Why is Car Insurance so Expensive?<\/h2>\n\n\n\n
Car insurance joins a long list of products that have increased in price. These are not fun products we can do without. These are things Americans need to purchase: Food, shelter, services and insurance. The reasons why everything is more expensive come down to factors such as the recent pandemic, climate change and inflation. <\/p>\n\n\n\n
Pandemic Shortages<\/h3>\n\n\n\n
You may have heard the term \u201csupply chain disruptions\u201d. Increased e-commerce and global demand during the pandemic caused shortages in supply. Your rates have increased, in part, because car parts are more expensive and harder to find. When Americans make claims for covered events and increased car repair costs and parts transfer to the insurer, you\u2019ll see a rate hike to cover the difference.<\/p>\n\n\n\n
Climate Change<\/h3>\n\n\n\n
According to some sources<\/a>, hurricanes and other weather events are more intense. Wildfires in California, flooding throughout the country, ice storms and other damaging weather have caused more auto claims. Insurers have hiked their prices to make up for the increase in costs of such damages.<\/p>\n\n\n\n Americans are dealing with the pain of inflation across the board right now \u2013 and with no end in sight. Inflation causes the price of goods and services to increase and that translates to a hike in insurance prices as the costs for mechanics, parts, repairs and more increase in response.<\/p>\n\n\n\n According to the Insurance Information Institute, insurance premiums<\/a> in the U.S. did not keep pace with the inflation rate in recent past years. Because the industry is heavily regulated in terms of rates, carriers have limited options for making up the increased costs they face, except for raising premiums.<\/p>\n\n\n\n Every driver has a unique set of circumstances that underwriters examine before issuing a premium cost. The factors that go into this depend somewhat on where you live, as well as federal rules against using possibly discriminatory information. For example, some states allow the use of your credit score as a factor to help determine your rate, while others expressly forbid that usage. Here are some of the factors an insurance company may use to determine your rate<\/a> that you have control over.<\/p>\n\n\n\n In places where it is permissible to use your credit score, a poor credit score could mean a higher rate. Insurance companies point to studies that allegedly show those with lower credit scores tend to have a higher claims rate.<\/p>\n\n\n\n This is one of the main \u2013 if not the main \u2013 factors in setting your rate. Drivers with a clean driving report (and most importantly, no claims) will pay less for their coverage. The more traffic violations, accidents and claims a driver accumulates, the higher risk they become.<\/p>\n\n\n\n High-risk drivers pay the most in annual premiums. This includes those who are convicted of driving under the influence (DUI). If you are convicted, you may have to search and compare to find cheap DUI insurance<\/a>. Additionally, many places require high-risk drivers to carry an SR-22 certificate<\/a>, which is filed with the DMV by an insurer to ensure you have at least the minimum required coverage.<\/p>\n\n\n\n As fun as they are to drive, expensive or sporty models are likely to cost more in your policy quotes. This can be because they are more likely to get stolen or be involved in an accident or because it costs more to repair them. For example, although electric vehicles are one of the ways you can have the biggest impact on the environment, they cost more to insure due to the price of repairs. However, in coming years, the trend will decrease to normal rates.<\/p>\n\n\n\n You may or may not have some control over where you live. In most cases, you aren\u2019t going to move to save a few bucks on your coverage costs. But it is important to note that rates change from zip code to zip code and, especially, from state to state. As a demographic group in one area of town, you\u2019ll be assessed a rate dependent somewhat on claims and crime in that area.<\/p>\n\n\n\n Keep in mind that you have control over how your policy is structured. A policy with lower limits and a high deductible will cost less but will offer less protection.<\/p>\n\n\n\n There are other factors you don\u2019t have any control over, such as age (younger drivers pay more) and gender (males pay more), however keeping your driving record free of accident and traffic violations is the most important factor you can control.<\/p>\n\n\n As mentioned, where you live plays a large part in your vehicle coverage price. The difference from state to state<\/a> can be staggering. No-fault tends to cost more than at-fault. That\u2019s because no-fault may require residents to purchase additional products, such as Personal Injury Protection<\/a> or MedPay, as well as uninsured motorist coverage (UM). Some at-fault states also require UIM. It also depends on how much coverage is required.<\/p>\n\n\n\n Your rate will also depend on whether you choose to carry only the required minimum liability (the cheapest auto coverage<\/a>) or full coverage, which includes liability, plus comprehensive and collision.<\/p>\n\n\n\n Here are 5 of the cheapest states for car insurance rates.<\/p>\n\n\n\nInflation<\/h3>\n\n\n\n
What Determines Your Auto Rate?<\/h2>\n\n\n\n
Credit Score<\/h3>\n\n\n\n
Driving History<\/h3>\n\n\n\n
Type of Vehicle<\/h3>\n\n\n\n
Location<\/h3>\n\n\n\n
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<\/figure><\/div>\n\n\nCheapest U.S. States for Car Insurance<\/h2>\n\n\n\n