“Am I paying too much for car insurance?”
If you’re asking yourself this question, the answer is probably yes.
Many people pay more than what they should have to for their car insurance, often for completely avoidable reasons. Others pay higher rates for reasons that they can’t quickly or easily change, such as a DUI on their driving record.
But if you find yourself asking, am I paying too much for car insurance, then you are entitled to answers about why your premium is so high. But first, it’s a good idea to get a benchmark of exactly how high is too high.
For 2021, the average cost of car insurance for one person and one vehicle is around $1,600 per year, or $133 per month. However, those costs can vary widely from person to person and across different regions. Some states are simply more expensive to insure vehicles in than others, California being one of the most expensive examples. If you live in one of these states, you simply must expect to pay more for your coverage than someone in, say, Nebraska or West Virginia.
There is also a huge range of factors that affect your car insurance premium, ranging from things inside your control— your credit and driving history, for example— to things you can’t — your age, location, and other factors.
That said, it’s worth knowing why you might be paying too much for car insurance if you’re looking for ways to bring your costs down. We’ve compiled a list of some of the most common reasons you might be asking yourself: Am I paying too much for car insurance?
You Live in a High-Risk Area
Car insurance companies are constantly assessing risk. For every policyholder, they want to get as complete a picture as they can about how risky it is to insure that person. That’s how they set their rates. If you’re considered to be at a higher risk than average of getting in an accident or submitting a claim, you’ll have higher rates than the average.
This risk assessment even extends to where you live. If you live in an area that has a high rate of traffic accidents, auto thefts, or other claims, then you’re considered a higher-risk policy. You can expect your
What to Do About It
Moving to an area that experiences less accidents and claims may not be worth it just for the car insurance premium reduction alone, but it’s a factor to consider if you’re already thinking about moving to a new spot.
Your Car Model is Frequently Stolen
Some vehicles are simply stolen more often than others. Sports cars and other desirable vehicles are at a higher risk of theft or break-kins, which puts them at a higher risk for insurers to cover. If you have a vehicle model that’s high on the list of most stolen or vandalized vehicles, it could reflect in a higher insurance premium.
What to Do About It
If you’re shopping for a vehicle, try to stick to options that aren’t major targets for car thieves or vandals. This won’t just help lower your premium, but will also help reduce your risk of having your car damaged or stolen.
Your Car Has Poor Safety Ratings or High Repair Costs
Every vehicle on the market is put through a rigorous testing process that results in a series of ratings on safety, repairability, and more. When you sign up for a policy, you input information about your vehicle’s make and model, which the insurance company will then research for all of these ratings and data.
If they find that your vehicle experiences accidents or injuries to drivers and passengers often, you can bet that your insurance premium will suffer.
If you have a high safety-rated vehicle, you may still be asking— am I paying too much for car insurance? The answer could lie in the costs of repairing your vehicle. Niche vehicles, high-end performance cars and other types can be much more expensive to repair and require specialized parts and experts to get the job done, which means higher payouts from insurance companies in the event of accidents.
What to Do About It
Choose a vehicle with high safety ratings and relatively low repair costs whenever possible.
You Rent Your Home
According to data from insurance agencies, people who rent are more likely to submit insurance claims than people that buy. The correlation between these two data points is up for debate, but the fact is that if you’re a renter, you’ll likely pay a slightly higher insurance premium than your neighbor who owns their home.
What to Do About It
Buying a house to save a few dollars on your insurance premium probably doesn’t make sense, but it’s a nice benefit to look forward to if you do purchase a home.
Your Credit Could Use Improving
Low credit scores and higher risk of insurance claims have been shown to be connected by insurance agency research time and time again. Having a low credit score doesn’t mean you’re an unsafe driver, but it will probably make your insurance more expensive. Plus, it may lead to concerns about whether you’ll be able to pay your premium each month.
What to Do About It
Make a plan to improve your credit score over time. It won’t just help lower your premiums, but will help your overall financial health as well.
Your Policy Features a Teenager
Everyone knows teenagers are expensive to insure as drivers, and it’s not hard to see why. They’re relatively new to being behind the wheel, and they don’t always have the best judgement in the world. If you have a teenager on your insurance policy, then you can bet it’s one of the primary reasons you’re paying more than the average for your car insurance.
What to Do About It
If your teen has a job, consider asking them to chip in on the monthly insurance premiums for vehicles they drive. Otherwise, wait until they have more experience and years behind them to see your premiums drop.
You Only Have Car Insurance On Your Policy
Bundling has become increasingly common as insurance companies try to get customers to insure more aspects of their lives through them. Bundling home and auto insurance with the same insurance provider, for example, can lower your rates for both.
What to Do About It
If you have insurance policies with different companies, do some research into how much you could save by bundling up multiple policies with the same insurer. You may be surprised by how much you could save.
You Have Too Many Optional Coverages
Roadside assistance. Rental coverage. No-deductible windshield repair. These are all convenient optional coverages to add to your plan, but they also pack on costs to your insurance premium. If you’re trying to save, it may be time to say goodbye to some of these optional coverages.
What to Do About It
Consider some of your additional coverage options and whether they’re really make-or-break in the event of a claim. Lose anything you don’t need.
You’re Paying Too Much to Insure an Old Car
Older vehicles are lower in value, so it doesn’t make sense to insure them to the same amount as a new vehicle. Insuring these vehicles for more than they’re worth can lead to a major bump in your insurance costs.
What to Do About It
If you have an older vehicle, one that’s low in value, or one that isn’t driven often, consider reducing the coverage to the state-required minimum.
You Didn’t Shop Around for Rates
More people than you’d think simply choose the first insurance provider whose name they can remember from a TV commercial. This might save you time, but it probably won’t save you money. Besides, agencies like Freedom National automatically compare the best rates and give you a quote that’s unique to you, so you don’t even need to invest time to find the right insurer for your needs and budget.
What to Do About It
Get a free quote from Freedom National that includes a range of nationwide insurers, guaranteeing that you have access to the best rate available for your needs.
You Haven’t Reviewed Your Policy Recently
If you’ve been letting your policy auto-renew for years without any significant changes, it may be time to review your policy. You might have different needs than you had back then, and some slight changes to better reflect your current coverage needs may be in order.
What to Do About It
Each time your policy is up for renewal, take a few minutes to review your coverage and see if anything can be updated or reduced.
You Let Your Coverage Lapse
Lapses in coverage due to non-payment or failing to sign up for an insurance policy are a big no-no, both when it comes to insurers and the law. Your insurance company will usually reward lapses in coverage with heftier premiums when you do sign back up.
What to Do About It
Sign up for auto-pay for your monthly premiums so there’s no chance of ever forgetting to pay your premium and having a lapse in coverage. If you do miss a payment, contact your insurer and make the payment right away. Many insurers offer grace periods between a week and a month where they won’t lapse your coverage as long as you make the payment ASAP.
Conclusion
There’s no reason to pay more for car insurance than you have to, and saving money all starts with getting the right quote. Use our free online quote form and have a quote in minutes designed to save you money and provide the coverage you need with Freedom National.
