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If you’ve ever asked yourself, “Why is my car insurance so expensive?” you’re not alone.
Auto insurance premiums, like most costs, climb over time, and certain factors are pushing premiums up even faster than the overall rate of inflation. Maintaining today's autos is more expensive, and medical costs are also rising in price. Higher premiums are passed on to you as a result of these expenditures.
The good news is that there are steps you can take to reduce your auto insurance costs. While some of the parameters used by vehicle insurance companies to determine your premiums are out of your control (for example, your age), others can be improved with a little effort.
If your car insurance is prohibitively expensive, a variety of reasons could be to blame. Your age, driving record, credit history, coverage selections, the automobile you drive, and where you live are all common causes of excessively high insurance premiums.
Factors that can make car insurance expensive
- Where you live
The location of your home can have a surprising impact on your insurance prices. Vehicle theft, vandalism, hailstorms, traffic congestion, and other issues that tend to create higher insurance claims vary by location. Because cities are more prone to traffic accidents than small towns, your rates will probably be higher if you live in a major city. If you travel, the level of risk in the area you pass through every day may be taken into account. If you reside in a small town but drive to a large metropolis, your rates will almost certainly be higher than if you lived and worked in a small town.
Your ZIP Code is commonly used by insurance firms to estimate the risk level of your region. It's probably not worth moving only to save money on car insurance, but if you're going to move anyway, you might as well priorities regions with fewer vehicle-related issues.
- The year of your birth
If you're under the age of 25, you're probably confused as to why vehicle insurance is so expensive. This is because teenage drivers are significantly more likely to be involved in vehicle accidents, and their high rates reflect this. Senior drivers, on the other hand, will pay higher premiums because the probability of an accident increases after the age of 69.
- Your driving record
The safer your driving habits are, the less likely you are to end up in an accident. Because insurance companies are aware of this, they place a high value on your driving record when determining your premiums. Accidents, speeding tickets, DUI convictions, moving penalties, and other similar offenses will result in increased risk and premiums. You may have problems finding insurance that would cover you if you have a history of driving accidents.
A driving history, like a credit score, can improve over time. Insurance companies may consider you a high-risk driver now, but if you keep your driving records clean and drive properly then you can improve your records. Many companies will only take your past three years' records and not beyond that. If you are the one with a clean driving record then you can typically save money and get cheaper rates from their insurance provider and are often eligible for “good driver” or “safe driver” discounts.
- Your previous insurance history
If you go without insurance for some time, your premiums will increase. Switching insurance companies will not affect this issue, but going without coverage for even a single day might have a massive influence on your auto insurance costs.
Consider purchasing a non-owner auto insurance policy if you anticipate being without a car for an extended period. You will be able to keep your driver's license active during this time if you have such insurance.
- Your coverage limits
To meet state minimum requirements, almost everyone must obtain some level of auto insurance coverage (residents of New Hampshire have no minimum coverage requirement).
- Your deductible
Your auto insurance policy's deductible is the amount you must pay toward a covered item before the insurance company takes over. For example, if your collision deductible is $500, you'll have to pay $500 for repairs before the insurance company covers the rest (up to your coverage limit).
The lower your deductible, the more probably your insurance company will be required to pay out if you are involved in an accident. As a result, greater insurance rates are associated with lower deductibles.
Setting an extremely high deductible, on the other hand, may leave you unable to pay for repairs if an accident occurs. Calculate how much you can safely afford to spend for repair bills and other expenses, and then set your deductible to that amount. If you have $2,000 in an emergency savings account, for example, you might set your auto insurance deductible to $2,000 because you know you can easily pay that amount for repairs.
- Your gender
According to the Insurance Institute for Highway Safety, male-driver accidents are often more severe than female-driver incidents, and men are more likely to die in an accident than women. As a result, insurance firms frequently charge men (particularly young men) greater premiums. Men in their twenties spend $15 more per month on average for basic liability-only automobile insurance than women in their twenties.
When all else is equal, the gender factor improves with age: from their thirties to their fifties, men and women receive about similar insurance premiums. In addition, Hawaii, Massachusetts, Michigan, Montana, North Carolina, and Pennsylvania do not let insurers consider gender when determining premiums.
- Your driving experience
People tend to improve their driving skills with time, making them less risky to insure. The longer your driving history, the better, especially if you haven't had any accidents in a long time. This is why insurance prices for teenagers and drivers in their early twenties are so insanely high.
How can I lower the cost of my car insurance?
Lowering your vehicle insurance costs is as simple as improving your credit score, taking advantage of your insurance company's special discounts, and maintaining a clean driving record. However, using a quote comparison service is one of the greatest ways to save money on vehicle insurance. These websites enable you to compare and select auto insurance policies from a variety of insurers all at once.