There are many reasons for high rates of auto insurance. Your age, driving record and creditworthiness all have a lot to do with it, as does the coverage you choose or vehicle you drive; not forgetting where you live! Insurance firms are more likely to be involved in incidents that lead to an increase in premiums when making a claim.
The state of the economy
The state of the economy is a major factor in how much insurance companies charge for premiums. Insurance companies are more likely to be involved in incidents, and making a claim can result in a higher premium. These increased rates may be due to the recession, which led to an increase of driving accidents and subsequently more claims filed with insurance firms.
Demographics and driving habits
The most common factors that contribute to the cost of auto insurance are your age and driving history. Most insurance firms will charge more for a younger driver with a short driving history than an older driver with a longer driving history. The second most common factor is creditworthiness, which includes how many years you’ve been at your current job and whether you have any claims against you in the past. For example, if you were laid off from your previous job, it would probably show up in your credit report. Drivers with good credit are less likely to pay as much for their auto insurance than drivers with bad credit.
Another factor is coverage – the type of car coverage that you want and need. Different areas require different types of coverage, so not all types of coverage can be had everywhere. Insurance companies set their premiums according to what they believe they can get away with charging people for a given area or type of coverage. So if there are lots of accidents in an area or many people requesting liability coverages, then rates will be higher because (theoretically) those drivers would have had to make more claims on their policies in order to drive safely through those areas. However, if there is less traffic in an area or fewer people requesting liability coverages, then rates might be lower because (again theoretically) those drivers would have had fewer incidents on the roads that they drove on for which they needed to make claims on their policies.
Coverage type and vehicle type
The type of coverage you have and the type of vehicle you drive can affect your premium. For instance, a luxury car with anti-lock brakes may cost more to insure than a standard sedan.
The cost of auto insurance in the United States is more expensive than other countries, with rates averaging $1,130 per year. In Canada, the average is $519. The difference can be explained by many factors, including accidents and the high cost of an emergency room visit in the U.S.
Age and driving record
There are two main factors that can lead to higher premiums: age and driving record. The older you get, the more likely you are to be involved in an incident and insurance firms will charge you a higher premium. Similarly, your driving record will determine how much you’re charged. If your driving record is clean, then you will have lower rates than if it’s not.
Auto insurance is expensive in the United States and there are many reasons for this. It’s important to understand why auto insurance is so expensive in order to know how to save money on it. These 10 reasons are just some of the many reasons that auto insurance is so expensive in the United States.