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Why Do Car Insurance Rates Get Expensive?

Written by Dave Benheim. Posted in Ask An Insurance Question, Rates, Research Last Updated: 03/05/2020

Wondering why your car insurance rate has become so costly? Car insurance rates can get expensive for a number of reasons, including:

  • Inflation
  • Your age
  • Your gender
  • Location
  • Driving history
  • Credit score
  • And more

In this article, we’ll explain why car insurance has gotten so much more expensive over the last few decades, as well as why it might be more costly for you. This important info can help you discover strategies to significantly reduce the cost of your car insurance:

car climbing on coins (why car ins. expensive)

In 2020, the price of car insurance was over 375 percent higher across the board than in 1985. Why has car insurance increased in price over the years? From 1985 to 2020, inflation in the cost of car insurance measured an average of 4.85 percent per year. 


This means that, for example, car insurance that cost only $500 per year in 1985 would cost $2,393.55 annually in 2020. If you’re shocked that your car insurance costs way more now than it did a decade (or three!) ago, inflation is likely the most important reason why.

Your Age
Being a young driver can massively increase the cost of car insurance. In fact, age is probably the most common and significant reason for expensive car insurance. 

Why? The data shows that young drivers (under the age of 25) are more likely to get in car accidents than more mature, experienced drivers (typically considered to be those in their thirties and above). When insuring youthful drivers, insurance companies have to account for the higher likelihood that they’ll have to pay for the expensive consequences of a car accident.
On the bright side, once you surpass the age of 25, your car insurance will almost certainly get more affordable. So if this is a factor for you, rest assured that you can look forward to cheaper insurance in the future.

Your Gender
Men almost always pay more for car insurance than women. That’s because men are more likely to have DUIs and to get into accidents, especially very dangerous accidents. 

This is particularly true for young men—past the age of 30, the gender divide in car insurance rates is less consistent.

If your location has a record of many/costly car insurance claims, you’ll be forced to pay more for car insurance. Once again, insurance companies are trying to maintain profitability, so they’re accounting for the higher probability that they’ll have to pay you more for future insurance claims.
Note that your location isn’t necessarily determined by your city or town. It’s frequently chosen based on your zip code. So if you’re wondering why your friend who lives in a different neighborhood has more affordable car insurance, that may be why. People living in cities also pay more for car insurance than those in small towns and in the country.

Driving History
Drivers who don’t violate traffic laws typically pay less for car insurance. As long as you pay them on time, parking tickets aren’t a concern. What will really increase the cost of your car insurance are moving violations, especially more than one. Car insurance companies are accounting for the fact that drivers with many moving violations and unpaid parking tickets are more likely to file insurance claims.  Furthermore, an additional factor is your driving history. At-fault accidents will significantly raise the insurance rate. Insurance companies check the number of at-fault accidents in the 3 previous years.

Credit Score
Even if you have a history of being a good, safe driver, a low credit score can contribute significantly to your insurance rates.
This depends on your state, however. Some states prohibit insurance companies from using credit scores to determine your insurance rate: Hawaii, Massachusetts, and California. 

Other Factors
These factors also contribute to high car insurance rates:

  • The type of car you drive
  • A gap in insurance coverage
  • A history of costly past claims
  • Getting off of your parents’ auto policy (being on your parents’ insurance can make it 66% cheaper)
  • Costly coverage options (optional coverages can add $1,000+ per year)


Now that you understand the causes of high car insurance rates—from systemic economic factors like inflation, to personal factors like your age, gender, credit score, and more—you have the crucial info needed to locate more affordable car insurance. 


Injuries From a Minor Car Accident?

Written by Michele Wilmonen. Posted in Ask An Insurance Question Last Updated: 10/28/2018

Q: I rear ended someone during stop-and-go commuting traffic. There was very little damage to both vehicles, but now the other person is claiming injuries, are they faking it?

A: There are times that people fake injuries after a minor car accident, but more often than not injuries, even in a minor accident, are valid. Our cars are built to protect us from major injuries and death, but there is little they can do about the sudden jolts our bodies get when our vehicles get hit. Even with everyone wearing a seat belt, the sudden jolting that happens in a minor car accident can lead to neck and back injuries. These soft tissue injuries can be very painful and can lead to physical therapy treatment for the person you hit.

So more likely than not, the person you hit did sustain some form of injury during your accident, even if the damage to your vehicles don’t look like there should be any after your minor car accident.

Changing Your Car Insurance Records

Written by Michele Wilmonen. Posted in Ask An Insurance Question Last Updated: 09/30/2018

Q: I have been with Geico for 21 years, move to Florida. I have had some accident some was not fought, then I was told my license was suspension. I have been with Geico for 21 years, move to Florida. I have had some accident some was not fought, then I was told my license was suspension.
They told me I had to pay 2173.50 for insurance, I am retired and live on an fixed income. Geico I have been in some accident not my fault like:
12/04/2015 not my fault,
10/07/2016 not my fault
06/02/2017 not my fault
06/10/2017 Improper lane change It was not my fault they left before the police came.
07/24/2017 I was never park illegal I have a handed sticker.
04/07/2018 I was rear ended there no car in front of me.
08/23/2016 I got a speeding almost paid 500.00 took a driving class and paid a lot.
06/01/2017 my license was never suspension.

Can you please help me I appreciate beening a Geico customer.
I cant afford 2173.50
This came from

LexisNexis Consumer Center.
Bureau of Records.

Thank You.

A: There are a number of ways to correct your car insurance records.

First, contact LexisNexis. Find out where each of the records are coming from. They generate the reports only, the information does not come from them.  Tell them you dispute the information. If they can’t help you,  get a copy of the report.

Second, make sure the information on the report is correctly referencing you and not someone that has almost similar information. If there is information that is not correctly referencing you, contact LexisNexis and tell them they are pulling incorrect information.

Third, if the information is referencing you correctly but the information itself is just not correct you will need to go to the source.  Contact the DMV for incorrect driving information and each insurance company that has listed an incorrect entry on your CLUE report.

It will take a lot of work on your part, but it is the only way to get your car insurance record correct in order to get your premiums back down.

Roommate on Your Car Insurance Policy?

Written by Michele Wilmonen. Posted in Ask An Insurance Question Last Updated: 10/04/2018

Q: I just moved in with a roommate for the first time and was wondering if I have to put my roommate on car insurance?

A: Actually, yes, most insurance companies require you to list ALL residents in your household, including your roommate, on your car insurance policy regardless if you are related or not. Why? Because they have access to your vehicle and to your insurance company that increases the risk the vehicle will be in a car accident.

Now, you can swear up and down to your car insurance company that your roommate doesn’t drive your vehicle, but it won’t matter. You both are in the same household and they look at who has access to the car when determining risk and premium.  The only way around it would be to have them excluded from your policy, to prevent having to have them listed on your policy as a driver and potentially have them drive up your premium.

You could also not say anything about your roommate to your car insurance company. But if they do borrow your vehicle and get into and accident, there could be severe consequences for not listing your roommate on your car insurance policy.


Car Maintenance Insurance Claim

Written by Michele Wilmonen. Posted in Ask An Insurance Question Last Updated: 10/04/2018

Q: My car broke down and I don’t know what’s wrong with it. Can I make an insurance claim if the problem is car maintenance issue?

A: It used to be that my answer to these types of questions was a flat no. Didn’t even have to think about it or look up the policy, just no.

Car insurance was created to help you if you had an accident. Something that was out of your control and you couldn’t predict would happen. It was not intended to cover day-to-day issues that happen with vehicles or things that can go wrong with cars if there is a lack of maintenance.

Car insurance has never has covered any type of car maintenance……..until recently.

In the last few years, there has been an introduction of car maintenance policies to the market that will cover the cost of work for things that may happen to your car that are not accident related. These types of policies were first introduced by smaller companies already in the field that were offering unique types of policies (like pet and appliance insurance) not usually available through the larger insurance companies. There were also some new companies that started up specifically to offer car maintenance insurance.

Recently, in the quest to stand out from their competitors, larger companies have also started getting into the market of offering car maintenance policies. To find a car maintenance policy, talk to your mechanic or your car insurance agent to see if they can help you in the right direction.

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Car Insurance Guidebook Unravels the Car Insurance Mystery

Unless you work in the car insurance industry, the topic is probably a mystery to you. The words deductible, comprehensive, collision, liability, premium, loss of use and bodily injury are all gibberish when they reach your ears.

Unfortunately, insurance is something that you are required to have by law if you want to drive. Because of how confusing it is many people go around in almost an insurance daze while they get car insurance quotes from the auto insurance companies that they have heard of. In reality, they are completely lost as to what they are actually buying.

Instead of looking at what each insurance company offers in the terms of protection for both themselves and their car, they are instead looking for cheap car insurance. Finding the cheapest car insurance coverage makes having to buy the required product all that much less painful, but misses the whole point of having insurance.

Learning about insurance through your insurance agent or websites like Car Insurance Guidebook will give you the upper hand when you looking for car insurance. You can take your knowledge and not only find the best price for insurance, you can use it to find really great insurance to protect you and your assets. Then you aren’t stuck settling for just average car insurance that can hurt you financially if you ever need it because there isn’t enough protection.

For example, when looking for insurance the car insurance rates are just the first of many factors that need to be taken into account when you are shopping around for car insurance. You also need to take into account the type of vehicle that you are driving. Many people don’t know this.

Are you driving around a vehicle that is a new sedan and can be protected under any blanket insurance policy? Or do you have an old car that you fixed up that needs special protection and could be better covered under classic car insurance?

Don’t just assume that when you compare car insurance that it will be a one-size-fits-all policy. This is where the insurance knowledge will come in handy; you will know what you need to protect yourself and your vehicle.

You will understand what your insurance agent is talking about when they use insurance terms and you will actually be able to make an informed decision. This is much better for you instead of the “nod and smile” approach people take in their insurance agent’s office.

Also just like your life changes your insurance needs will change. This year you may just need to learn about the best deductible to have. Next year you may need to educate yourself on car insurance for young drivers. As the years pass, motorcycle insurance may be something you will need to know.

Many wise people say that you never stop learning, so take their advice and educate yourself on the insurance that you spend a lot of money on and can’t get away with not having.