At Affordable Insurance, one of the most common reasons customers come to us is because they feel they are paying high car insurance rates.
Whether they have a DUI, poor credit or any of the other reasons listed here, we aim to give customers insurance that best protects them at a cost they can afford.
Here we’ll explain five reasons why you’re paying high car insurance rates so you can potentially lower your monthly cost.
- Your Driving Record is Less than Stellar
Speeding tickets and other traffic violations can be an indication that you are a risky driver. Insurance companies will increase the cost of your premium without hesitation when they see anything but a clean record. To them, a history of imperfect driving indicates a future of imperfect driving.
Drivers who receive tickets for speeding or cell phone violations will see an increase in cost the next time they renew their insurance coverage.
Severe citations, such as being found at fault for an accident or receiving a DUI will cause your insurance to skyrocket. A single DUI will increase the cost of your insurance by at least 40%. To keep your price low, drive safely, stick to the speed limits and obey the laws of the state you are driving in.
- You’re Driving an Expensive or High-Risk Vehicle
You may be paying high car insurance rates if you drive a top-tier, high-performance car. Generally speaking, sports cars, specialty vehicles or limited production vehicles cost a lot to insure.
If your car requires expensive, imported replacement parts or specialized mechanic attention, insurance companies are going to increase your premium to reflect this. Additionally, high-performance vehicles are more associated with speeding and reckless behavior than, for instance, a family van.
After luxury cars, the most expensive types of vehicle to insure are electric or hybrid cars, followed by trucks, sedans, SUVs and vans being the cheapest. If you are serious about minimizing your insurance costs, you should choose an SUV or van with a high safety rating.
- You Just Got Your Driver’s License
Unfortunately for young drivers, paying high car insurance rates is inevitable as a teenager. Drivers between the ages of 16 and 19 years of age often pay more than double of any other age group.
Young drivers have little experience and are statistically more likely to engage in reckless behavior behind the wheel. While not every young driver will drive irresponsibly, insurance companies are not taking any risks. Until a teen proves themselves to be low risk, your rate will stay high.
Some insurance companies give discounts to high school drivers that maintain high grades, so if you’re a parent of a teen, ask about possible discounts when you consult with your insurance agent.
While there’s no way to avoid paying high car insurance rates as a young driver, keeping your record clean and building up a good insurance history and credit rating will help to ensure that your insurance bill drops dramatically on your 20th birthday.
- You Opted for Coverage with Low Deductibles
A low deductible means you won’t have to pay much out of pocket if you damage your car or somebody else’s. Unfortunately, the insurance company has to get the money to cover the damages somehow.
Usually, if you choose to have lower deductibles, your premium will be higher and vice versa. It can be a tough decision to make. Nobody wants to have an accident and need to claim, but you must anticipate what would work best for your budget should that happen.
If you choose the highest deductible that you can afford to pay in case of an accident, your premium should be reduced. Best case scenario, you get cheaper car insurance, and you don’t ever need to make a claim. Worst case scenario, you incur damages and need to pay the deductible, but it doesn’t break the bank. Your insurance will cover the rest, and the car insurance is still cheaper overall.
- You Have a Low, Even Poor Credit Score
Although it doesn’t directly relate to your driving ability or your claim history, your credit score can have a huge impact on the price you pay for car insurance. Having good or bad credit can swing your cost by about 50% in either direction.
Apart from the age of the driver or getting a DUI, your credit score is the factor with the most potential to force you into paying high car insurance rates.
Insurance studies have also found that those with a lower credit score have a higher likelihood of filing a claim. Also, the resulting payout is double than the average payout on claims filed by those with good scores. Bottom line, looking at someone’s credit score is a good indicator of potential risk. Insurance companies charge a lot more to insure drivers they think are risky and are likely to file a costly claim.
- According to the 2016 Zebra State of Auto Insurance Report, drivers with an excellent credit score of 823 or more pay an average of $1130 for their yearly car insurance.
- Drivers with a poor credit score of 524 or below, pay an average yearly premium of $2411, more than double the cost of someone with excellent credit.!
Remember, carriers will look at your current credit rating, so if it sits in the poor range and you improve it to the excellent range, you could save 50% on your car insurance instantly.
So, these are five reasons why you’re paying high car insurance rates. There are an enormous number of factors that help decide the price of your insurance premium.
Some of them, such as your age, you cannot change. Many of these factors, however, are at least partially under your control. Keeping your credit score high and your driving record clean are probably the easiest ways to reduce the cost of your insurance. For more insider knowledge on the insurance industry and help getting the best deal, call us here at Affordable Insurance.