Why is my car insurance so expensive?

Do you have auto insurance that has a premium that is simplytoo high? One thing that all consumers can agree on is that they want to be sure they are getting the best deal possible with their insurance.

When you are in the market for a car insurance policy, or maybe you already have one, how can you be sure that you’re being charged a fair rate?

How do you know that the premium that you are being charged is fair and has real value?

As a consumer, what you always need to remember is that when it comes to insurance, you are in control and you have the power to find the most value in the market.

Read More: Compare Car Insurance Costs

The car insurance industry is one that is beyond crowded. There are many national insurance carriers out there all trying to compete for market share. There are also plenty of niche insurance carriers also trying to carve out their tiny piece of the space.

As a consumer, this puts you in a great position to shop the market and ensure that when you sign on with a policy, you are getting the most value that you can. If you have auto insurance that is too high, it is time to take action.

Enter your zip code into our free rate comparison tool above. You might be able to save hundreds of dollars a year by switching car insurance providers.

Understanding Insurance Rates

To figure out if you have a car insurance premium that is too high initially, you have to understand what is the driving force behind the dollars you are being charged.

Insurance premiums are calculated in a very formulaic way.

Insurance providers have rates that they file with the individual states that dictate what they will charge for a policy. Adjustments to those rates are going to come from whether or not you have had a history of car accidents, a pristine driving record, etc.

You may also get adjustments to your car insurance premium if you meet one of their specified criteria. For example, if you only drive 8,000 miles or less each year, you are usually going to be able to get a discount for that.

If you drive more than that, the premium is likely to be higher.

If you are under the age of 25 and you pose an increased risk, your rates are also going to go up and thus; your premium will work as well. When you understand how your premium is calculated, figuring out if it is too high and how you can shop to get it lower becomes easier.

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What causes car insurance rates to increase?

As we talked about above, you are going to find that your car insurance premium can increase for a variety of reasons.

• your driving history
• your age
• the type of car that you drive
• where you live

The various factors that cause premiums to increase all need to be made aware of. You need to know what is driving the dollars you are being paid.

Are all insurance companies the same?

It is pivotal to note that all insurance carriers are not going to be the same. When it comes to a car insurance carrier, the one thing that has to be constant is what they are charging each customer across the company.

If you have two drivers with the same risk profile and car and go to insurance company “A,” you will get charged the same premium.

Insurance carriers are not allowed to charge consumers differently across their book of business because the rates are already filed and must be followed.

If those same two people in the above example went to different insurance carriers, they are going to come back with premiums that vary.

They are, more likely than not, going to end up in a situation where they are unaligned on what they are being charged.

What is the driving force behind this? Every insurance carrier is going to be developing their rates based on their risk assessment.

The rates that insurers produce are based on actuarial work, historical data, loss history that they expect to see repeated in the future. The loss ratios they hope to obtain are also going to be driving forces behind what they charge premium dollar wise.

Every single insurance carrier will be consistent across their company, but when you compare one insurer to the next, variances will indeed exist.

How can you lower your car insurance?

If you are a consumer that has a high car insurance premium, how can you go about getting a lower premium? It is all about making use of the comparative rating systems that are available online.

You would be amazed at the amount of information you are going to be able to acquire when you shop the internet for car insurance. Just hop onto Google and search for a term such as “lower my car insurance premium” and you will find many results.

The risk that you present is going to be perceived differently by the various insurers that are out there in the market.

The way to get a lower premium is to do your homework and see where you, as a risk, is going to be seen as the least dangerous to an insurance carrier. Those are the carriers that are going to offer you the following:

• lower rates
• higher discounts
• decreased premium overall

One other option that you do have is to hire an agent to help you. An insurance agent is someone that is going to work on your behalf to shop the market for you.

They are going to seek out the various carriers and ask what they can offer for coverage in exchange for a premium. They can do the leg work for you in exchange for a commission they get, usually a cut of your premium.

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Focus on Coverage

You also do not want to lose sight of the coverage that you are being offered. You could get a dirt cheap insurance premium, but it may be because the coverage that you are being offered is half of what you currently have.

It is one thing to lower your insurance premium, but you also want to make sure that you are going to have adequate coverage when you are out on the road. Accidents can always happen, even when you least expect it. Insurance is there to indemnify you, make you whole again.

Act Today, Not Tomorrow

You are not trapped to the current car insurance policy that you have. What many consumers think is that they are stuck with the policy they have now until it has fully expired. That could not be farther from the truth.

With virtually all car insurance carriers, you have the ability tocancelyour car insurance at any time.

You do not have to wait until you get to the expiration date of your current policy to make a move, to adjust things for a lower premium.

Start shopping for a new car insurance policy today. Once you find that ideal policy, it is then that you can set your current policy up so that it goes into effect on the same day that your current policy is canceled out.

The time to act is now. Comparative rating systems are out there to help you get the most value possible from your car insurance policy. It is up to you to take advantage of the technology that exists as well as the industry that is extremely competitive.

Insurance carriers want your business, and they are going to do all that they can to acquire it. As a consumer, finding that perfect match starts and ends by putting the work in.

If you want to lower your car insurance premium, you certainly can do it! It’s as easy as entering your zip code into our free rate comparison tool below!

Case Studies: Understanding High Car Insurance Premiums

Case Study 1: Poor Driving Record

Sarah has a history of traffic violations, including speeding tickets and at-fault accidents. Due to her driving record, she is considered a high-risk driver by insurance companies. As a result, Sarah is charged higher premiums to offset the increased likelihood of accidents and claims.

Case Study 2: Adverse Credit History

John has a low credit score due to past financial difficulties. Insurance companies consider individuals with poor credit history as higher risk, as they may be more likely to miss premium payments or file more claims. As a result, John is charged higher premiums to compensate for the perceived increased risk.

Case Study 3: Young Driver

Emily is a young, inexperienced driver. Statistically, young drivers are more prone to accidents and are considered higher risk by insurance companies. As a result, Emily is charged higher premiums until she gains more driving experience and establishes a safe track record.

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