Q

Why is my car insurance so high?

A

There are many factors that impact your insurance rates, including your location, age, driving record, annual mileage, and the type of car you drive.

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By

Rachael Brennan

Rachael Brennan

Property and Casualty Insurance Expert

Rachael Brennan is a senior insurance editor at Policygenius, specializing in auto insurance. She worked for 21st Century Insurance, BlueCross BlueShield Massachusetts, and HealthPass New York. She also spent two years working as a content expert for dozens of auto insurance websites through 360Quote LLC.

Published September 3, 2021|7 min read

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Whether you’re getting a new quote or simply renewing your current coverage, seeing how much car insurance costs can sometimes feel like a punch in the gut. How can your rates be that high if you haven’t had any recent accidents?

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Insurance rates are determined by a number of factors, some of which you can control, like your driving record, and some that can’t really be changed, like your age. Depending on which state you are in and which insurance company you choose, some factors have a higher impact than others.

Key Takeaways

  • Every insurance company uses the same information when setting rates, but the individual companies decide how much weight to give each factor

  • Things like location, age, the type of car you drive, your deductible, your driving record, any lapses in coverage, and your annual mileage all impact your car insurance rates

  • Your gender and your credit history may or may not impact your rates, depending on the laws in your state

Reasons why your car insurance is so high

Car insurance rates may seem unfair or unpredictable, but each company has their own internal system to decide exactly how to determine their rates. Every insurance company uses the same information, but the individual companies decide how much weight to give each factor when setting rates.

For example, some companies place more emphasis on your age and the number of years you’ve been driving, while other companies are more concerned with your driving history and whether or not you’ve had any accidents or traffic violations. That being said, there are some common factors that can drive up your rate no matter which insurance company you choose.

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1. Location

Your location plays a huge part in determining your rates. The number of accidents in a given area, the number of stolen vehicles in a city, and the ratio of street parking to driveways and garages can all impact how much your car insurance will charge each year.

Rates are determined by ZIP code, which means moving just a few blocks can sometimes be enough to increase or reduce your rates, sometimes by hundreds of dollars each year. If you live in a ZIP code where accidents and stolen cars are common, that is likely one of the reasons your car insurance rates are so high.

2. Age

Younger drivers have less experience behind the wheel, which means they are more likely to be in an accident or get a ticket than older drivers. The increased risk for younger drivers means that insurance companies charge them higher rates. If you are a young adult under the age of 25, the odds are good that your insurance rates are high because of your age.

On the other hand, drivers above a certain age may see their rates increase slightly. As we age our eyesight diminishes and our reaction time slows down, which leads to an increased risk of an accident. Drivers over the age of 60 may see a slight increase in their rates, but many companies offer discounts for senior drivers who take a safe driving course.

3. The type of car you drive

The type of car you drive can have a significant impact on your insurance rates. For example, sporty cars and luxury vehicles are more expensive to insure because they cost more to repair in the event of an accident. They also tend to have higher price tags than a traditional sedan, which means they need higher levels of comprehensive and collision coverage to make sure they are fully protected.

On the other hand, some less expensive vehicles are among the most frequently stolen cars in the United States

RankModelThefts
1Ford Pickup (Full size)38,938
2Honda Civic33,220
3Chevrolet Pickup (Full size)32,583
4Honda Accord30,745
5Toyota Camry15,656
6Nissan Altima13,355
7Toyota Corolla12,137
8Dodge Pickup (Full size)11,292
9GMC Pickup (Full size)11,164
10Honda CR-V10,094

For example, Ford pickups and Honda Civics are the two most stolen vehicles in the country as of 2019. This likely means comprehensive insurance for those cars is more expensive than it would be for similarly priced vehicles. If you drive a sporty, expensive car or a vehicle that is a common target for thieves, it is likely one of the reasons your insurance costs are so high. 

4. Your deductible amount

Comprehensive and collision insurance require drivers to choose a deductible, which is the amount you agree to pay out-of-pocket when filing a claim. The most common deductible is $500, which means a driver who files a $3,000 claim would pay $500 toward the cost of repair and the insurance company would pay the other $2,500.

Drivers can choose a lower deductible, sometimes as little as $0 or $100, if they don’t want to pay much out-of-pocket when filing a claim, but this can significantly increase your annual insurance costs. If you’ve chosen a super low deductible, that is one of the reasons your car insurance is so expensive. 

My insurance costs have skyrocketed. Why are my car insurance quotes so high?

Some people have always had higher insurance rates because they live in an expensive ZIP code or drive a flashy car, but what about people whose rates seemed to skyrocket overnight? If your new quote or your insurance renewal came back with a significantly higher rate than you are used to paying, there are several things that might be driving your rate increase.

1. Your driving record

If you went from having a pristine driving record to having an accident or a moving violation, you might see a significant increase in your rates because of it. A single at-fault accident claim can raise your rates by 20% or more, while a serious moving violation like a DUI or reckless driving can sometimes double your rates.

It is possible to keep a single accident or moving violation off of your driving record. Many insurance companies allow drivers to take a safe driving course to keep a ticket off of their record. Some insurance companies also offer first accident forgiveness benefits, which allow you to file a claim up to a certain dollar amount without it impacting your insurance rates. 

However, if you later find yourself with another accident or moving violation you may lose that benefit, with both incidents now impacting your rates. If you’ve had an accident or moving violation since your last insurance renewal, the odds are good that is why your car insurance is so high.

2. A gap in coverage

There are two types of gaps in coverage that can impact your insurance rates. The first is a lapse in coverage while you own a registered vehicle. If your coverage is cancelled for even a single day while you own a car, you can expect to see an increase in your insurance rates at your next renewal.

You can also go through periods of time where you don’t own a car and, therefore, you don’t have a car insurance policy. If the period of time where you don’t own a car is short, you may be able to simply suspend your coverage to avoid having a gap in your insurance. If you are going years between vehicles you can expect to see a bit of an increase in your premiums when you purchase a new car, but you will then see a decrease in cost when your insurance renews. If you’ve had a lapse or gap in your coverage, this is likely a big reason why your car insurance premium is so high.

3. Your annual mileage

The number of miles you drive in a year can have a noticeable impact on your insurance rates. For example, when the COVID pandemic hit, most drivers got a refund from their car insurance companies because they weren’t doing much driving. 

Drivers who increase the number of miles they drive each year will likely see an increase in their rates as well. If you’ve taken a new job with a longer commute or moved farther away from your office, the odds are good that your increased annual mileage is part of why your auto insurance is so expensive.

Things that may or may not impact your insurance rates

Because local laws and regulations vary from state-to-state, there are some things that can impact your rates in one state but not in another.

1. Gender

Some states use gender-based statistics to set insurance rates. However, several states have made it illegal for car insurance companies to use gender to determine insurance rates, including:

  • California

  • Hawaii

  • Massachusetts

  • Michigan 

  • Montana

  • North Carolina

  • Pennsylvania

2. Credit history

Some states allow companies to use your credit history or credit score to help determine insurance rates. However, some states have laws that either prevent credit from being used at all in setting rates or prevent credit from being used to deny someone an insurance policy, including:

  • California

  • Hawaii

  • Maryland

  • Massachusetts

  • Michigan

  • Oregon

  • Utah

Frequently Asked Questions

Does your car insurance go up if someone hits you?

Generally speaking, your rates will not increase if you were not at fault in an accident. However, it is possible your rates may be impacted if you are found partially at fault for the accident. Each state has their own unique laws and each company has their own standards for how to handle insurance rates, so check with your insurance agent if you are unsure whether or not an accident may impact your insurance rates.

Can I lower my car insurance?

While there are some things that impact your insurance rates that you can’t really change, there are lots of things within your control that can lower your insurance costs. Take advantage of any discounts, review your insurance limits and deductibles, or clean up your driving record to help bring down the cost of your insurance. You may also want to compare quotes for a new auto insurance policy to make sure you are getting the best possible rate.

Why is my car insurance so high in Michigan?

Michigan insurance rates are some of the highest in the nation. There are many reasons for this, but one of the biggest is the unlimited levels of personal injury protection (PIP) coverage required by the state. If you live in Michigan, work with your insurance agent to find the best ways to save money on your car insurance.