Car Insurance and Why it is so Expensive

Getting a new car should be a fun experience, however, there is one thing that can really put a damper on the whole thing. Purchasing car insurance. Car insurance is something you are required to have to drive a vehicle. Most dealerships don’t even let you leave the lot with your car without insurance. The thing about it is, if you are in a wreck insurance is a great thing but paying it for it every day is such bind.

So, why exactly is car insurance so expensive?

What affects your car insurance rate?

Unfortunately purchasing car insurance isn’t as simple as grocery shopping. There are so many options when it comes to insurance providers and they all offer something different.

However, where grocery shoppers all pay the same price for the exact same things, everyone pays something different for their auto insurance.

This is because there are several different things that actually affect the rates of your car insurance.

Location Location Location

Unfortunately, where you live greatly affects how much you will pay for your car insurance. From what state you live in, down to your exact zip code, car insurance is regulated.

The number of accidents in a specific area, weather patterns, and even state legislation all go into how much car insurance actually costs. State legislation is what determines the minimum amount of coverage you are required to have. More coverage means higher rates.

Some of the top states for the highest insurance premiums include Michigan, Florida, and California.

Company and Policy

Next up, some companies really do offer lower rates than each other in general. They also all offer different levels of coverage.

Each company has its own policy structure and discounts that they offer and within those general parameters are their different policies. Some offer bundling discounts and other things.

The type of policy, such as full coverage or liability will also affect how much you pay for the premium.

Age and Credit History

That is right, your age actually affects your monthly auto insurance premium. Drivers under the age of 25 usually pay a little more than their older peers.

It is actually a very common thing to look forward to turning 25 because your car insurance payment goes down.

Your credit history is also a big factor. What really stinks about this is that most young adults don’t have a credit history. Your credit is what you build by having bank accounts, credit cards, car payments, utilities, and ironically, insurance policies.

For this reason, the first insurance policy you purchase will usually cost more than ones purchased later on.

Car and Driving Record


Last but certainly not least are the type of car you are insuring and your past driving record. Sports cars and off road vehicles, like Jeep Wranglers, carry insurance rates that are much higher than those for pickup trucks, sedans, and vans.

This is because sports cars tend to be driven fast and more recklessly while big off road vehicles get driven through rough terrain and often experience roll overs. This makes them high risk vehicles which automatically drives the premium of these plans higher.

Any changes you make to your car, such as custom parts or paint jobs, will also raise your rates. These things cost more to repair if you are in an accident, so your insurance company raises your rates.

Which brings us to your driving record. If you drive too fast, get a lot of tickets, are in a lot of accidents, it goes on your driving record. Which is what insurance companies look at when they are writing your policy.

The better driver you are, the more you save.


When it comes to car insurance premiums, if you find yourself drowning in how much they cost, take a look at a few factors than just blaming the company. Make sure you aren’t to blame.

If it really is the company that just seems to be charging way too much, look into switching policies, or see if they have any special discounts you could qualify for. Many providers offer safe driving discounts that help you save money the longer you drive without tickets or accidents.

If none of these seem to help, you can always look into other companies.

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