Why Is Car Insurance So Expensive?

Why Is Car Insurance So Expensive?

With the holidays approaching, many of us are feeling the financial strain of the season. We’re all trying to afford gifts, decorations, and trips to see family, and you may be looking for areas you can cut back. This financial examination could leave you staring at a bill and asking yourself, “Why is car insurance so expensive?”

There are several factors that could be impacting the cost of your car insurance. Read on to learn more about these and how you can get those premiums down and save a lot of money.

Types of Coverage

“Why is my car insurance so expensive?”

One of the biggest factors that can impact how much your car insurance costs is the type of coverage you have. Different plans cover different incidents and may have better premiums and/or deductibles. The more coverage you get, the more you’ll have to pay for it.

Full coverage covers almost anything that happens to your car, from an accident on the road to damage from natural disasters. Liability insurance, however, only covers damages you were responsible for. If you hit someone else and cause an injury, your insurance will cover the other driver’s medical costs, rather than you having to pay that out of pocket.


“Why is car insurance so expensive for new drivers?” is another popular question.

Your age is another enormous factor that influences how much you pay for car insurance. You may not be surprised to learn that the younger you are, the more you’re going to pay for insurance. Not only do teenagers have less experience driving, but they’re also more likely to make reckless or dangerous driving decisions.

Drivers under the age of 20 pay more than double what their 20-something peers pay for the same insurance. Once you hit the 30 mark, you’ll see your premiums drop again, and you’ll see similar, although smaller, drops on your 40th and 50th birthdays. Over the age of 60, premiums start going back up slowly, although they’ll never be as high as they are in your early life.


You might be surprised to learn that your gender can also play a role in your car insurance costs. This gap tends to be larger in the younger age groups, as teenage boys and young men tend to be more reckless than their female peers.

In fact, in 2016, a study found that almost 17 males died per 100,000 people in car crashes, compared to just over 6 females.

In general, this gender gap evens out as you get older, and both genders mature more. By the time you reach your 30s and 40s, the difference in men’s and women’s policies will depend more on their personal driving habits. And in most cases, the difference for older adults will come out to only a few dollars a month.

Driving History

Many people may also wonder, “Why is car insurance so expensive for first-time drivers?”

Perhaps the biggest single factor driving up your car insurance costs is your personal driving history. The demographic information we’ve discussed so far is based on your statistical likelihood of getting into a crash.

However, the single best way for insurance companies to predict your likelihood to crash your car is to look at your driving record.

If you often get in fender benders, get pulled over, or drive unsafely, you’re going to pay higher premiums. However, if you go years without an incident, your insurance company will see you as less of a risk and lower your monthly bill. In fact, some companies even offer discounts to drivers who agree to install devices in their cars that track their speed and general driving safety.

Why Is Car Insurance So Expensive?

Credit Score

Your credit score has an impact on a wide variety of things in your life, and your car insurance is no exception. Although your spending habits may seem unrelated to your driving habits, your credit score can give a general idea of how much risk you’re comfortable with. In fact, studies by the Federal Trade Commission have shown that drivers with low credit scores are much more likely to file insurance claims.

Your credit score can account for nearly 20 percent of the cost of your insurance premiums. If your premiums are high, consider working to pay bills on time, paying down credit cards, and limiting your number of credit searches. You could save as much as $30 a month on your car insurance alone, thanks to your higher credit score.

Vehicle Repair Expenses

Of course, your insurance company is going to consider how much it will cost to repair your car when they’re calculating your monthly premiums. A person driving a 2005 Toyota Corolla won’t need nearly as much money to repair their car as someone driving a 2021 Cadillac Escalade.

As a general rule of thumb, the more expensive your car is, the more you’ll pay for insurance.

However, it’s not just expensive cars that can drive up your premiums. Cars that are rare or out of production may cost more to fix since parts are harder to find and they may require specialized knowledge. You may wind up paying more for these cars, too, even if their Blue Book value isn’t the highest.

Answer: “Why Is Car Insurance So Expensive?”

Car insurance is one of those expenses that may eat you up every month, given that it can seem like you’re paying for nothing. In most cases, the answer to “Why is car insurance so expensive?” can be answered by looking in the mirror.

Factors like your age, gender, driving history, credit score, and even vehicle can all drive up those monthly premiums.

If you’d like to find more ways to save on your car insurance, check out the rest of our site at Official Car Insurance. We can help you compare rates from the best car insurance companies in your area. Contact us today and discover more tips to lower your car insurance costs the easy way.