Why is my car insurance so expensive?

If you think your car insurance is expensive compared to the past, you're not wrong. Your car insurance is so expensive because of inflation, but that's only one reason. The average age of cars on the road has gone up, making property damage during accidents more likely. Car values for new cars have also gone up, and repairs to hybrid or electric vehicles are more costly for insurers. More costs for the insurance companies means more cost are passed on to the consumer.

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Chris Tepedino is a feature writer that has written extensively about auto insurance for numerous websites. He has a college degree in communication from the University of Tennessee and has experience reporting, researching investigative pieces, and crafting detailed, data-driven features. His works have been featured on CB Blog Nation, Flow Words, Healing Law, WIBW Kansas, and Cinncinati.com. ...

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Written by Chris Tepedino
Insurance Feature Writer Chris Tepedino

Rachael Brennan has been working in the insurance industry since 2006 when she began working as a licensed insurance representative for 21st Century Insurance, during which time she earned her Property and Casualty license in all 50 states. After several years she expanded her insurance expertise, earning her license in Health and AD&D insurance as well. She has worked for small health in...

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Reviewed by Rachael Brennan
Licensed Insurance Agent Rachael Brennan

UPDATED: Dec 9, 2021

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Can't-Miss Facts

  • Car insurance rates have gone up at more than double the rate of inflation over the last decade
  • The average car insurance cost in California has increased by $500 in the last ten years
  • You can still save on your car insurance by looking for discounts and comparing rates

It may seem like the cost of insurance is going up each year. 

That’s because it is. 

In fact, in California alone, insurance rates have risen each year for the past decade. The average insurance has increased almost 45%, from just under $1,200 per year to more than $1,700 now.

What makes insurance more expensive

There are a variety of factors that go into this premium increase. Many tend to attribute rising prices to inflation.  While that is true to some extent, the price of insurance has risen much more quickly than the dollar price has changed. 

A dollar in 2011 is equal to about $1.21 in purchasing power now, which accounts for just under half the change seen in California’s insurance prices.

It may be tempting to attribute these rises in cost to a single cause. 

In reality, a combination of factors contributes to the constantly rising insurance coverage prices. If you’re interested in the causes behind the change or just want to learn more about the costs behind your insurance policy, read on to learn more.

If you want to try and save a little on your auto insurance, one of the best ways is to comparison shop. You can use our free rate comparison tool to gather quotes from your area right now.

COVID’s Role

The number of drivers on the road fell significantly as a result of the pandemic. 

Approximately $14 billion in premiums were refunded over the last year. As drivers return to the road, they return to insurance policies which may have risen in cost during their year off. Although the price of insurance was close to an all-time low last year, the insurance cost is nearing their pre-pandemic levels, according to CNBC.

The pandemic may also have pushed the average age of the American car to a brand-new high. The average age of US cars is 12.1 years old. Older cars are costlier to repair, and their parts are much scarcer than those for a new car, suggesting the potential cost of a repair may be a driving factor behind the rise in insurance costs.

The accidents which occurred during the pandemic had a much higher percentage of fatalities when compared to accidents from before the pandemic. Fatalities went up 7% in car accidents, despite a notable drop in total hours driven.

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Distracted Driving

As technology has become more ingrained in our personal lives, deaths are associated with one-the-road phone use. According to the National Highway Traffic Safety Administration (NHTSA), 3,142 people were killed as a direct result of distracted driving in 2019 alone.

Sending or reading a text distracts a driver from the road for up to five seconds. In most states, phone use is banned while operating a car (for good reason!). Almost ten percent of fatal crashes involving a driver between the ages of 15 and 19 were attributed to distracted driving, and in many cases, the most damage is done to the non-distracted party.

A distracted driving ticket could raise your insurance rate by as much as 40%. 

Save that text for later. 

Distracted driving tickets add up and eventually slightly affect the overall average for the insurance premium on a given car. If the owner of a Dodge Challenger is more likely to receive a ticket for distracted driving, a new owner of a Challenger will have the potential risk of a distracted driving ticket factored into their cost.

By some figures, up to 50% of all Americans let themselves get distracted behind the wheel. Of 11 million accidents in 2016, almost 4 million could have been avoided with the elimination of distracted driving. Eating and drinking, texting while driving, and adjusting hair and makeup — while second nature on their own — become a lot more dangerous at 60 mph.

In Need of Repair

Repair costs have always been a major factor in determining insurance rates. Throughout the COVID-19 pandemic, however, some parts have become few and far between. A wheel bearing which was $100 about a year ago is now sold for $150, closely paralleling the rise in the car insurance cost.

A microchip shortage within the past year caused a drop in car production and a noticeable slowdown in repairs. 

Drivers began buying more used cars, as Ford and General Motors both had shutdowns. 

  • Part of the issue is the shared technology between computers, consoles, and cars. 
  • Both the growth in crypto mining and the renewed console wars, most microchips on the market were bought up for much of the past year.

Some car owners reported wait times of up to a month for car repairs. These shortages are expected to carry on into next year but should be alleviated somewhat by ramped up production from many premier microchip companies.

Natural disasters

The past decade was one of the most expensive regarding the damages caused by natural disasters. Between 2010 and 2019, the United States faced nearly $70 billion in damages. Forest fires and flooding were both major contributors to the rising costs of auto insurance.

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Lowering your car insurance rate

Given the rise in insurance prices, you may be wondering how you can lower your car insurance rate. We’ve prepared some great steps you can take if you’re interested in paying less each year for insurance.

#1 — Stay Studious

If you’re a student, you probably already know about the good student discount. A high GPA tells the insurance provider or insurance agency that you’re responsible and can lower the cost of your insurance up to 25%.

#2 — Shop Around

Compare rates regularly to find a price and coverage option which works for you. It’s easy to fall into the habit of using the same insurer or insurance agent year after year. Many auto insurers actually incentivize renewal with annual premium discounts, which build on themselves the longer you stay with a company.

Still, it’s a good practice to shop around. 

You may find a great new coverage plan that works perfectly for you. Alternatively, you might discover that your plan is, in fact, the best option for you. Because the insurance cost can fluctuate, keeping your options open allows for the opportunity to find and lock into a better rate.

#3 — Certified Defensive Driver

Any car insurance company or insurance agency will love safe drivers. If you’re willing to take the time to get certified as a defensive driver, you can save up to 12% on their car insurance. The class itself is pretty straightforward. Most programs focus on traffic codes and the steps you can take ahead of time to avoid accidents.

In most cases, a defensive driving course will pay for itself over time. There are some conditions, however. A defensive driving discount would not be active after a car accident if you were determined at fault. In other cases, you may not be able to access a defensive driver discount simply because you live in the wrong state.

#4 — It’s Better Together

Family plans are commonplace in auto insurance, especially for parents with newly-minted teenage drivers. Insurance companies tend to offer many types of insurance, meaning it may be possible for you to bundle your auto, home, and even life insurance.

Auto Insurance companies are willing to give customers up to a 20% discount on multi-car auto insurance (sometimes higher if the family has an accident-free history, and the youngest on the plan apply for the good student discount).

#5 — Ask For a Discount

Some say the best advice is the simplest. Often when you’re renewing your insurance, simply asking for a discount can be enough to change the price up to 10%. 

Remember, auto insurance companies want your business. If you’ve shopped around, and you know you can get better coverage with another company, share the better plan with your agent, and they’re likely to offer the same coverage.

#6 — Change Your Coverage Plan

The easiest way to pay less for auto insurance is to downgrade your coverage. Never pay for more coverage than you can afford. As we’ve already discussed, it can be easy to stay with the same plan without changing it for years, but look into the specifics of your project, and the coverages you need to determine whether you’re paying the right amount for your insurance.

Find affordable rates now

With the rise of insurance costs, it’s more difficult than ever to find affordable auto insurance. If you’re looking for a new provider, or you’re just shopping around, you’re in the right place.

Our goal is to connect shoppers with the best and most trusted brands. We know how difficult it can be to find auto insurance — everyone on the road has been through the process. So we’ve simplified the process of finding and comparing rates. 

Ready to find the perfect insurance plan? Just start by selecting a type and entering your ZIP code

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