There are a number of factors that impact your car insurance rates, including your coverage choices, deductible, driving record, age, vehicle, driving frequency, credit score, neighborhood’s safety rating, insurance company, or inflation. Looking into discounts and comparing rates from multiple car insurance companies can help lower your insurance premium.
Reasons why your car insurance may be expensive
Car insurance rates depend on many factors—from your policy to your age and driving record to the type of car you drive. Even factors you cannot fully control—like your neighborhood and inflation—can impact your rates.
You have high coverage levels
This is a good reason for your car insurance to be expensive. If you have a full-coverage insurance policy (which includes liability insurance, collision coverage, and comprehensive coverage), you will pay more than you would for minimum liability car insurance (also called liability-only insurance)—but you’ll also have more financial protection.
Full-coverage policies with higher liability limits can be pricey, but shopping around can help you find the cheapest rate. Check out what the following providers are charging for full coverage and minimum coverage:
| Insurance company | Minimum liability | Full coverage |
|---|---|---|
| AAA | $105 | $215 |
| Allstate | $85 | $198 |
| Founders | $51 | $174 |
| Gainsco | $98 | $222 |
| MAPFRE | $66 | $205 |
| National General | $93 | $211 |
| Nationwide | $61 | $155 |
| Progressive | $79 | $178 |
| State Auto | $58 | $162 |
| Travelers | $59 | $141 |
A minimum liability insurance policy is the cheapest insurance you can buy—but it doesn’t provide the most coverage. While you might be paying less money for your monthly premium, if you are involved in an accident, you may find yourself financially vulnerable.
All of the expenses following a car accident, including car repairs and medical expenses, quickly add up. If you don’t have enough coverage to pay for the other driver’s expenses, as well as your own, you could find yourself in a lot of debt.
If you raise your policy limits or purchase additional coverage—like gap insurance, personal injury protection (PIP), and roadside assistance— your premium will also increase.
You have a low deductible
Your deductible also impacts your insurance rates. A deductible is the amount of money you agree to pay out of pocket before your car insurance company pays to cover a claim.
A higher deductible on your coverage will often give you lower rates, while a lower deductible may increase your rates. According to our experts, here’s what you can expect to pay for a full-coverage policy based on your deductible:
| Insurance company | $500 | $1,000 | $2,500 |
|---|---|---|---|
| AAA | $270 | $264 | $255 |
| Allstate | $241 | $228 | $224 |
| Nationwide | $185 | $181 | $179 |
| Progressive | $193 | $184 | $179 |
| State Auto | $224 | $218 | $213 |
If you set a higher deductible, like $1,000, your car insurance company will lower your rates a bit because you’re taking on more of the cost if you file a claim.
Learn more: How to choose a deductible
You have a poor driving record
Traffic violations tell car insurance providers that you’re a risky driver, and that tag comes with higher premiums.
Our experts analyzed thousands of car insurance policies purchased by real Jerry users to determine how various violations can impact your average monthly premium:
| Violation | Average monthly rate | Percentage increase |
|---|---|---|
| No violations | $144 | No increase |
| Insurance lapse | $154 | 7% |
| At-fault accident | $155 | 8% |
| Seat belt violation | $186 | 29% |
| Failure to signal | $204 | 41% |
| Improper cell phone use | $217 | 51% |
| Bad credit | $222 | 54% |
| Speeding ticket (all speeds) | $252 | 75% |
| Careless driving | $259 | 80% |
| DUI | $272 | 89% |
You don’t have much driving experience
Young drivers and new drivers are considered high-risk drivers and pay more for insurance. This is because they are statistically more likely to be involved in accidents than drivers with more experience.
Car insurance rates tend to go down once you reach the age of 25 and then increase again once you reach your mid-70s.
Here’s how your age can impact how much you are paying for car insurance:
| Age group | Minimum liability | Full coverage |
|---|---|---|
| Under 18 | $275 | $681 |
| 18–21 | $248 | $542 |
| 22–25 | $163 | $369 |
| 26–34 | $123 | $274 |
| 35–44 | $110 | $242 |
| 45–54 | $106 | $230 |
| 55–64 | $100 | $213 |
| 65 and up | $106 | $214 |
Learn more: How to find cheap car insurance for new drivers
You drive an expensive vehicle
Pricier cars are more expensive to insure because they will cost your insurer more to repair or replace after a claim. If you own a luxury vehicle or sports car, you’ll pay higher insurance rates.
Classic cars tend to be an exception to this rule—they’re valuable but require specialized classic car coverage insurance that usually costs less.
New cars are generally more expensive to insure than older vehicles due to their high replacement or repair costs. Vehicles with up-to-date safety features that have done well on the Insurance Institute for Highway Safety might have lower insurance premiums (and will keep you safer!), but it’s also possible that the safety features might also cost a lot to repair and replace, leading to higher premiums.
You drive a lot
The more you drive, the higher your risk, and the more you can expect to pay for your insurance coverage. Every minute you spend on the road increases your chances of being involved in an accident or claimable incident, and for this reason, your mileage plays a role in the price of your premium.
Alternatively, if you rarely drive, you might qualify for a low-mileage discount because you are less likely to file a claim.
Take a look at the difference in monthly insurance cost based on annual miles:
| Annual miles | Monthly insurance cost |
|---|---|
| 1,000–5,000 (low) | $166 |
| 6,000–15,000 (avg) | $175 |
| 15,000+ (high) | $184 |
Learn more: The best low-mileage car insurance companies
You live in a high-risk neighborhood
Location is a big factor in your insurance rates, and rates can vary widely—even within the same city. Living in an area deemed higher risk by insurers will usually mean pricier insurance.
The following areas tend to have higher auto insurance rates:
- Urban areas. Rural areas, on the other hand, tend to have cheaper rates.
- Zip codes with higher vehicle theft rates.
- Areas that are prone to severe weather, like flooding.
People who live in these areas are more likely to file claims due to myriad risks. Insurance companies, in response, raise their rates.
You have a low credit score
There is a statistical correlation between low credit scores and insurance claims, so most auto insurance companies use something called a “credit-based insurance score” to set car insurance premiums. On average, drivers with good credit scores pay lower premiums than drivers with poor credit scores1.
According to our research, a “good” FICO score and a solid credit history can help get you the best insurance rates:
| Credit score | Minimum liability | Full coverage |
|---|---|---|
| Less than 600 | $70 | $145 |
| 601–699 | $65 | $132 |
| 700+ | $62 | $121 |
Some states, like California, Massachusetts, and Hawaii, ban the use of credit scores when setting auto insurance premiums2.
You have a policy with a pricey insurance company
Sometimes, it’s just about the company you’re with. Insurance companies use different methods to calculate their premiums, meaning that some companies might be more affordable for your vehicle and driver profile than others.
It’s always a good idea to compare quotes from multiple companies every six months to make sure you’re getting a good deal. If you find that you are paying too much for car insurance, switching companies may help you find the best rate.
Inflation
Inflation impacts everything, including car insurance rates. Due to inflation in the past few years, there have been industry-wide insurance rate hikes.
Along with the prices for both new and used cars, the prices for parts and labor have gone up, and this impacts your car insurance premium since car insurance companies have to pay out more for claims.
Learn more: The 10 best insurance companies for most drivers
How to lower your insurance costs
Don’t worry, your insurance rates are not set in stone. There are a few things you can do to lower your car insurance premium.
Look for discounts
Car insurance discounts are a great way to reduce your insurance premium. Different insurers offer different discounts, and some may not be available with every company or in every state.
While many insurance companies automatically apply discounts to your policy, it never hurts to ask if you are eligible for further savings.
Here are some of the most popular discounts:
- Good driver or safe driver discount: Keeping your record free of car accidents and claims for at least three years can earn you a discount.
- Bundling discount: Buying two or more insurance products with the same company (like homeowners and auto) can lower your rates.
- Good student discount: Maintaining a 3.0 average in full-time studies can earn you a discount.
- Pay-in-full discount: Paying your premium annually instead of monthly can help lower your rates.
- Multi-vehicle discount: Insuring two or more vehicles with the same insurance company can save you some money on your premium.
- Accident forgiveness: This is sometimes available as an add-on for purchase, but it might also be applied as an automatic discount. Accident forgiveness prevents a rate increase after your first accident.
Practice safe driving habits
Maintaining a good driving record is a great way to save money on car insurance. Not only does it keep you safe, but it also keeps your premiums low.
Avoid risky driving behaviors, such as speeding, distracted driving, and driving under the influence. This way you won’t receive any pricey tickets and you won’t have a record as a risky driver.
Look for a new insurance company
One of the best ways to lower your rates is to get the best deal possible. You can do this by comparing quotes from multiple car insurance companies. If you see a better rate, simply make the switch to a new company.
With the Jerry app, you can easily compare car insurance quotes from dozens of providers. The app will show you rates based on your driver profile, including your driving record and vehicle information. You can also adjust your car insurance coverage levels directly in the app.
Simply download the Jerry app, enter your information, and you can review auto policies from the best car insurance companies.
FAQ
- Why is my car insurance so high for no reason?
- Why is car insurance so expensive?
- How do I get my car insurance to go down?
Sources
- https://www.iii.org/article/background-on-insurance-scoring ↩︎
- https://www.allstate.com/resources/car-insurance/does-credit-score-affect-car-insurance ↩︎
Hillary Kobayashi is an insurance writer and editor specializing in insurance and finance topics. Hillary’s mission is to use her knowledge and love of education to help car owners better understand how they can save time and money on car ownership. The articles Hillary has published for Jerry span topics from state-specific bill of sale requirements to SR-22 insurance information. Prior to joining Jerry, Hillary spent over ten years in education at Pacific University and the University of Oregon.
Expert insurance writer and editor Amy Bobinger specializes in car repair, car maintenance, and car insurance. Amy is passionate about creating content that helps consumers navigate challenges related to car ownership and achieve financial success in areas relating to cars. Amy has over 10 years of writing and editing experience. After several years as a freelance writer, Amy spent four years as an editing fellow at WikiHow, where she co-authored over 600 articles on topics including car maintenance and home ownership. Since joining Jerry’s editorial team in 2022, Amy has edited over 2,500 articles on car insurance, state driving laws, and car repair and maintenance.
