7 Reasons Why Your Auto Insurance Is So Expensive

You may have noticed recently that your car insurance premiums have increased, just like the price of nearly everything else over the past few years. According to Bureau of Labor Statistics data, car insurance prices have soared 20% on average over the past year, much faster than inflation.

Here are seven factors that can cause your car insurance premiums to rise and a few ways to help bring the costs down.

1. Your driving record isn't great

Your driving record is a major factor in how much you pay for car insurance. If you have a lot of speeding tickets, frequent accidents, or other violations, your car insurance will likely be expensive.

Most of the time, violations will be erased from your record after a few years. But until they come off, you may want to take a defensive driving course. Completing this class can keep a ticket from going on your record and may lower your insurance by up to 10%.

2. You own an EV

Electric vehicles are usually more expensive to insure because they're more complicated to fix, require expensive parts, and have fewer mechanics trained to fix them. Contact your insurance company if you're considering buying an EV to determine which models are the most expensive to insure.

For example, the average EV costs 25% more to insure than a comparable gas-powered vehicle, but Tesla models can cost up to 48% more to insure.

3. You own an expensive car

Expensive cars are generally more costly to insure. Car insurance companies decide how much it will cost to fully replace a vehicle if it's totaled, as well as how much it will cost to repair after an accident. While not all expensive cars cost more to insure than cheaper ones, most do.

4. You're a young driver

Progressive says age is one of the most important factors in how much you pay for car insurance. Younger drivers are more likely to take risks and are involved in more accidents, which drives up insurance claims.

While you can't change your age, Progressive says that costs typically decrease substantially between ages 19 and 34 and then stabilize or even come down slightly between 34 and 74. But if you continue driving at 74 and beyond, your rates may go back up.

5. You live in one of these states

Car insurance rates aren't the same in every state. Frequent accidents, major weather events, and state laws can all influence the cost of auto insurance in different states. The most expensive states for car insurance are Michigan, Louisiana, Florida, New York, and New Jersey. Michigan is the priciest, with an average annual premium of $4,894.

6. Your credit score is low

Most insurance companies will use your credit score as one of many factors for determining your insurance premiums. One reason for this is that drivers with lower credit scores tend to file more car insurance claims.

To increase your score, focus first on paying down your debt. How much debt you owe, relative to how much credit is available to you, accounts for 30% of your credit score. Additionally, make sure to make all of your payments on time. Payments 30 days past due can severely affect your credit score.

7. You haven't bundled your home and auto insurance

Like so many insurance ads suggest, bundling your home (or renters) and auto insurance gives you a discount on your rates. The percentage you save depends on how expensive your policies are and what they cover. With some companies, you can save up to 7% on your insurance by bundling. Considering you don't have to do much more than contact your insurance company to get a bundled discount, that's a decent percentage of savings.

A few extra tips for lowering your car insurance

You may want to contact your insurance agent about any discounts you currently don't have. For example, if you work from home and don't drive your car very often, there may be a low-mileage discount you might qualify for.

Similarly, you may want to try telematics car insurance that gives you a discount based on how well you drive. Many insurance companies offer this through an app that tracks how you drive -- including your driving speed, acceleration, and braking -- and may adjust your rates based on the data. You may save money with telematics insurance if you're a good driver. But if your driving isn't great, your insurance premiums might actually go up.

Lastly, shop around for car insurance quotes. About 60% of consumers find cheaper insurance rates when they get quotes from different companies. It's easy to do, and if nothing else, you may find out that you're already getting the best deal.