The Insurance Bulletin
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Why Is My Car Insurance So Expensive?

expensive car insurance

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Mandy Sleight
Updated March 7, 2023
6 Min Read

If you’ve been wondering why your car insurance is so expensive, the answer is there could be several things that could cause high insurance premiums. Car insurance rates are based on several factors, some you can control and some you can’t. For instance, your age and gender are things you can’t control, but your driving record is. Understanding how car insurance rates are determined can help you get your premiums lower if you think you’re paying too much for car insurance.

What factors determine how much you pay for auto insurance?

Auto insurance companies use various factors to determine how much you pay for coverage. Individual rates are based on your likelihood of filing a claim and the cost the insurer will incur for claims. The more high risk a driver the insurance company thinks you are, the more you’ll end up paying for car insurance. Here are the factors auto insurance companies use to determine how much you pay.


The younger you are, the more likely you are to pay extra for car insurance. That’s because young drivers have less experience behind the wheel and are more likely to get into an accident than a more experienced driver. Experience can only come with time, so the longer you drive, the less you may pay for car insurance, although there are other factors than just your age to consider.

Driving and claims history

Insurers also consider your past driving and claims history. Your driving record will show tickets, DUIs and other moving violations you receive. Your claims history will show any claims you file, including who was at fault and how much was paid. Having an at-fault accident can increase your rates, and several negative entries on your driving or claims record could even cause the company to deny you coverage or non-renew your policy.

Having a clean driving record is one of the best ways to keep low car insurance premiums. If you engage in risky behavior behind the wheel, it usually winds up on your record, and that will cause your car insurance rates to increase.

ZIP code

Where you live also factors into your car insurance premiums. Things like population density, natural disasters, vehicle thefts, and the frequency of car accidents in your area are all taken into consideration when determining base rates. People who live in areas with low crime rates will pay less than those living in areas with high crime rates.

These factors also determine your minimum coverage needs. Almost all states have minimum coverage requirements. While most only require liability insurance to cover the other person if you cause an accident, others require coverages like personal injury protection (PIP) and uninsured motorist coverage.

Credit score

An insurance-based credit score is not the same as your FICO credit score. Insurance-based credit scores look at how well you manage your money, including paying bills on time. The better you are at managing your money, the better your insurance credit score can be. Not all states use credit scores for auto insurance. In California, Hawaii, Massachusetts, and Michigan, car insurance companies can’t use credit to determine rates.

Car make and model

The type of car you drive also affects what you pay for auto insurance. If you drive a sedan with highly rated safety features, the premium for your car will be cheaper than if you drive an expensive, fast sports car. The make and model can also affect your coverages, which will also matter to your premium.

If you finance or lease your car, you’ll probably have to carry full coverage as part of the financing agreement. These coverages offer more protection, but also cost more than having just liability. If you paid your car off, you can choose to carry liability only or full coverage.


The more coverage you choose, the more you’ll pay for car insurance. While some coverages are necessary, like liability insurance, others are optional, such as roadside assistance and rental car reimbursement. The level of coverage you choose also matters.

Choosing higher liability limits offers more protection if you cause an accident with injuries or property damage, but it will increase your insurance costs. When you have comprehensive and collision coverage, opting for a lower deductible means less out of pocket if you file a claim, but you pay higher premiums for each policy period.

Extra add on coverages may be necessary, but also drive up insurance costs. For instance, if you don’t have AAA, you may want roadside assistance, in case you lock your keys in the car or get a flat tire. If you finance your car, gap insurance may be a valuable coverage because it pays the difference if your car is totaled and the market value is less than what you owe on the loan.

Insurance company

If you’ve ever gotten comparison quotes from different companies, you may have seen just how different the rates can be, even if you quote the same coverages. Each insurance company gets to set its own rates, which can vary considerably. The insurers can also factor criteria differently. For example, a speeding ticket could be a minor offense with one company, while being a major violation for another, which will be reflected in the rate.

How to lower your car insurance rates

No matter the reason your auto insurance may be too expensive, there are ways to lower your car insurance rates. Even if you're young and paying higher rates, you can still do things to get a more affordable premium.

Shop around

Since the insurance company you choose can affect your cost of car insurance, shopping around can help keep your rates low. When you shop around, get at least three quotes from different insurance carriers. To know which offers the lowest rate, get a quote with the same coverages, deductibles, and limits to get a real comparison between the companies.

While price is important, it’s not the only thing to look for in an insurer. Consider third-party ratings, like J.D. Power, to see how people rate their customer service and claims process. A company’s financial strength rating, which you can find by searching for the company on AM Best and other financial scorers, can show you how well the company has handled past claims payouts, which can determine future claims responses.

Maintain a clean driving record

Safe drivers typically pay the least for car insurance, so having a clean driving record can help you save on insurance. The longer you go without causing an accident, getting a ticket or a DUI, the lower your rate could be. A clean driving record can also make you eligible for certain discounts, like accident forgiveness or safe driving discounts that can lower your rate even more.

Show off your driving skills

Many insurance companies use telematics technology to monitor driving habits. The telematics program will track your speed, braking, accelerations, and other factors. The more you practice safe driving habits, the more the company will reward you with a cheaper rate. Be careful, though, because some companies will raise your rates if you take part in risky driving behaviors during the program.

Check coverages

Another way you can save on car insurance is to check your coverages. You may not have enough coverage, or you could have coverage you no longer need. For instance, you may have had a newer car with a loan, so you bought full coverage insurance. But now, your car is older and paid off, so full coverage might no longer make sense.

You can also adjust deductibles to lower your car insurance rates. The higher your deductible, the more you pay when you use the coverage after filing a claim, but the less you’ll pay in premiums. If you’re in doubt about your coverages and if you should make changes, talk with your insurance agent and ask them to review your policy with you to identify ways to save.

Ask about discounts

While some discounts are the same for all companies, they aren’t the same across the board. Since you’re not sure what discounts an insurance company might offer, asking can help you take advantage of the ones you’re eligible for. The great thing about car insurance discounts is that most of them are stackable, which means you can add them up for more savings.

In some states, you can take a defensive driving course, which can help lower your car insurance premiums. There are also other discounts, such as going paperless, paying your premium in full, bundling your policies with the same company, and being affiliated with certain organizations, like a credit union.

Check your credit report

Although an insurance credit score isn’t the same as the credit score banks and lenders use, it still factors in your credit history. If you have incorrect credit entries, like a late payment you know you made on time, it could reflect negatively on your insurance-based credit score. Plus, the longer you have a track record of paying your bills and credit cards on time, the more it can have a positive effect on your car insurance rates.

Are auto insurance rates expected to go up?

Many of us are feeling the effects of inflation in multiple places, from the gas pump to the grocery store to insurance premiums. While many saw a refund during the COVID-19 pandemic lockdowns as driving decreased, rates are creeping back up as people are on the roads more and heading back to the office.

Recent data from the Consumer Price Index (CPI) shows that car insurance has had some of the largest increases of all items, including food and energy. In June 2022, the CPI for auto insurance increased another 1.9%, its sixth consecutive monthly increase. The index also rose for vehicle repairs, maintenance, and new cars, which also reflect in insurance premiums set by the insurers.

Although flying restrictions have eased, staff shortages and other factors have caused chaos in the airline industry. With more people hitting the road for trips despite higher gas prices, we can expect rates to go up again. Using our tips on ways to save on car insurance and understanding the factors that create car insurance rates so you can make adjustments where you can may help keep your rates lower, despite increasing premiums.