What Makes Car Insurance Go Up

At a time when the cost of every good and service seems to be going up, millions of consumers are looking to lower their auto insurance.  If you’ve been wondering why you’re paying more auto insurance than your co-worker or neighbor, this article should answer those questions and help save you money. 


Determining the price of auto insurance involves several factors.  The type and cost of automobile, region of the country, urban versus rural areas, age of the driver, credit history, driving record, number of miles you commute daily, amount of deductible, number of automobiles on the policy, and the increase of surcharges after an accident all influence the premium cost.  Because there are so many conditions that could drive up the price of car insurance, I’ll provide you more information to help sort it all out.  


  • Cost of Automobiles – The highest insurance rate in the U.S. covers the Porsche 911 Carrera GT2 ($100,000 car) at a cost of $2,950 per year to insure for a 40 year old man.  The cheapest rate covers the Mazda Tribute I, a small four door SUV which sells for $22,500 and insures for $1,133.  The big variance in premium has a lot to do with the cost to replace each vehicle and the likelihood of an accident.


  • Regional Price Differences – The cost of covering the same car for the same individual can differ depending on what region of the country you live in.  New York insurance prices dwarf those of Texas and California’s rates are much greater than Missouri’s; for the same vehicles.


  • Urban Cost Vs. Rural - In most cases, insurance companies charge higher premiums to cover automobiles in heavily populated areas where the chance of theft and accidents are more common than in rural, less populated, areas.


  • Number of miles you drive – Companies also factor in the amount of miles you commute to work monthly and yearly to determine the cost of supplying coverage.



  • Gender of Drivers – Studies have shown that young men have riskier driving habits and therefore are more prone to cause accidents and receive more traffic violations than females their same age (16-25).  Thus, the reason for slightly higher premiums for young men.


  • Credit & Driving Record – Most insurance providers look at an applicant’s past credit history as well as their driving record when formulating a policy amount.  Calculating the risk of cancelling a policy after causing an accident or the failure to pay the premium on time both have been listed as areas of concern.


  • Deductible Amount - The premium can be increased or decreased depending on the amount a policy holder chooses to pay as a deductible in the event of a claim.


  • Multi-Car Discounts - Expect to catch a break when adding vehicles to your policy.  Companies realize it makes sense for them to offer their customers a bonus for loyalty and referrals.


  • Accident Surcharges – A surcharge is a fee that insurance companies attach to the premium when their customer causes an accident, to help recoup the cost of repairing both cars.  At-fault accidents or chargeable accidents can saddle customers with a surcharge that increases their premium from 20-150% and could last as long as two to three years.


In most states, carrying a car insurance policy is the law and is generally affordable to all drivers who are inclined to examine all of their options.  Even though car insurance companies hold most of the cards when you’re shopping around for coverage, you should still take time to find the best coverage that fits your needs and budget.