Why Is My Car Insurance So High
Why my car insurance is high and what can I do to get my car insured with a cheaper premium? Every car owner who wish to insure his car must know that premiums are a necessary expense that must be paid. Almost all state requires its drivers to have some form of insurance, normally a minimum of liability coverage. It purpose is to protect every traffic participant from property damage and help in paying for medical treatment in the unexpected event of an accident.
Where there is no insurance, drivers would always be at risk of a substantial financial loss, and even worse, unable to get adequate medical treatment. It is not hard to see reasons why we need to pay for insurance, but there are lots of misunderstandings around how premiums are calculated.
Now, we can examine some of the reasons your car insurance rates may be high and ways to mitigate and lower them.
What are the Rates Insurance are Determined?
The premium to be paid to each insurance depends on various factors, most notably the type of coverage you’re getting.
Minimum liability coverage is mandatory in almost all state, but the operative word is minimum. There are lot of additional options to increase your safety. Calculating the insurance premium can at times be challenging. Companies have to calculate different data points and statistics to know the likelihood of a particular driver being involved in an accident.
The Driver’s Driving Record and Claim History.
A driver’s driving history is a necessary factor in determining how high or low the premium of your insurance would be. Always involving in accidents can significantly affect negatively your premium, especially if they resulted in significant damage. Parking accidents and minor fender-benders aren’t as crucial, as drivers most likely prefer to settle them privately.
This will take us into a discussion about claim history. When a driver file a claim with the insurance company, an insurance adjuster will contact you for extra information about the accident. After every details have been collected, a decision will be taken and you will be indemnified. Every indemnity you receive would be noted and recorded, and they will affect the pricing of future premiums. However, there’s a sharp distinction between no-fault and at-fault claims, with the latter having a far more profound effect on your insurance rates.
Disobedience to traffic rules are also reviewed. Drivers with an extensive records of speeding, running red lights, or driving under the influence of alcohol or any narcotic substances can have a difficult time securing a sustainable insurance premium. By obeying traffic rules and regulations, not only will you be safer, but also enjoy reduced insurance premium.
kind Of Vehicle.
A vehicle’s specifications have many to do with insurance premium. The most prominent factors include:
- Risk of theft.
- The number of active and passive safety systems in the car.
- Costs of repair or replacement of a damaged car.
- Vehicle make model.
- An Insurance Institute for Highway Safety (IIHS) report on vehicle safety.
Driver’s parking Location and Residence
This may look like it’s not a factor, but where you park your vehicle and your home address matter. Parking your vehicle where there is likelihood of theft or a low-income neighborhood presents a huge amount of risk of damage and theft, whereas a residential complex with a gatekeeper, personal garage, or secured parking lot positively affects the cost.
How often you drive your car
The more you drive, the more wear and tear your vehicle may suffer—and the more likely you are to crash it into something. High mileage is a sure way to increase your auto insurance premiums.
Most insurers will ask you for your annual mileage when you sign up for a policy. However, they won’t necessarily confirm that your mileage hasn’t changed when you renew. So if your mileage goes down for some reason—say, you moved to a home much closer to your office—let your insurance company know because it is one of the reasons why your car insurance is so high.
Where you drive your vehicle.
When you apply for an insurance policy, you’ll likely be asked what you use the vehicle for—be it personal use, business use, or for-hire use such as ridesharing. Getting your car covered for business or ride sharing use will be more expensive than getting a personal-use-only policy. But don’t lie to your insurer and tell them you drive your vehicle only for personal use if you’re actually an Uber or Lyft driver. If the insurance company finds out, they’ll likely void your policy. Worse, if you get in an accident while ride sharing and you haven’t told the insurance company about your side business, they’ll likely refuse to fill the claim—leaving you stuck with all the costs.
Your driving experience.
People tend to become better drivers over time, which makes them less risky to insure. The longer your driving history, the better—especially if you’ve been accident-free for quite a while. This factor is another reason why teenagers and drivers in their early twenties have such stratospheric-ally high insurance premiums.
Your driving experience is another factor that will automatically get better over time. If you stop driving for a while, keep your license active so that this time counts towards your driving experiences.
Drivers can significantly affect their car insurance rates by buying the right car, obedience to traffic rules and laws, and having a clear claims history. However, certain factors are determined simply by profession, sex, age and marital status.
For example, a single young man who always drink alcohol would pay a much higher premium because they lack driving experience. Being that they present more risk to the insurer, prices are higher, which is why the insurance typically goes through the parent or guardian in these situations. Statistically speaking, drivers below the age of 25 have the highest probability of being involved in an accident, reflecting in their increased insurance costs.
Additionally, the IIHS has concluded that men are more likely to be involved in serious accidents. The death rate is also higher for men, which is why insurance is generally more expensive for males than for female drivers. Also, being married can result in lower premiums than for those who are single, divorced, or widowed.
Mode of Driving or Driving Habits
This may be overlooked by some insurer, your driving habits most often will be considered when checking the costs of your insurance premium. These costs are related to the purpose of your travels and commutes and the average mileage. The likelihood of accidents naturally increases the more time you spend on the road. It’s one of the reasons why professionals like taxi drivers have such high insurance costs. .
Kinds Of Coverage
The premium depends on the type of coverage you select and it greatly affects the yearly insurance premium. Liability insurance only covers minimal vehicle damage and injury costs. Being that liability only covers the other driver, you’ll need collision coverage to recuperate your losses in the event of an accident.
A comprehensive premium provides a variety of additional coverage options, including protection against events like natural causes or theft. However, damage by natural elements like hail, falling objects, flood, or fire, represents an individual clause in the contract. Many drivers under insure their vehicle, and a comprehensive insurance package will save you the trouble of taking a responsible party to court in the event of an accident.
Once you begin to add in the variety of additional layers of coverage, you can see how the premium can quickly escalate. Though they are enumerated instances where the premium escalates, however there are many others that come into play as well, like GAP insurance, towing, and rental car coverage that could raise the price even more.
The deductible on your auto insurance policy is the amount you have to pay towards a covered expense before the insurance company takes over. For instance, if you have a $800 collision deductible, you’d have to pay $800 worth of repairs, and then the insurance company would pay for the rest (up to your coverage.
The lower your deductible is, the more likely it is that your insurance company will need to shell out some money if you get in an accident. As a result, lower deductibles mean higher insurance premiums.
Furthermore, setting a very high deductible could mean that you won’t be able to pay the repair bills if an accident occurs. The most intelligent move is normally to figure out the amount you could comfortably afford to pay for repair bills and other fees, then set your deductible to that level. For example, if you have $1,000 set aside in an emergency savings account, you might set your car insurance deductible to $1,000 because you know you can easily pay that much in repairs.
The policy you’ve chosen (and who’s on it)
The policy you end up selecting will be a huge determining factor in what you pay. Think of it like picking a health insurance plan. If you choose the plan with all the bells and whistles (or in the case of auto insurance, the coverage amounts you select), you’re going to pay more.
Finally, who you have on your policy can impact your rates. For instance, if you have a teenager or a single man on your policy, they’ll be considered a “youthful operator” and your premiums will go up.
Whether you’re bundling
Perhaps you found a better deal by getting your auto, home, and motorcycle insurance at three different companies. While each one might be lower than if you were to individually sign up at one company, you’re missing out on a bundled discount.
Nearly every insurance company will give you a discount if you bring all of your business to them.
If you’ve read this far, you now know exactly how your rates are determined and why your current rate might be higher than you’d like.
You can reverse many of these factors by doing the opposite of what’s causing the rate to be high.
What to do to reduce the high premium you pay to insure your vehicle.
Below are few tips to cut your premium down:
Look for discounts
Every insurance company has several discount programs—such as military, student, good driver (no accidents or tickets), and much more. Check out your insurance company’s website to see what type of discounts they offer.
This is one of the most trusted recommendation. If you’re paying too much for insurance, many times the best place to start is by shopping around.
According to AAA 2020 Your Driving Costs study, overall driving costs went up slightly year-over-year. This included a 0.6% increase to overall insurance premiums, which they say is attributed to normal market fluctuations.
Bundle home & auto
Bundling – where you purchase more than one insurance policy with the same provider–can save you a lot of money because the insurance provider is now collecting two or more premiums from you instead of just one. So it always helps to explore bundling where it makes sense.
If you’re currently shopping for insurance, Liberty Mutual offers discounts when you bundle your auto insurance with homeowners (in addition to having good driving behaviors). And since Liberty Mutual lets you customize your coverage to what you need for both types, you won’t overpay for your insurance.
Progressive is another excellent insurance provider that offers discounts for bundling. They offer all types of insurance, including auto, homeowners, commercial, personal, and more. Getting a quote is really quick and easy to do online, and you’re able to see right away what kind of bundling discount you’re able to get right away.
As I mentioned before, driving safely is not only the right thing to do for your own safety, but also for your premiums. Better driving, fewer accidents, and thus fewer claims will lead to lower costs for your auto insurance premiums. And providers will reward you for this.
Allstate is one of those providers. With Allstate, as long as you haven’t had an accident in the past six months, you’ll get a safe driving bonus. If you do have an accident, Allstate’s Accident Forgiveness feature will keep your rates the same, even if the accident was your fault. Lastly, safe drivers can activate Drive-wise in the Allstate app to get savings based on responsible
Get a higher deductible
This is pretty much common sense, but if you raise your deductible, your premiums will go down. If you have a good driving record, you probably don’t need a low deductible anyway.
The odds of you getting into an accident are lower, so you should save money on a monthly basis by raising the deductible as high as you’re comfortable with.
Compare insurance costs before buying a car
This is so often overlooked. Many times when you buy a car, you know what you want. Whether it’s a specific model or just the cheapest car available. What many of us often forget to do, though, is determine what it will cost to insure each of these cars.
Here’s an instance. If you’ve narrowed your search down to two cars—Car A at $30,000 and Car B at $35,000—you might choose the cheaper option, all things being equal.
But in doing some research you might find that Car A costs double the amount to insure. As long as you have the car, you’ll be paying this premium.
Think about these things before purchasing a new or used vehicle. Your current insurance company will be more than happy to give you a quote on a few vehicles you’re comparing, so you know exactly what to expect.
It’s easy to see Why my car insurance is high. But now that you have the knowledge needed to identify where you’re missing potential savings, break away from social media for a night and spend some time getting the discounts you deserve!
Nowadays, Why my car insurance is high is because it’s almost the standard. Modern vehicles can be moderately expensive to maintain and repair, which only result to drive insurance rates high. To get the lowest rates, you need to maintain an accident-free record, have a good credit score, drive responsibly, make your payments regularly, and own the right kind of vehicle.