Why is my car insurance so high? (And how to lower it)

It seems like car insurance premiums just keep getting higher and higher.

And for good reason — they are.

According to AAA’s 2022 Your Driving Costs study, the average annual cost of full-coverage insurance for a medium sedan is now $1,694. That’s more than a 20% increase compared to 2021.

While you can’t personally do much to curb inflation, you can control where your own premiums fall relative to other drivers. At least, to some extent.

Below are the primary factors that can lead to high car insurance premiums. I’ve also included some tips on how to minimize your rates.

Reasons your car insurance might be high

Dicey driving record

Insurance companies are going to want to know your complete history of driving before giving you a policy. This includes any and all accidents you’ve had in the past, as well as traffic violations, such as speeding tickets.

If you’ve had even a couple of accidents — recent or otherwise — you’re going to pay a higher premium. The same goes for traffic violations. If you’re accumulating points faster than LeBron James, you’re in trouble. LeBron is rewarded for getting points — you’re not.

The claim amounts resulting from any accidents can also influence premiums. Someone who’s had a couple of minor fender benders is a much lower risk than someone who has totaled three cars.

This is why it pays to have the right insurance. Companies like Allstate offer accident forgiveness coverage, so your rate won’t automatically go up after an accident.

Read more: How much does your insurance go up after an accident? (And 6 ways to reduce it)

Costly commute

Plain and simple, you (and thus, the insurance company) are more at risk the further you drive and the more often you are on the road.

If your commute to work is long, you may not be bothered by it because you can just listen to podcasts to pass the time. The problem is, you’re paying a higher premium because of it.

Subpar credit score

That’s right, believe it or not, insurance companies want to see your credit history. This includes all your debts as well as any tax liens, personal judgments, and medical bills.

If you have no credit history or your credit report is less than stellar, you’ll pay more for car insurance. That’s not to say insurance companies care how much debt you have, but they’re looking for patterns of delinquency, liens against you, or taxes you’ve refused to pay.

Insurance companies are all about reducing their risk, and if you appear risky, they’ll make you pay for it.

Unreliable payment history

If you’re routinely late with your insurance payments, your insurer might raise your rate or cancel your insurance entirely.

And if your next would-be insurer sees a lapse in your insurance history, they’ll perceive you as a liability and punish you with a higher premium because of that.

Risky regions

Different geographic areas have different accident rates, weather patterns, and crime levels. These variations affect your premiums.

For example, my parents’ car insurance rates doubled when they moved from Ohio to Florida. There are just certain parts of the country that charge a higher insurance premium. 

Read more: Minimum auto insurance coverage requirements by state

Sex, age, and marital status

Once again, this isn’t really something you can control, but insurance companies will look at historical averages of accidents within different demographics and factor their findings into your premium.

Men, for example, tend to pay higher insurance premiums than women, especially early on in their driving careers, due to higher averages of accidents and traffic violations. Insurance companies also consider married drivers a safer bet than their single counterparts.

Sportier vehicle

This is one thing that’s well within your control. Insurance companies will want to know if you’re driving a safe, boring car or a souped-up hotrod that tends to get in a lot of accidents or gets stolen a lot.

It doesn’t matter how safe you feel in your car. If you’ve chosen a car that the insurance companies deem risky, you’ll pay for it. Many times, smaller, sportier cars get the brunt of this.

Also, the rumor about a car being red costing more in insurance is completely false. According to Esurance, “the year, make, model, body style, and the age of your vehicle” are what matter when it comes to your premiums.

Coverage terms and deductible

The policy you end up choosing 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. 

Deductibles are also a big factor. The deductible is what you pay out of pocket when you get into an accident, for example.

If your policy has a low deductible (typically under $1,000) your premiums are going to be much higher. While this may cost you less at the time of the accident, you’ll pay more in your monthly or annual car insurance premium.

Finally, who you have on your policy can impact your rates. For instance, if you have a teenager on your policy, they’ll be considered a “youthful operator” and your premiums will go up.

Read more: How much does it cost to drive safe? Auto insurance coverage types that you need

How to lower car insurance costs

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. But for good measure, here are a few more tips to cut your premium:

Shop providers

This is my number one recommendation: If you’re paying too much for insurance, get into the habit of regularly shopping around for more affordable insurance companies.

Some insurers really punish those with a long commute; others are more particular about your driving history. You won’t know which provider truly values your driving profile unless you get quotes from multiple providers.

Aside from that, your life changes rapidly. In a given year you might move zip codes or get married, two adjustments that could influence your premiums. Plus, both you and your car will inevitably age. This should reduce your premiums, as older drivers are typically more responsible, and older cars are cheaper to replace in the event of a major accident.

With such a dynamic life, it’s a good idea to ask your current insurer to reassess your rates every six months. Then compare their offer with at least a few competing insurance companies. 

Read more: Best car insurance companies of 2022

Compare cars

When hunting for a new set of wheels, most of us are hopefully savvy enough to compare a few different options that meet our basic driving needs, and to strongly consider a car’s retail price when making our final decision.

But what many of us often forget to do is check what it will cost to insure each of the cars we consider buying.

Let’s say you’ve narrowed your search down to two cars. Car A costs $20,000 and Car B costs $25,000. Your first instinct might be to choose the cheaper car, all things being equal.

But after 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 high premium each month, and over time it might very well outpace whatever you saved on the cheaper car’s retail price.

Maximize 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, and if there are any you qualify for that you’re not already benefiting from.

Pay in advance

Some insurers offer lower rates for those who pay their premiums in a lump annual sum rather than in monthly installments.

If the lure of reduced rates convinces you to switch to annual rather than monthly payments, be sure to check the following with your provider:

  1. Will they give you a prorated refund should you elect to cancel your policy mid-term?
  2. Do they charge a cancellation fee?

Cheaper rates are great, but you don’t want your hands to be tied in the event that you find a better offer from another insurance company.

Bundle up

Bundling — in which you purchase more than one insurance policy from 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.

Nearly every insurance company will give you a discount if you bring all of your business to them. So if you’re paying different insurers for different police types, call each of those insurers to find out what rate they would offer you if you bundled. Then compare the bundled amount to what you’re paying for your status quo arrangement, with different policies at different insurers.

Read more: The best home and auto insurance bundles

Drive safely and save

Driving safely is not only the right thing to do for your own safety and the safety of others. It’s also easier on your insurance premiums. Providers will reward better driving, fewer accidents, and fewer claims.

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.

Save money on a monthly basis by raising the deductible as high as you’re comfortable with. And hey, a high deductible might also have a positive psychological effect on your driving.


It’s easy to see why your car insurance rates might be excessive. But now that you have the knowledge to identify where you’re missing potential savings, break away from social media for a night and spend some time getting the rate you deserve!

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