Why Is My Car Insurance So High? (5 Reasons) - NerdWallet (2024)

Car insurance rates are on the rise. In April, the cost of car insurance rose 22.6% compared to a year ago, according to data from the U.S. Bureau of Labor Statistics. And more than half of Americans said they’ve noticed an increase in their own car insurance rate in the past year, according to a recent NerdWallet survey. If you’re like them, you’re probably wondering: “Why is my car insurance so high?”

Unfortunately, there’s no single answer. Many factors influence the price you pay for auto insurance. Some might seem obvious, like having a recent speeding ticket on record. But others may be less apparent, like your marital status or ZIP code.

Here’s how different traffic violations can impact rates. The rates below are for 35-year-old drivers with good credit and full-coverage insurance.

Average car insurance rates

There are five main reasons your car insurance might be expensive:

Why your car insurance is so high

These are the five most likely reasons your car insurance rate might be high right now, along with some tips on what you can do to lower your bill. (Some states ban the use of one or more of these factors in insurance pricing, so they may not all apply where you live.)

1. Your personal characteristics

Age

Young, inexperienced drivers are more likely than older drivers to get in a fatal accident. As a result, insurance companies generally charge higher rates for drivers in their 20s, according to NerdWallet’s most recent rate analysis.

Below are the average annual full-coverage and minimum coverage rates for drivers of different ages with a good driving record and good credit.

Average car insurance rates by age

Gender

In most states, insurers can charge different rates for male and female drivers. This often means young men are charged higher rates than young women. The price gap between men and women decreases dramatically by age 30, although it never disappears entirely. A handful of states — including California, Hawaii, Massachusetts, Michigan, Montana, North Carolina and Pennsylvania — don’t allow insurers to differentiate by gender.

Marital status

Most large auto insurance companies have lower rates for married drivers than for those who are single, separated, divorced or widowed.

Education

Drivers with college degrees generally pay less for car insurance. Insurers say highly educated people tend to file fewer claims. However, using education levels in setting prices has come under fire in recent years, and some states are moving away from allowing this practice.

Address

Location is one of the primary factors affecting your car insurance rates. Average premiums vary dramatically by state because each state has different regulations. Rates also vary significantly by ZIP code and neighborhood. For instance, rural drivers pay less than those in cities, where vandalism, theft and crashes are more common.

Occupation

Drivers with certain occupations pay higher rates because they’re more likely than others to file insurance claims, according to some insurers. But consumer advocates have challenged the use of occupation in setting car insurance rates. Some states have banned it or are considering a ban.

Credit history

In many states, insurance companies use credit-based insurance scores, which are different from your regular credit score, to set prices. Your credit score is typically a good indicator of your credit-based insurance score.

On average, a 35-year-old good driver with poor credit pays 60% more for full coverage car insurance than an equivalent driver with good credit, a NerdWallet analysis found. Critics have questioned the validity of using credit history to determine a driver’s car insurance rate.

Home ownership

Some companies give homeowners a price break on car insurance, even if they don’t buy homeowners coverage through the same insurer. Many offer discounts if you bundle multiple policies, such as homeowners and auto insurance, with the same company.

2. How you drive

Driving record

If you’ve had at-fault accidents, traffic tickets or violations like a DUI, you’ll pay more for car insurance than a driver with a clean record. For example, a 35-year-old driver with good credit and a DUI on their record will pay 90% more than a similar driver with a clean record pays for minimum coverage, NerdWallet’s analysis found. In some cases, you might need a company that specializes in insuring high-risk drivers.

Mileage

Low-mileage drivers often get cheaper car insurance, because less time on the road means fewer opportunities for an accident. Low-mileage drivers may also save by choosing pay-per-mile insurance, which tracks how many miles they drive to set premiums.

Car storage

Keeping your car in a garage is less risky than parking it on the street, and your insurance rates may reflect this.

Years of driving experience

If you started driving at 23, you’ll probably pay more for car insurance at 25 than someone your age who’s been driving since 16. Your rates are likely to decline as you get more experience behind the wheel.

3. Your vehicle

Car make and model

Your rates are based in part on the claims your insurer has seen from other people who drive the same model as the car you’re insuring. Sports cars often have high insurance rates, for example, in part because insurers are more likely to pay out large claims from speeding drivers.

Insurance companies also consider factors like how much a vehicle will cost to repair, how popular it is with car thieves and how likely it is to damage another car in an accident. For example, insurance for electric cars tends to cost more due to their higher price tags and specialized parts.

Trim level

Vehicles with extra features like lane sensors, backup cameras and high-end audio can cost more to repair — and therefore more to insure — than base models of the same vehicle. Moving to a higher trim level typically raises not just the price of the car but also the insurance premium.

Safety features

Vehicles with a strong safety record and good safety equipment often qualify for discounts. On the other hand, some safety features can lead to higher premiums, because high-tech safety equipment can be expensive to repair or replace after an accident.

4. Your car insurance choices

Insurance company

If you’re looking at your declaration page and wondering why your car insurance rate is so high, a big reason might be the insurance company you chose. You could potentially save hundreds if not thousands per year on full coverage by switching from the state’s most expensive insurers to the cheapest, according to our analysis.

And just because a company is cheapest in one state doesn’t mean it’s the cheapest across the country. That’s why it’s important to shop around and compare car insurance quotes to find the best car insurance rates for you.

Insurance lapses

Failing to pay your car insurance bill or canceling your policy because you’re between vehicles can cost you. Coverage gaps can make you seem like a higher risk in the eyes of insurance companies, and they’ll often raise your rates in response — or even deny you coverage altogether. To avoid this, consider pausing or reducing your coverage if you can’t afford your current premium.

Coverage selected

It’s no surprise that the more coverage you get, the more it will cost. We found that full coverage auto insurance costs $1,708 on average, compared to $483 for minimum coverage. A full-coverage policy includes collision and comprehensive coverage, which pay to fix or replace your car after a variety of mishaps, like if you collide with other vehicles or animals, or if it’s stolen.

Add-ons like new car replacement coverage can boost the price, but the benefits may be worth it to you. That's why it's important to compare policies with the same coverage limits when you shop around.

Deductible amount

Your deductible is the amount you pay out of pocket when your insurer pays for a claim. For example, if your insurance company approves $3,000 worth of repairs and your deductible is $500, your insurer will pay $2,500. Your insurance premiums will be lower if you choose a higher deductible, like $1,000, but the payout will be lower if you have an accident.

Loyalty

You might expect your car insurance company to reward your years of loyalty with discounts, and some do. But some insurers try to predict which customers are the least likely to switch insurers and squeeze more profit from them through rate increases. Some states have banned this practice, called price optimization. It’s a good idea to compare car insurance rates to make sure your loyalty isn’t costing you.

Discounts

Don’t assume your insurance company automatically applies all the discounts for which you’re eligible. For example, your insurer won’t know your teen is getting good grades unless you provide proof and ask for a good student discount. Insurance companies have tons of discounts, and you may save money by reviewing them with your agent on a regular basis.

5. Economic factors

Rising costs

Rising costs from inflation don’t just impact people — they impact insurance companies, too. And the multi-year spike in car prices and repair costs means many insurers must increase rates to keep up with more expensive payouts.

Increase in claims

On top of having to pay more for an insurance claim, insurance companies are also receiving a greater number of claims. The recent uptick in traffic fatalities and financial losses from extreme weather events have caused many insurers to raise rates to cover costs.

How to save on car insurance