Why Does My Car Insurance Keep Going Up?
Compare Rates and Save on Car Insurance
By, Content Director
Many factors influence car insurance rates, some of which you can control, like your driving record and credit score, and others you can't, such as state laws and your ZIP code. These rates are often reviewed when it's time to renew your policy.
If you notice an increase, you can talk to your insurer or even switch companies. You can also save by bundling policies, requesting discounts, or choosing a higher deductible.
Table of Contents
Car insurance rates are influenced by various factors, both within and outside your control. These include your driving record, age and even your ZIP code.
Insurance companies reassess your risk level during policy renewal, checking for any changes in your driving behavior, credit score, and other factors. This is when you'll often see a change in your rates.
There are multiple strategies to save on car insurance, such as bundling insurance policies, increasing your deductible and maintaining a good driving record.
Why Car Insurance Rates Go Up
It's common to see a change in your car insurance rates when it's time for policy renewal.
Your insurer takes this opportunity to reassess your risk level by checking various records. They consult with the Department of Motor Vehicles (DMV) to see if you've had any lapses in insurance, received any tickets, or committed any moving violations. Additionally, your insurer will check your credit score; a decline since your last assessment could result in higher premiums.
While some factors are out of your control, like state laws, you can still work on maintaining a good driving record or improving your credit score to lower your future premiums.
Why Car Insurance Rates Go Up
- Your driving behavior
- Where you live
- Drivers on your policy
- The vehicle you drive
- You credit score
- A change in marital status
- Accidents and violations in your area
- Claims in your area
- Loss of discounts
- Your age
- Your gender
Your Driving Record
Your driving record is like a report card of your behavior on the road. It keeps track of any tickets you've received, accidents you've been involved in, and other traffic violations. The more points you accumulate on this record, the higher your insurance rates will likely be.
The average cost of car insurance spikes depending on the severity of your violation:
- With a speeding ticket: Your annual rates increase by 24.7% or $260 on average.
- After an accident: Your annual rates go up by 46.2% or $487 on average.
- With a DUI: Your annual rates soar by 76.6% or $808 on average.
For instance, in the table below, a person aged 30 to 59 with a clean driving record would have an annual premium of $1,054, while a person with a speeding ticket would have a premium of $1,314 ($260 higher).
Browse the table below to find out how a violation affects rates in your state.
Please note that the data below is based on a 40-year-old male driver.
The cost of car insurance can differ significantly from state to state due to factors like population density, minimum insurance requirements, and the typical cost of car repairs, as well as weather-related risks such as hurricanes or hail.
The average cost of car insurance in New York can vary by borough, depending on where you park your car overnight.
View the table below to see the annual and monthly premiums for each state.
Insurance rates can differ significantly from one state to another, and much of this variation depends on the insurer. A provider offering the cheapest rates in one state could be the most expensive option in another. Each state also has its own set of insurance requirements. For instance, carrying car insurance isn't even a legal necessity in New Hampshire and Virginia, .
Adding a Driver to Your Policy
Insurance companies evaluate the risk of covering you and anyone else you add to your policy. This generally includes all household members who could potentially drive your car.
If your household includes a teen driver or someone considered high-risk, adding them to your policy will likely cause your rates to increase. However, if there's someone you don't want driving your car, you can talk to your insurance company about listing them as an "excluded driver." This means your policy won't cover them, and it won't affect your rates.
Despite the initial sticker shock of adding a teen driver to your family policy, it's usually the cheapest way to get them insured, as indicated in the table below. As your teen gains more experience and maintains a clean driving record, you can generally expect their insurance rates to decrease over time.
To ensure you're getting the best deal, shopping around for insurance every year is a good idea. Look for companies that offer the cheapest car insurance for teen drivers; doing so can result in significant savings.
Auto insurance companies also consider the type of vehicle you drive. The make and build of your car can change your premiums. Adding or switching to a new car can also increase your insurance rate because certain models, such as those with rare parts, are more expensive to insure.
Your Credit Score
A change in your credit score can mean a difference in car insurance rates. If your credit score drops, your insurer may drive up the cost of your policy. That said, there are states — such as California, Hawaii and Massachusetts — where credit score does not matter.
Your ZIP Code
Location plays a crucial role in determining your car insurance premiums.
Even within the same state, rates can vary by ZIP code. Insurance companies consider collective risk, meaning if your area has high rates of accidents and violations or if more people in your ZIP code have filed claims, you're more likely to face higher insurance costs. Changes to accident and violation rates in your area can also lead to adjustments in your premiums.
Your Eligibility for Discounts
Qualifying for car insurance discounts can help you save significantly. However, it is possible to no longer be eligible for the discount at the time of your policy renewal.
For example, a college student who has graduated and returned home may no longer be eligible for a distant student discount. A driver recently been in an accident may also lose their safe driver discount.
Always check with your insurer to see if you still qualify for these discounts and inquire about other car insurance discounts that may be available to you.
Your Age and Gender
Regarding car insurance, average rates by age and gender can tell you a lot about how much you're likely to pay.
Young drivers, particularly males under 25, usually pay more due to a higher perceived risk of accidents. However, after 25, gender has less influence on your rates. There is no specific age when car insurance starts to go down. Instead, as you grow older, your rates are more affected by your driving history and experience.
Rates generally decrease with age, reaching their lowest around 50. However, both teenagers and seniors often face higher rates because they're considered riskier drivers.
Why Car Insurance Increased in 2023
Car insurance rates are on the rise due to various factors, including an increase in accidents and their severity, higher costs for parts and labor and slim profit margins for insurers. Additionally, inflation and risky driving behaviors are contributing to higher legal costs, all of which are putting upward pressure on insurance premiums.
When COVID-19 hit, car insurance companies gave back $14 billion, thinking fewer accidents would occur. But as things opened up, not only did accidents happen more often, they also got worse. Even the number of deadly accidents increased. This has made insurance companies adjust their rates higher.
Parts and labor get pricier
Fixing a car is more expensive now because the parts and the labor to install them cost more. Insurance companies must raise their rates when these costs rise to keep offering the same coverage.
Slim profits for insurers
The car insurance business isn't making huge profits. They measure their success with a "combined ratio," which needs to be under 100% for them to make money. With the current trends in accidents and costs, rates will likely keep increasing.
Inflation hits insurance too
The rising cost of living affects everything, including insurance. If insurance rates don't go up to match these rising costs, companies could run out of the money they need to pay out claims.
Risky driving and legal costs
Bad driving habits like speeding or driving under the influence are on the rise. When accidents happen because of this, legal costs can increase, especially in severe cases. This also pushes insurance rates higher.
What to Do When Car Insurance Rates Go Up
If your car insurance rates increase, you can talk to your insurer, adjust your coverage, or even switch providers to lower your costs.
Review your policy
The first step is to understand why your rates have gone up. Check your policy details and consult your insurer for clarification.
Contact your insurer
Sometimes, a simple phone call can explain why your rates increased. You can also inquire about any new discounts you may now qualify for.
Re-evaluate your coverage
If your lifestyle has changed — maybe you're working from home now and driving less — you might not need as much coverage as you did before. It’s also a good time to consider usage-based insurance programs.
Increase your deductible
You can often lower your premium by agreeing to pay a higher deductible in the event of a claim.
Bundle your insurance
If you have multiple types of insurance policies, bundling them with a single insurer can often result in a discount.
Check for discounts
You might be eligible for new discounts, like a good driver discount if you've been accident-free for a certain period or discounts related to a new job or retirement.
Adjust payment plan
Some insurers offer a discount for paying your premium lump sum rather than monthly installments.
Remove unnecessary add-ons
Features like rental car coverage or roadside assistance are often optional. Removing them can lower your premium.
Consult an insurance broker
If you're having trouble finding a better rate on your own, a broker can help you navigate the market.
File a complaint
If you believe the rate increase is unjustified and discussions with your insurer have not resolved the issue, you can file a complaint with your state's insurance department.
You can always switch to a different insurer offering better rates. Just make sure to understand any fees associated with canceling your current policy.
How to Save on Car Insurance
To save on car insurance, consider shopping around for quotes, bundling insurance policies, and asking for discounts you may qualify for. Other strategies include increasing your deductible, maintaining a good driving record and opting for annual payments.
Compare quotes from different providers to find the best deal. Make it a habit to review your policy and shop for new quotes at least once a year.
Combine auto with home or renters insurance for a discount.
Ask for discounts
Inquire about discounts you may qualify for, such as good driver, multi-car, or student discounts.
Increase your deductible
A higher deductible usually means a lower premium.
Maintain a good driving record
Safe driving can qualify you for discounts and lower rates.
Some insurers offer discounts for paying your premium in one lump sum.
Some insurers offer discounts for using an app or device that tracks your driving habits.
Take a defensive driving course
Completing a course can often result in a discount.
Maintain good credit
A higher credit score can lead to lower premiums in many states.
Choose your car wisely
The make and model of your car can affect your insurance rates.
Frequently Asked Questions
Knowing the different factors affecting car insurance rates can help you understand why your car insurance rates are so expensive. MoneyGeek answered some frequently asked questions about insurance rate revisions to help you understand auto insurance rates.
About Mark Fitzpatrick
- Insurance Information Institute. "How Inflation Affects P/C Insurance Premium Rates – and How It Doesn’t." Accessed October 18, 2023.
- Insurance Information Institute. "Trends and Insights: Personal Auto Insurance Rates." Accessed October 18, 2023.