The culprit isn't just one factor—it's a perfect storm of rising repair costs, increased accident rates, and inflation affecting everything from medical care to vehicle parts.
Understanding what drives these costs is key to finding relief. In this guide, we'll explain why car insurance has become so expensive and share proven strategies to help you secure quality coverage without overpaying.
Why Is Car Insurance So Expensive?
Car insurance is expensive primarily due to rising vehicle values and soaring repair costs. "The increase in serious accidents along with extreme weather conditions has also forced insurers to raise rates simply to match potential losses," explains Chap Michie, licensed insurance expert at Guardian Service.
Inflation compounds the problem by driving up costs across the board, including medical care for treating collision injuries. "Car insurance companies are forced to balance the need to stay competitive with the reality of more frequent and expensive claims," emphasizes Kevin Kramer, chief operating officer at Ignition Dealer Services.
While these factors make auto insurance costly, coverage remains essential for most drivers. Without it, you could face thousands of dollars in damages after an accident, plus additional consequences like hefty fines, jail time, or even license suspension.
How Your Driving History Impacts Car Insurance Costs
When you shop for car insurance, your history as a driver will help determine your premiums. Here are the key factors insurers consider:
Age And Experience
Teens and newer drivers pay significantly more than middle-aged or older drivers with years of road experience. "A lack of driving experience can significantly push a driver's insurance costs higher," warns Kramer.
"New or young drivers have less time behind the wheel and statistically higher accident rates, making them riskier to insure and warranting elevated premiums," adds Kramer.
Traffic Violations
Speeding tickets, DUIs, and at-fault car accidents all indicate high-risk behavior and typically result in steeper rates. Responsible drivers with clean records can expect lower premiums than those with a history of violations.
Credit Score
In most states, insurers use credit-based insurance scores to assess risk. Lower credit scores are often associated with higher likelihoods of filing claims, leading to more expensive policies.
Driving Habits
High annual mileage or daily commuting through heavy traffic increases accident exposure and drives costs higher. Drivers who log less than 12,000 miles annually—such as remote workers or retirees—typically enjoy cheaper premiums.
For low-mileage drivers, pay-per-mile insurance can offer even greater savings by charging based on actual miles driven.
How Location And Vehicle Type Drive Up Insurance Costs
Location
Where you live, down to your ZIP code, plays a major role in car insurance rates. Areas with dense traffic, high accident rates, severe weather, or elevated theft rates are considered high-risk locations, resulting in more expensive auto insurance policies.
"For example, living in a coastal city prone to hurricanes can lead to higher comprehensive coverage rates," says Kramer.
Vehicle Type
Car insurance companies will take your vehicle type into consideration. Luxury or high-performance models are among the most expensive cars to repair and cost more to replace after an accident.
"Even small repairs can be costly when dealing with advanced technology, like sensors embedded in bumpers or windshields. A luxury sedan with adaptive cruise control, for instance, will cost far more to fix than a standard mid-size car after a minor collision, pushing insurance premiums higher," said Kramer.
How To Lower Your Car Insurance Costs
Fortunately, there are ways to save on auto insurance and keep more of your hard-earned money in your pocket. Here are several strategies to explore:
Compare Quotes
While it might be tempting to go with the first car insurer you find, doing so can cost you. Get car insurance quotes from at least three different insurance companies.
Then, compare premiums, coverage options, discounts, financial strength ratings, and customer service to zero in on the best bang for your buck.
Bundle Policies
If you have another type of insurance policy, such as home insurance or renter's insurance, you might benefit from a bundling discount by simply buying your car insurance from the same provider.
Bundling is also convenient for managing multiple policies with the same app or online portal.
Drive Safely
By making an effort to drive responsibly and avoid serious traffic violations, you can increase your chances of lower car insurance rates. A defensive driving course might be worthwhile if you want to sharpen your driving skills and stay safe behind the wheel.
Explore Discounts
Most reputable car insurance companies offer discounts to help policyholders save money. Some examples of car insurance discounts include the good student discount, loyalty discount, electric vehicle discount, and claims-free discount. These discounts are usually advertised on each insurer's website.
Be Mindful Of The Vehicle You Drive
Cars with high safety ratings, low theft rates, and moderate repair costs typically cost less to insure. While a luxury SUV may be a better fit for your unique lifestyle and needs, your car insurance rates will be higher.
Remove Unnecessary Coverage
If a car's market value is low, as is often the case with older vehicles, dropping collision or comprehensive coverage might make financial sense. This will allow you to avoid paying for protection that exceeds the car's actual worth.
Increase Your Deductible
A higher deductible, such as $1,000 instead of $500, for example, will lower your car insurance costs. The caveat, however, is you'll have to pay more out-of-pocket once you file a covered claim.
Use Telematics Devices
Telematics devices track your driving patterns to look for speeding, abrupt braking, distracted driving, and other dangerous behaviors. Many insurers have their own telematics programs that will reward you for responsible driving.
Frequently Asked Questions
Why did my car insurance go up?
Your car insurance rates may have increased due to higher crime rates, greater traffic congestion, or more uninsured drivers in your local area. While you can’t control these issues, you do have control over traffic violations, like speeding tickets and at-fault accidents, which can raise car insurance costs.
How can I lower my car insurance?
To lower your car insurance payments, shop around and compare options from several car insurance companies. You can also choose a higher deductible, take advantage of discounts, and bundle policies.
What is a deductible?
A deductible is the amount of money you’ll owe before your car insurance plan kicks in and covers the rest of your damages. A higher deductible will lower your premiums but cost you more out-of-pocket after a covered claim.
