November 20th, 2014
One of the biggest deterrents of buying insurance of any type is the price tag. Many people feel like they're not getting any tangible benefit from paying for insurance each month, especially if they never have to use it. In the case of car insurance, the majority of U.S. states mandate a minimum level of coverage for all drivers. However, people are still wary of paying out the extra money.
Even though a large amount of policies can cost only a few hundred dollars for the whole year, drivers are hesitant about seeing price increases. Due to a variety of factors, some drivers' auto insurance continues to go up over time, further giving rise to concern over insurance costs.
Here are six reasons why your car insurance is through the roof:
1. You've been canceled before
Insurance providers can cancel your policy at any time if you are not staying up to date with payments. If you max out your policy limits routinely and become too much of a risk to insure, then your company can remove you from its registration. When this happens, obtaining insurance from a new company might be difficult or may come at a higher price. Your rates will likely be higher because you have a track record of not being a trustworthy client.
2. Poor driving record
Perhaps the largest reason your premiums are so high is your driving habits. Frequently getting into accidents or traffic tickets will lead to a rate hike in most cases. That's why it's best to keep your record as clean as possible and avoid aggressive and distracted driving.
3. Too many claims
When you file an insurance claim, you are forcing your provider to make a payout. When you do this too often, you begin to seem like a risky investment, which insurance companies will try to combat by upping your premiums. For larger issues like heavy car damage from accidents, a claim should definitely be filed because that's what insurance is for. However, for smaller items like dents, scratches and minor repairs, you should probably handle them on your own to avoid making an unnecessary claim.
4. Bad credit score
Regardless of your driving history, if your credit score begins to tank, then you become less financially stable. This gives insurance companies the impression that you aren't smart with your money and may have trouble keeping up with your auto insurance payments. When applying for insurance, low credit can immediately lead to higher rates.
5. Type of car
If you've bought a new car, then it may be more costly to insure, thus leading to a more expensive policy. Higher-end models can be attractive targets for thieves. On the other hand, cars that don't have a lot of protective measures built in may be more expensive as well.
6. You're overinsured
Many people have trouble fully grasping the many similarities and differences between coverage options. If you have an older car that may only last a few more years, you don't need a comprehensive plan that covers a large amount of expenses. In fact, you may only need liability coverage because your car could be worth less than a potential claim. In this case, you may have been paying for too much insurance the whole time, which is why your rates were so comparatively high.
Speak with your insurance agent to get the best discounts available to you. If you are a good student or a safe driver, then you can get more bang for your buck by taking advantage of auto discounts. Additionally, if you have a security system in your car or attend a defensive driving course, then your provider may lower your rates.
CoverHound is a leading source for auto insurance quotes.