/facts-statistics-auto-insurance#Auto%20insurance%20expenditures,%20by%20state
  2. https://www.forbes.com/sites/edgarsten/2020/12/07/covid-sparks-spike-in-usage-based-insurance/?sh=210c17624ed0
  3. https://newsroom.aaa.com/2018/03/distraction-tops-drivers-list-growing-dangers-road/

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