woman in car with hand on forehead red banner that reads why is my car insurance so high?

Why Is My Car Insurance So High?

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quick highlights

Most auto insurance companies look at your driving record for the past 3 to 5 years.

If you get a DUI, it could impact your rates for the next 10 years.

Consider dropping Comprehensive & Collision Coverage on a car with a low depreciated value.

Car insurance is a necessary expense for most people, so it’s no surprise that the cost seems to be on everyone’s mind. 

It can be incredibly frustrating if you're forced to pay a high rate. 

After all, you already spend money on car repairs, registration and fuel to get you where you need to be. 

But if you’re like most people, you’re also asking yourself, “Why is my car insurance so high?”

Luckily, car insurance rates aren’t set in stone.

 If you know what goes into calculating car insurance rates, you’ll have a better chance of lowering your premium.

So, let’s get down to it.

Here’s why car insurance is so expensive, plus a few strategies to lower your rates.

How is Car Insurance Calculated?

On average, your car insurance bill can range from about $100 to $300 per month. 

Car insurance rates aren’t random calculations that insurers pull out of thin air. It’s a mathematical conclusion based on risk and lots and lots of data.

Here’s how it works:

The insurance carrier looks at different areas to determine your rate:

  • Driving record: One of the main factors that impact your car insurance is your driving record. If you have a history of getting into car accidents or have tickets on your record, you’ll likely pay a much higher rate.   Auto insurance underwriters usually look at the last three to five years of your record, but a DUI could impact your rates for 10 years.  


  • Driving habits: You can’t always control how often you drive, but more time on the road can increase your car insurance premium. Insurers will look at things like where you work, the length of your commute, and where you live.
  • Coverage history: Having gaps in auto insurance coverage can increase your rates.
  • Car type: While cheaper cars don’t always have lower rates, some vehicles are more expensive to insure than others. Are you driving a safe, reliable car? Or do you have a sports car or a high-end luxury car? 

tips for success!

Dodo Tips

Want to save money?

Use a higher deductible for Collision coverage.  Maybe $1,000 or more.  This will give a good discount.  Use a lower deductible for Comprehensive.  The highest I would suggest is $500.

  • Credit score: Your credit score matters, even when getting an auto insurance quote. Many auto insurers use credit-based insurance scores to determine risk.
  • Demographics: Statistically, your age, sex and marital status influence your risk level, and higher-risk individuals can be charged higher rates.
  • Young Drivers:  if you have teen drivers, your rates will be a lot higher.

Another factor that goes into your rates is your deductible. 

A deductible is how much you pay before the insurance company begins to cover costs when you file a claim.

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Usually, Comprehensive and Collision coverages have deductibles.

Higher deductibles generally mean lower car insurance rates.

That’s because you’re financially on the hook to pay a higher amount before the insurance kicks in.

woman in drivers seat of car mouth wide open surprised holding a bill blue and red cross banner reads Why is my car insurance so high?

Why is Car Insurance So Expensive?

Auto insurance companies evaluate many factors before giving you a quote.

But rates can change from one auto insurance company to the next because each auto insurance company can calculate risk factors differently.

Plus, your premiums can fluctuate if there’s a change to one (or more) of your risk factors.

For example, younger drivers that are 16 to 19 years old are three times more likely to be involved in a fatal crash, according to the Insurance Institute for Highway Safety

Once you turn 20, your car insurance rates could go down.

Comparison quotes are quick, easy, and free!

But other factors can cause your car insurance company to charge more:

  • Surcharge: A surcharge is assessed as a penalty that you must pay for something usually within your control, such as an accident, traffic ticket or excessive number of claims filed.
  • Lapse in coverage: A lapse in coverage can happen for a legitimate reason, like if you sold your only car or you forgot to pay your bill. But a gap puts you in the high-risk category and can nearly double your rates.
  • At-fault accident: Even if the police don't issue you a ticket, the insurance company can still determine you're at-fault for the accident and make you pay more for coverage.
  • Adding a young driver: If your child is driving age, your costs could significantly increase when they're added to your policy. A young driver could increase your cost by as much as 4.5 times more than an adult driver.

How to Lower the Price of Your Car Insurance

Some factors that car insurance companies use to set your premium are out of your control. 

But there are ways you can influence how much you pay for car insurance.

To answer the question of “why is my car insurance so high,” consider these options to lower your bill.

tips for success!

Dodo Tips

Best rates online!?!?

Get an online quote because they have access to multiple car insurance companies.  They can shop around for you.  This will save you time.  

Shop around for auto insurance

Don't assume that because your insurer was the cheapest last year, they'll still be the cheapest this year.

Shop around to compare quotes for car insurance to see how much you could save. 

Raise Your Collision Deductible 

Choosing a higher deductible can significantly lower your premium costs.

But there’s a downside to consider:

Make sure you have the cash available to cover the higher deductible amount before making the switch.

Otherwise, you may not have the money available if you need to file a claim.

Get a multi-policy discount

When you bundle your home and auto insurance with the same insurance carrier, you often qualify for a multi-policy discount.

You could cut as much as 20% off your premiums by bundling your insurance.

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Improve your credit score

Because car insurance companies can consider your credit score when setting your premiums, focus on ways to establish a solid credit history.

Need ideas on how to improve your credit score?  Click this link.

Scale down your policy

Take great care when making these decisions.  Lesser coverage could burn you in the end.

  • Do you need roadside assistance or car rental coverage? 

  • You could remove the Comprehensive and Collision coverage from an older car.  
  • Check the Actual Cash Value of your car on Kelly Blue Book.com.
Dodo Teaching Numbers

Let's looks at a simple example...

Jen works nights at Denny’s as a server.  She drives a 2005 Honda Civic.  Its depreciated value is $1,900.  

It's a reliable car.  Hondas run forever, so her plan is to drive it until it fails, then buy something newer.  

Jen has auto insurance with Collision coverage on the Civic, because she wants help from the insurance company if she wrecks it.

She pays $280 a year for the coverage and she has a $500 deductible.  


Compare Policies

Action Item:  Review your policy line by line and ask your insurer about removing coverage options you don’t need to lower your costs. You can get started comparing quotes here. 


She drove the Civic for four years without having an accident. 

During that time, she paid $1,120 in premium for her Collision coverage.

In year five, she is driving home in the rain and spins out on the freeway, totaling the Civic.  

She files for coverage and the insurance company pays her a settlement amount of $1,400.  

don't be a dodo!

Don't Make this Dodo Mistake

Watch out for this mistake!

Only carry insurance when you can’t afford the loss.  Buying Comprehensive or Collision Insurance on an old, beat up car could be a waste of money. 

This is the Depreciated, aka “Actual Cash Value” of the Civic at that time, minus her $500 deductible.

So her net benefit was only $280 because she had paid the premium for all those years without an accident.

Had Jen done the math five years ago, she would have saved the $1,120 and been able to use that money towards a newer car when the Civic was totaled that dark and stormy night.

The bottom line: Why is My Car Insurance so High?

You may not have control over all of the factors that influence your car insurance premiums.

But taking a look at what’s in your control can offer substantial savings on your auto insurance rates.

Remember: Not all insurers place the same level of importance on different risk factors.

Taking the time to shop around and compare quotes from multiple companies is one of the easiest ways to save money on car insurance.

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