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Why Is Car Insurance So Expensive?

Why Is Car Insurance So Expensive

What makes car insurance more expensive

There are many companies that sell car insurance, and prices can vary from one company to the next, as well as from one state to another. They can change from one city to another and one person to another as well. Many factors affect car insurance prices, and they are all based on risk. Car insurance companies utilize algorithms, or mathematical equations, to determine how much risk a driver is for getting into an accident. The higher the risk of the driver, the higher the risk of the automobile insurance premiums. Car insurance costs as much as it does because people get in accidents that can be very costly, and the insurance company has to pay for these costs. They need to charge to be able to do that. 

How Age Changes Rates

Car insurance tends to be more expensive on average for people on the younger and older ends of the driving spectrum. This is because these drivers provide more risk of getting into an accident, and so the claims they make costs more in total. Younger drivers do not have as much experience behind the wheel or in more risky driving conditions. Due to these reasons and more, they are more likely to get into an accident. 

As people get to the older end of the spectrum, their ability to react to and process information may slow down, putting them at more significant risk for a crash. These risks and others are reflected in the premiums these customers are charged.

Insurance provider 6-month premium — 16-year-old 6-month premium — 50-year-old
Allstate $4,393 $930
Farmers $4,013 $755
Liberty Mutual $5,268 $693
Nationwide $2,518 $646
Progressive $5,047 $712
State Farm $2,040 $608
USAA $2,114 $461
Average $3,452 $669

The Garaged Address Of Your Vehicle

Another factor that affects car insurance costs is the location that your vehicle is garaged at. There are many reasons for this, including the crime rate in the area. If you live in an area where your car is more likely to be vandalized or broken into, your insurance rates are likely to go up. 


Also, the quality of the roads and the quality of other drivers in your area may increase prices. For areas of the country that have snow, rates may be higher because ice provides the additional risk of an accident when driving. Some of these variables may affect larger areas and regions, and others can vary from one neighborhood to the next. Some people choose to take insurance into consideration before moving into a new house or apartment.

Credit Scores

While not legal in every state, in some states, a person's credit report can be used to help determine how much of a risk driver is. Generally speaking, the lower the credit score, the higher the rates could go up. Not every state allows credit reports to be taken into consideration when determining automobile insurance rates.

Insurance provider 6-month premium — Very Poor Credit

6-month premium — Great Credit

Allstate $1,692 $885
Farmers $1,293 $714
Liberty Mutual $1,921 $705
Nationwide $1,059 $637
Progressive $1,658 $617
State Farm $1,435 $527
USAA $1,199 $475
Average $1,418 $634

The Vehicle and Its Use

Another factor that is used to help determine your auto insurance policy costs is how you use your vehicle. Prices are different for people that use their vehicle for personal or business use, as an example. Also, the number of miles your car is driven is also relevant to the amount that you pay for your car insurance plan. If you drive many miles, you are more likely to get into a car accident simply because you are on the road more.

There are many other factors that affect your car insurance rates. Unfortunately, many of them are not changeable until you buy a new car. The year, make, and model of a vehicle are all factors in car insurance rates. Different vehicles cost different amounts for parts and repairs, which is one reason why different vehicles have different rates. In addition, the age of the car helps determine its value, which depreciates over time. Car insurance companies tend to charge less for older cars because the value of replacing them, or their value, completely is less. Other car specific variables include the safety ratings of the car, which not only can tell things about durability but also whether a car accident has a higher likelihood of resulting in injury or death. 

Marital Status

Additionally, people's marital status is another factor that is often used in determining car insurance rates. People who are married have a lower risk of getting into an automobile accident. These numbers are based on statistics and research from car insurance companies and others. When you put your marital status down on your car insurance application, it will affect your rate.

Insurance History

A person’s insurance history can have a large impact on the rates they pay for automobile insurance. If a person has had a gap in their insurance coverage of more than 30 days, they may be put into a high-risk car insurance category. People in high-risk car insurance categories tend to pay more for automobile insurance plans than people in lower-risk categories. There are other elements of a person’s driving history, and insurance history, that also have an impact on the rates that people pay on their policies. If a person makes a lot of claims on their auto insurance policy, they are considered to be more at risk of filing another claim. This can have impacts on the rates they paid for auto insurance plans. Auto insurance providers use statistics to determine what a person pays for insurance. Those who have a higher likelihood of making a claim pay more on average.

Driving Record

Even if you do not make a claim, your driving record can affect your auto insurance rates. If you have speeding tickets, you are statistically more likely to get into an accident. This means that the rates you pay could go up. People who are in accidents and do not file claims, as well as people who get points on their license for other reasons, can also see their rates go up.


6-Month Premium



Comprehensive claim


Not-at-fault accident



From a statistics point of view, gender also plays a role in the rates a person pays for an automobile insurance plan. Males tend to be at a higher risk of getting into accidents than females. Due to this, males tend to pay higher rates for car insurance than females. Variables that affect auto insurance premiums are also matched up with other variables. There can be a larger difference between average rates for younger males versus younger females than middle-aged males versus middle-aged females, as an example.

Gender and age group 6-Month premium
Female teen driver $2,446
Male teen driver $2,823

Type Of Car You Drive

The type of car a person drives also affects the rates they pay for automobile insurance. Cars that are less expensive to repair, have better safety ratings, and are known to have fewer repairs over their lifespan, on average, tend to be less expensive to insure. In many cases, older vehicles with more miles can see lower auto insurance rates due to their current value being lower. If the vehicle is totaled, the insurance company will have to pay less out on the policy, lowering rates.

Many people decide to put extra time into determining how much an auto insurance policy would cost for the different types of vehicles they are looking at purchasing. Keep in mind that you will want to pay attention to not only the make and model of a vehicle but also the year. Some years have better-rated cars than others, even if the make and model names are the same. 

Tactics To Lower Your Car Insurance Rates

Fortunately, there are many ways to save money on auto insurance. Car insurance companies offer a wide variety of discounts that can help you lower the cost of insurance. Some of these discounts include anti-theft devices, multiple policies that are bundled together, good student discounts, and additional certifications obtained through drivers training classes that are more advanced than the regular drivers training courses the state requires. Talking to an insurance agent will help you make sure to get all of the discounts you qualify for and save the most money. Tools like the ones on this site are also fantastic for getting the best quotes. In addition to the discounts above, in car accident help services and good driving record discounts are also available from most insurance companies. Taking the time to see if you qualify is a smart decision.

While variables like age cannot be changed except with time, other variables that impact your car insurance premium costs can be worked on and improved. For example, your driver's record is utilized when determining your car insurance rates. If you have made a claim in the last number of years, that may increase your costs. By driving safely and avoiding accidents that involve you needing to make a claim, you can lower your car insurance rates. In addition, safe driving can help in other ways. The number of tickets and types of tickets you receive can affect what you pay for car insurance. Again, by driving safely, you can avoid these tickets, and by avoiding them, your car insurance rates can go down.

Another way to improve your rates on car insurance, in some states, is to improve your credit score. Since not all states are allowed by law to utilize a credit score when determining rates, this is a factor that will only improve the amount you pay for car insurance premiums if you are in a state that allows credit scores to be used when determining your premiums. By actively paying attention to your credit report, and making sure there are no errors on it, you can save money on your car insurance policy. If your credit is not fantastic, improving your credit score can also lower your rates. This can take time, but the benefits extend well beyond the cost of your car insurance policy. Improving your credit score can also improve your ability to get loans as well as the rates that you can get on the loans you look to apply for.

An additional easy way to save money on your rates is to shop around. Each car insurance company utilizes different variables when determining people's rates. The factors auto insurance companies choose, and the way they weigh them means that your specific situation will create different rates for each company. Sometimes these rates and equations used will produce a wide range of car insurance premium prices. Make sure to compare each policy you are considering and note the differences and similarities of each. As a driver, you will want to get the right amount of insurance to fit your specific needs. A car insurance agent can help you determine what types of coverage will best meet your needs, as well as the amounts of coverage that make the most sense. You will also want to look at the general quality of customer service, and how efficient a company is when administering claims as well. When added with a comparison of the additional perks a company provides, like roadside assistance, you will be able to compare each policy line by line and determine which companies will be the best choice for you regarding both cost and quality.

Final Notes

Your search for the best car insurance should include a stop on this site. The tools and professionals here are excellent and happy to answer any questions that you have. Get the attention you need and the rates you want right here, ten minutes and you will have a free quote.

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