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Why Is My Car Insurance So High?

Have you taken a look at your car insurance bill recently? As you shake your head at the amount you owe, a few questions probably pop up—questions like, Why is my car insurance so high? or Why have my premiums gone up again?

Truth is, while premiums have continued to increase from 2010–2019, auto insurance prices decreased by almost 5% in 2020, when the COVID-19 pandemic forced people to stay home.1 But that’s no reason not to look into lowering your rate.

Let’s look at why your insurance might be so high and what you can do to stop rising premiums from cramping your budget.

Why Is My Car Insurance So High?

Honestly, there could be a few reasons why you’re paying so much for car insurance. This could range from things like your driving history to how old you are. But even though you can’t help your age, there are a few things you can change to lower your rates. Let’s take a look:

Your Driving Record

Speeding tickets, DUIs and other violations will skyrocket your rates, but a safe driving record can lower it. Some insurance companies even offer good-driver and safe-driver discounts. See if you qualify for one of these to lower your existing rate.

Your Claim History

Even though it’s their job, insurance companies don’t like it when you file a lot of claims. And they definitely don’t like big claims. Anything from a couple fender benders to totaling one too many cars will increase your premiums. Consider paying for smaller repairs out of pocket to avoid raising your rates.

Your Commute

Long commutes or traveling on especially dangerous highways, will increase your rates. That’s why insurance companies ask you where you work on your application. While you’re probably saving big on your housing expenses by commuting, it’s hiking up your car insurance.


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This isn’t something worth moving over, but if you’re already looking to move, it’s something to consider.

Your Credit

If you’ve got a credit score under 600, you’ll pay more for car insurance. Of course, you can increase your credit score over time. But know that while it might be hurting your insurance rate, the truth about credit scores is that they’re not an accurate measure of your wealth and not worth worrying about.

Sounds weird, right? Everyone says you have to increase your credit score to be wealthy, but what is a credit score anyway? Basically, it’s a number that says you’re good at borrowing money and paying it back—doesn’t matter what’s in your bank account, how much you’ve saved for retirement or even your income.

If you really want to build wealth but you’ve got debt, try following the 7 Baby Steps to ditch credit scores and save more money. It’s a lot easier than you think and totally worth it.

Your History of Paying for Insurance

Lapses in coverage can cause your premiums to spike. It’s the law to have car insurance if you own a car. And it’s not a good look if you don’t. So, to avoid higher premiums, make sure you’ve always got car insurance as long as you own a car and sometimes even if you don’t.

Your Location

If you live in a big city, or an area with lots of traffic accidents, then your premiums will be high compared to suburban or rural parts of the country. Insurance companies look at the number of claims made in the area, the crime rate and the population density. If any of these are high, your insurance rate will be high too.

Your Age and Gender

Believe it or not, insurance companies also look at age and gender to determine insurance rates. Drivers under 25 and over 75 tend to have higher rates. And recently, women have been paying more for car insurance than men.2

Some states, like California, Hawaii and Massachusetts, have banned insurance companies from using age and gender to determine premiums. But for the rest of the U.S., it’s pretty common.

Regardless, you can still lower your rate by making some of the other adjustments we recommend.

The Kind of Car You Drive

That new Porsche or Tesla might be fun to drive, but they’re sending up your insurance rate. Even if you don’t have a sports or luxury car, expensive vehicles or cars with expensive parts cost more to insure.

Vehicle safety can also affect your insurance prices. Cars that do well on safety tests, like the Insurance Institute for Highway Safety test, have lower insurance premiums.

Look up the safety ratings the next time you’re shopping for a new car, or ask your insurance agent how it might affect your rate.

The Policy You Have and Who It Covers

If you’ve got teenagers or an elderly family member on your insurance policy, it’ll send up the rates. To help decrease the cost, some insurance providers offer discounts for good grades or a safe driving record. Take advantage of these to lower your existing rate.

Also, plans with lots of add-ons or a low deductible have higher premiums. Take a look at your policy and decide if you need everything you’re paying for. If you only buy the coverage you need, you can ditch the extras and lower your premium. More on this later.

Are You Bundling?

Bundling your home, auto and other property insurance policies can actually save you money. If you’re paying multiple insurance companies, consider bringing all of your policies under one roof for a lower rate.

You Don’t Have to Settle for High Car Insurance Premiums

Sure, car insurance rates may be in the stratosphere in some places. But are you really destined to pay sky-high rates forever? No way. The truth is that most people are overpaying for coverage by hundreds of dollars! If that’s you, here are some ways you can lower your premiums fast:

1. Raise Your Deductible

If you get into an accident or a tree branch conveniently decides to fall on your windshield, your deductible is how much you have to pay to fix your car before your insurance company starts paying for the rest. If you have a low deductible, that means you’re letting the insurance company take on more risk. You’ll pay less for the repairs in the moment, but you’re going to have much higher premiums as a result.

If you have at least $1,000 saved, raise your deductible! Having a higher deductible means lower premiums. That’s because you’re taking on more risk (usually a few hundred dollars more per year), but you have money in the bank that allows you to cover it if you get in an accident. You only want to pay insurance premiums for the risks you can’t handle yourself—like if you total your car.

2. Get Rid of Coverage You Don’t Need

Now it’s time to look under the hood of your policy and find out what kind of coverage you’re actually paying for.

Let’s be very clear: There are certain types of car insurance you should almost always have in place. Those include liability, comprehensive and collision coverage. Together, these three insurance types give you full coverage—from injuries and damage done to others to theft and damage done to your own car.

But there are also plenty of types of coverage you can probably drop from your policy to shave some of the cost from your premiums. Here are some coverages you might consider cutting if they’re not required in your state:

3. Bundle Your Policies

Let’s say you’ve got homeowner’s insurance and auto insurance by two different insurance providers. To bundle insurances, you would get rid of one or both policies and purchase your insurance through one provider. It’s a nice way to conveniently manage your policies and save money on premiums, especially if one of them is expensive.

Some companies say they can save you up to 25% on your insurance. That’s more money in your pocket and less money going to the insurance company. Nice! You’re also less likely to be dropped from your insurance company if you’ve got multiple policies with them.

But—and it’s a big one—what worked for your buddy when he bundled insurances may not work for you. Depending on what you need, buying individual insurances could save you more.

For example, let’s say you’ve got a modest car and an expensive home. If the provider offers a bundle with expensive car insurance but cheap homeowner’s insurance, you may find better coverage at a better deal by breaking up the bundle. Review your policy, and don’t be afraid to comparison shop.

4. Shop Around for Car Insurance

Think about it: When was the last time you shopped around for car insurance? Was it when you bought your car? A year or two ago? Maybe longer?

If you have a clean driving record, comparing quotes could save you hundreds of dollars. That’s why it’s a good idea to look for a better deal at least once each year. You have nothing to lose and potentially hundreds of dollars to gain!

Work With an Independent Agent

Getting insurance quotes online seems convenient—who doesn’t like the look and feel of “Add to Cart” shopping? But you’re likely missing some savings that route. Or a lot of people make the mistake of working with an agent who can’t (or won’t) compare quotes from different insurance companies. You want someone who is committed to getting the best deal for you—not for the insurance company that pays them. Plus, they know all the additional discounts to look for. And we know just the right people to call.

Ramsey backs trusted professionals in your area called Endorsed Local Providers (ELPs). They will help you compare rates and find the right coverage at the right price. That way, you know you’re getting the most bang for your buck when it comes to auto insurance!

Get a new quote today.

George Kamel

About the author

George Kamel

George Kamel is a personal finance expert, certified financial coach through Ramsey Financial Coach Master Training, and nationally syndicated columnist. George has served at Ramsey Solutions since 2013, where he speaks, writes and teaches on personal finance, investing, budgeting, insurance and how to avoid consumer traps. He co-hosts The Ramsey Show, the second-largest talk show in the nation that’s heard by 18 million weekly listeners. He also hosts The EntreLeadership Podcast and The Fine Print podcast, which has over one million downloads. You can find George’s financial expertise featured in the U.S. Sun, Daily Mail and NewsNation. Learn More.

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