If you’ve seen your insurance bill climb year–over–year, you may be wondering what the deal is. Why is car insurance so expensive? The short answer: There isn’t just one reason why your car insurance rates are so high.
In this article, we at the MarketWatch Guides team will explain all the reasons your rate could be so expensive. We’ve reviewed the best car insurance companies, and we’ll recommend cheap car insurance options too.
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Why Is My Car Insurance So High?
Your car insurance may be expensive because of your driving history, location, vehicle or credit history. Recent insurance claims and violations can increase your rates for three to five years. On the other hand, it’s possible you also just have a more expensive car insurance company.
What Factors Make Car Insurance More Expensive?
Let’s get into the details of why your car insurance could be expensive.
#1 You’re a High-Risk Driver
One of the main reasons car insurance is so expensive depends on whether insurance companies see you as a high-risk driver. This may be because you have recent at-fault accidents, moving violations or convictions like a driving under the influence violation (DUI) on your insurance record.
To car insurance companies, people who have violations like these on their records are more likely to get violations in the future. Since car insurance companies cover damage and lawsuits from accidents for customers, it makes sense that they charge high-risk drivers higher rates.
Car Insurance Rates by Accident and Violation
Having an accident or moving violation on your record can increase your rates drastically depending on the situation. The average driver pays $554 more per year if they have a speeding ticket on their record and $1,193 more per year if they have a DUI, according to our estimates.
Below, you can see how different types of speeding tickets, violations and accidents affect average annual insurance rates for a full-coverage policy compared to a clean driving record.
| Violation or Accident | Estimated Increase in Average Monthly Rate | Estimated Increase in Average Annual Rate |
| Speeding ticket | $47 | $554 |
| Single accident | $76 | $910 |
| DUI | $100 | $1,192 |
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How Long Do Violations Stay on Your Driving Record?
Depending on the state you live in, small or moderate accidents and violations can stay on your driving record for two to five years. Serious convictions stay on your record for longer. A DUI may stay on your record for five years, 10 years or even indefinitely, but it won’t affect your insurance costs forever.
Most insurance companies look at your driving record over the past three to five year, so your insurance history is shorter than your driving history. If you’ve driven responsibly after a major incident, keep checking car insurance quotes each time your policy is up for renewal until you see rates go down.
#2 You’re a Young Driver
Your age may be another factor in why your car insurance is so expensive. Our estimates show that 18-year-olds pay an average of nearly $6,000 annually for individual insurance policies. Auto insurance premiums are most expensive for teens and young adults because these age groups have a higher risk of car accidents and violations.
Average Car Insurance Cost by Age
Teenage drivers tend to pay the most for car insurance coverage, but rates generally decrease when a driver enters their twenties, based on our rate data. Rates go up again for older drivers, especially those 65 and older.
#3 You Live in an Area With More Expensive Insurance
The area you live in can be another reason why car insurance is so expensive. Densely populated areas have higher rates of accidents, traffic violations and theft, so the average cost of car insurance is higher. Similarly, if inclement weather or a natural disaster damages a large number of vehicles in your area, companies can raise rates to cover increased claims.
Car insurance requirements and claim rates also differ by state. States have differing levels of uninsured drivers as well, and insured motorists pick up the tab. That raises overall costs.
States With the Most Expensive Car Insurance
According to our research, these are among the most expensive states for car insurance on average:
- Louisiana: $4,357
- Michigan: $4,067
- Nevada: $3,870
- Florida: $3,795
- Delaware: $3,364
- New Jersey: $3,034
Note: These are full-coverage, annual rates based on a 35-year-old driver with good credit and a clean driving history, since this is a profile representative of many drivers and excludes several factors that may raise rates.
States With the Cheapest Car Insurance
On the other hand, these states have cheaper average car insurance prices:
- Maine: $1,460
- Vermont: $1,539
- Idaho: $1,588
- Wyoming: $1,794
- Iowa: $1,994
- Nebraska: $2,252
- South Dakota: $2,590
Note: These are full-coverage, annual rates based on a 35-year-old driver with good credit and a clean driving history.
#4 Your Car Is Expensive To Insure
Does your car have a racing-spec engine? An array of high-tech features? A luxury price tag? If so, you’ll pay more for car insurance. Cars with the following attributes cost more to insure:
- Expensive price tag
- Advanced tech features
- Sport design or functionality
- High likelihood of theft
Generally, luxury cars, sports cars and full-size pickup trucks are the most expensive vehicles to insure.
#5 You Have Poor Credit
Car insurance can be expensive if you have a poor credit score. Most states (except California, Hawaii, Massachusetts and Michigan) allow insurers to use credit-based insurance scores, and companies charge people with poor scores higher premiums. This is because poor credit history has been associated with a higher likelihood of filing a claim. Drivers with poor credit pay an average of $5,358 per year for full coverage. That’s nearly double the national annual average of $2,681.
#6 You Have an Expensive Car Insurance Company
Lastly, it’s possible for you to have an expensive car insurance company compared to other options. According to our estimates, average rates for good drivers range from about $1,000 per year from the cheapest car insurance companies to over $8,000 per year from the most expensive ones.
You may be surprised to find lower car insurance premiums with a competitor if you source quotes from multiple companies.
Car Insurance Companies Change Rates Often
Car insurance providers change their base rates annually or even biannually. Your rates may change even if there’s nothing different about your situation. It can seem like rates always increase, but there are cases where rates go down as well.
For example, many companies gave customers breaks on their premiums during the COVID-19 pandemic. A judge may rule that a company’s insurance rates are too expensive for a given area or state, and the company may decrease its rates.
Can Car Insurance Companies Deny Coverage?
If your recent driving record is full of claims and violations, insurance companies may only offer astronomically high rates or even turn you down for coverage. But if your state still requires you to have car insurance, what do you do?
This is why assigned-risk pools exist. Each state requires companies to insure some high-risk drivers they would normally turn away under assigned-risk pools. This way, high-risk drivers can find coverage and companies can split the risk.
In some states, you can only get coverage through the assigned-risk pool if you’ve been denied coverage by at least one insurance company. Others allow you to enter the pool if you can’t afford the rates you’ve been offered. Ask licensed insurance agent about the assigned-risk pool in your state to get started with an application.
How Can You Reduce Your Insurance Policy Payment?
While you can’t change every factor car insurance companies look at to determine your rate, you can find lower rates in several ways.
Shop around: This is one of the simplest ways to find a lower car insurance rate. We recommend comparing rates from at least three companies each time your insurance policy is up for renewal. Your rates go down when violations fall off your insurance history, too.
Choose your car wisely: If you’re shopping for a car, consider a well-maintained used car with good safety features. This will fetch the most affordable rates.
Try usage-based insurance: Usage-based programs like Progressive’s Snapshot® or Geico’s DriveEasy track your driving in real time and award discounts. Using these can be a great way to reduce your rate if you’re a safe driver.
Try mileage-based programs: Some companies offer pay-per-mile insurance that can be affordable if you have a short commute or don’t drive very often.
Take a driver’s education or defensive driving course: Your company may offer car insurance discounts for taking approved driving courses.
Change your coverage: You can downgrade your insurance coverage and limits to save money. State minimum liability coverage is the cheapest option available.
Change your deductible: If you have full coverage (comprehensive and collision coverage), having a higher deductible will reduce your car insurance rates, and vice versa. Keep in mind, however, that a higher deductible means higher out-of-pocket costs in the event of an accident.
Improve your credit: You can find better rates by increasing your credit score over time. Having good credit will help you avoid high premiums.
Most Expensive Car Insurance: The Bottom Line
There are many reasons why your car insurance could be expensive, but there are also ways to get lower rates. If you’re unhappy with what you pay for car insurance, it’s definitely a good idea to compare car insurance quotes from multiple companies. Quotes are free, and you could end up getting a lower premium.
Expensive Car Insurance Alternatives
Not all car insurance companies offer the same rates, coverage options or levels of customer service. Our top picks for affordable coverage, based on our industry-wide review, include Travelers and Progressive.
Travelers: Best for Most Drivers
After a thorough review of the auto insurance industry, we consider Travelers our top choice for most drivers. The company offers an extensive range of coverage options, many catering to new car and motorcycle owners. A standout feature is its Premier New Car Replacement policy, which provides a brand-new replacement of the same make and model if your vehicle suffers a total loss.
Keep reading: Travelers insurance Review
Progressive: Best for Tech-Savvy Drivers
Progressive is known for its affordable rates and plentiful discounts. The company offers Snapshot, one of the most popular usage-based insurance programs on the market. The Snapshot program is especially useful for high-risk drivers, as it monitors driving habits and rewards safe driving.
Keep reading: Progressive insurance Review
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Why Is My Car Insurance So Expensive: FAQ
Below are frequently asked questions about why car insurance is so expensive.
The main reason why car insurance is becoming more expensive is that the number of accidents is increasing nationwide, leading to more insurance claims.
Adding another driver to your policy will likely affect your rates, but whether or not it increases depends on the other driver’s record. In some cases, adding an older driver with a clean record may decrease your insurance rates, while adding a driver under 25 or someone with traffic violations could result in an increase.
To reduce the cost of car insurance, you can try these options:
- Shop around for another provider
- Try a usage-based program
- Reduce coverage
- Raise your deductible
- Improve your credit
- Get a cheaper car
Car insurance can become cheaper if accidents or violations have dropped off of your insurance history. Companies occasionally reduce rates depending on market conditions or state requirements. But if you want a cheaper rate now, the best thing to do is compare quotes.
Car insurance is expensive in the United States because many newer cars have advanced sensors and systems that cost more to repair. Based on our rate data, car insurance can also be expensive for drivers with accidents and violations on their driving record.
It costs more to insure an expensive car because parts and labor often cost more for repairs. Also, the insurance company would have to pay more to cover the vehicle’s value in the event of a total loss. Based on our research, some luxury car insurance may be as much as 85% more expensive than the national average rate.
Our Methodology
Because consumers rely on us to provide objective and accurate information, we created a comprehensive rating system to formulate our rankings of the best car insurance companies. We collected data on dozens of auto insurance providers to grade the companies on a wide range of ranking factors. The end result was an overall rating for each provider, with the insurers that scored the most points topping the list.
Here are the factors our ratings take into account:
- Coverage (30% of total score): Companies that offer a variety of choices for insurance coverage are more likely to meet consumer needs.
- Cost and Discounts (25% of total score): Auto insurance rate estimates generated by Quadrant Information Services and discount opportunities are both taken into consideration.
- Industry Standing (20% of total score): Our research team considers market share, ratings from industry experts and years in business when giving this score.
- Customer Experience (15% of total score): This score is based on volume of complaints reported by the National Association of Insurance Commissioners (NAIC) and customer satisfaction ratings reported by J.D. Power. We also consider the responsiveness, friendliness and helpfulness of each insurance company’s customer service team based on our own shopper analysis.
- Availability (10% of total score): Auto insurance companies with greater state availability and few eligibility requirements score highest in this category.
Our credentials:
- 800 hours researched
- 130+ companies reviewed
- 8,500+ consumers surveyed
*Data accurate at time of publication.
If you have feedback or questions about this article, please email the MarketWatch Guides team at editors@marketwatchguides.com.
