September 29, 2021
Why is car insurance so expensive

Why Does Car Insurance Cost So Much?

Whether you are just about to purchase a new auto or have been driving for years, the cost of car insurance is one that many drivers want to understand.

There are several factors that determine how much your premiums will be.

Some of these include what kind of coverage you get, where you live, and your age.

Not only do people who live in high-risk areas pay more than those in low-risk areas, but teenagers also tend to pay more because they statistically make more mistakes on the road than adults do.

The higher risk an individual poses on the road means higher rates, which can add up quickly if someone gets into multiple accidents over time.

Luckily, there are ways to save money, like getting quotes from different providers before selecting one and comparing deductibles when shopping for lower rates.

Table of Contents
The cost of car insurance

13 What factors can affect insurance pricing?

Your age (and your gender)

The car insurance cost for different age groups is different. Older people will pay more because they are more likely to have car accidents. Teenagers will also pay more because they are the group of people who are most likely to have car accidents.

Where you live

Car insurance is a necessity for most people and it can vary drastically depending on where you live. For example, the average cost of car insurance in New York City is $4,546 per year, while the national average is around $1,200. There are many factors that contribute to what rates look like, including the number of accidents and claims filed by drivers in your area as well as how often cars get stolen or vandalized. Insurance companies also consider things like road conditions and traffic density when calculating premiums, which can cause prices to fluctuate depending on where you live. 

So why does car insurance cost so much?

Factors that influence the cost of insurance

Well, first off there's just more risk involved with driving in a busy city than out in rural America - someone could easily crash into your car in the big city, whereas they're less likely to do that where there are fewer people.

Your car insurance coverage options

Depending on what coverages you include on your insurance policy, car insurance rates may be higher or lower. For example, if you elect to include comprehensive and collision car insurance coverage on your policy then car insurance rates will probably be higher than if you did not have car insurance that includes these coverages.

Your driving record

Do you have a clean driving record or a few accidents or tickets which can affect car insurance rates? If you have an accident or a ticket, car insurance companies may see you as a higher risk and charge you more money to insure your car.

Your credit score

How is your credit? Most insurance carriers will charge more for lower credit scores. Make sure to keep your credit clean to keep car insurance rates low.

Your marital status

Married people pay a lower car insurance rate than single people because they, mostly, have more than one car insured and car insurance companies recognize that fact. There is also a stability factor in car insurance rates that makes married people who are more likely to stay at the same job and in the same place for a longer period of time.

How often do you drive your car…

Are you driving a lot or just occasionally? People who drive their car more often will generally pay car insurance rates that are higher.

Your driving experience.

Are you a new driver or an experienced driver? Most car insurance companies charge car insurance rates that are higher for new drivers than experienced car insurance drivers.

Your car's make and model

If you own a more affordable vehicle, the cost of repair or replacement will be less expensive if the car is in an accident or stolen. Insurance car insurance rates are also lower for cars that have been in the market longer because the price of those models has declined over time.

Your deductible

The higher your deductible, the lower the cost of insurance, also known as the premium. When you accept more responsibility, financial insurance companies will offer a lower car insurance rate.

Your coverage limits.

If you want higher liability limits, the premium will be higher, but you'll also be providing more coverage if you cause bodily injury and/or property damage.

Your previous insurance history.

Having prior insurance shows the insurance company that you are a responsible insurance customer. If you have made claims in the past and paid them, car insurance companies will recognize that fact and may give you car insurance rates that are lower than someone who has made no claims.

How much should you pay for insurance a month?

It depends - car insurance rates can fluctuate depending on a number of factors, such as car make and model, the distance you drive every day, and your car insurance coverage choices.

Most car insurance companies will charge lower car insurance rates if you have more than one car insured with the same car insurance company.

The national average is around $100, with liability insurance, comprehensive, and collision coverage based on a clean driving history.

What factors can influence your auto insurance premiums?

Your car's make and model, your driving record, credit score, claim history, good driver, marital status, any traffic accidents, frequency of use (how often you drive), age of the driver(s), car insurance coverage options chosen by the car owner/driver.

What would cause a person's car insurance premium to decrease?

Premiums are based on many factors and some of the biggest ways to save money are don't speed, drive more carefully and don't file small claims, watch your credit score.

What do insurance companies consider most important when determining the cost of a car insurance policy?

Insurance companies look at a car owner's age, driving history and claim record, car type, car safety features, and the likelihood of theft or damage to determine how much you'll have to pay for car insurance.

When determining rates, take note that these are usually averages so your own premium may vary depending on where you live (geographic location) as well as other factors like car make/model and age, which can affect car insurance rates.

To get lower car insurance premiums, you'll want to take proactive steps towards keeping your car in good condition and maintaining a clean driving record (no speeding tickets or moving violations). You can also always ask for car insurance discounts if available.

What are five factors that can affect auto insurance rates?

Every car insurance policy is different, and it's impossible to say whether the following five factors will affect your premiums. However, here are some common reasons why car insurance can cost you so much:

1 driving history

2 credit score

3 car make/model

4 drivers age

5 type of car usage (commute vs. weekend trips)

Is car insurance cheaper when you're 25?

One of the biggest factors in car insurance is age, with rates often more than double for drivers under 25.

When you're young and inexperienced behind the wheel, car accidents are more common, which means car insurance companies have to pay out on them at a higher rate. That's why car insurance premiums go down when you get older.

- car insurance is a lot cheaper for those 25 or older

When you're younger, car accidents happen more often and car insurance companies have to pay out at a higher rate which is why car insurance premiums go up as you get older. For people aged 25 and over, car insurance rates can be lower because there are fewer car accidents.


How can you lower your car insurance bill?

There are many ways to lower car insurance premiums, but don't expect drastic changes.

- Deductible: This is the amount of money you pay out before your car insurance kicks in. You can decrease this cost by increasing your deductible - for example, instead of a $500 deductible, you can have a $1000 deductible. The more you take financial responsibility the lower the auto insurance cost.

- Car: car insurance premiums are usually higher for sports cars, luxury vehicles, or other expensive models because of the likelihood of accidents and cost of repair.

Improve your credit history as quickly as possible. A low credit score is a higher risk in the eyes of the insurance company.

What to do if your car insurance is too high

As mentioned above, your credit history will have a major impact on the premium you pay. Also, work with an attorney if you get any tickets so they don't so up on your driving record.

What can I do to prevent this in the future?

Slow down, pay off debt, buy a regular car vs a sports car, add more vehicles for extra discounts and add additional policies like home or renter's insurance for multi-policy discounts.

Why is car insurance so expensive now?

Auto insurance companies are charging higher car insurance premiums because the cost of repairs and replacement of vehicles keeps going up. Parts for auto accidents are getting harder to find and vehicles are getting more expensive, even older used vehicles.

What factors can decrease your insurance rates?

A defensive driving class might give a 2-5% discount to lower premiums. Compare quotes with other carriers, or consider increasing a low deductible.

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

Male drivers or a young driver will always pay higher premiums than female drivers. In most cases the reason for a rate increase is not always about your driving record. Inflation has a big influence in what an insurance company charges. Increase in the cost of parts, labor, and computer chip are what is driving up the insurance costs because of costly claims.

How to lower your auto insurance after a ticket?

Talk with an attorney if you get a ticket so they can help reduce the points or have it reported as safe driving. Also, carpool, whenever you can so your insurance premiums, will go down.

Does your car insurance go down after they pay the car off?

No, they do not base the cost of insurance on whether you have a loan or car payment.

Should I carry full coverage on a car that is paid off?

It depends on the vehicle value and if it makes smart financial sense based on the added cost of coverage and the deductible amount.

An older vehicle with high mileage might warrant removing collision coverage to reduce expensive car insurance premiums.

Does auto insurance go down as a vehicle gets older?

One of the largest expenses on an auto insurance policy is liability coverage. So, regardless of the age of the vehicle, the risk of causing bodily injury or property damage remains the same. Talk with your insurance provider about increasing your deductible for older vehicles or removing altogether if the value and decreased substantially.

Who Pays more for car insurance - married or single?

It’s commonly believed that car insurance rates are lower for those who are unmarried. However, studies show car insurance premiums actually cost less for married couples than singles with similar driving records and demographics. As a result of these findings, many states prohibit insurers from basing auto insurance rates on marital status.

Which age group pays the most for car insurance?

Young drivers pay up to 100% more for insurance costs. Younger drivers also have less experience and have a tendency to have more minor fender benders which cause increase premiums.

Older drivers with declining motor skills are also paying higher premiums regardless of safe driving habits or lack of traffic violations.

How Insurance Brokers Group finds lower car insurance rates

The average car owner spends $750 per year on car insurance, yet they don't understand how their auto coverage works and what goes into the cost of car insurance.

Insurance Brokers Group specializes in finding lower rates for more than just auto policies; we can aid you with your home or life policy too! We work with over 20 providers to offer our clients some of the lowest prices around because of our vast experience within the industry and working directly with many companies who are eager to do business online by offering affordable premiums that include much more than just liability.

If you're looking for a better rate when it comes to car, homeowners, condo unit owners, or renter's insurance, give Insurance Brokers Group a call today!


Car owners should take some time to review car insurance coverages as well as understand what's currently being offered for the price they're paying. A great way to find out is by comparing car insurance quotes from multiple providers online.

When you receive your quote comparison results, pick the policy that best suits your needs and budget. If you want more protection than just liability coverage but can't afford it consider raising deductibles or dropping comprehensive/collision coverage completely until rates are reduced. For example, if you have an older vehicle with low value, then remove collision & comprehensive car insurance so that premium decreases accordingly.

Remember when considering premiums to look at car insurance quotes as a long-term investment. If you save up to $30-$50 per month, car insurance premiums will be much more manageable and affordable in the future!

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John Espenschied is a long-time veteran of the insurance industry. He's worked with thousands of clients over the years, helping to protect their personal and business needs. John's goal is to provide the best advice possible to assist customers in saving money while protecting their property and securing their financial future.
He truly enjoys helping others and takes great satisfaction in providing top-notch customer service. When he's not working, John has fun spending time with his family, golfing, bike riding, and blogging on insurance topics.