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Why Is My Car Insurance So Expensive?

Why Is My Car Insurance So Expensive?

While you may have your heart set on your perfect car, the reality is you may not be able to afford to insure it. Your car insurance is affected by many different factors.

Are you a high-risk driver?

Here are some factors that may classify you as a high-risk driver and raise your insurance rates:

Where you live

Insurance companies analyze your neighborhood’s claims history when setting auto rates, including accidents, vandalism, and thefts. Weather is another consideration - states prone to severe weather (i.e., floods, hurricanes) will usually have higher insurance costs. They also look at state-level regulations, which can influence auto rates.

Amongst all the states, Louisiana is the most expensive state with an average auto insurance premium of $2,839 per year, a 19% increase in rates from 2020. On the other hand, Maine has the cheapest car insurance rates, with an average insurance premium of $858 a year. In addition, drivers in no-fault states such as Michigan and Florida pay more for auto insurance than drivers in other states.

Louisiana, Michigan, Florida, California, and Missouri are the top five most expensive states. The top five are Maine, New Hampshire, Wisconsin, Idaho, and Ohio for low-priced states.

Inexperienced or young driver

Car insurance rates for high-risk drivers can run between 32% to 49% higher than is typical for standard-risk drivers. Young drivers are less experienced and more likely to have an accident, which results in higher insurance premiums. After 25 years, driver’s insurance rates begin to fall. Senior drivers are more likely to get into a car accident than younger people, but they are also more likely to suffer damage in an accident.

Your driving record

Your driving history has an impact on your car insurance costs. Drivers with recent accidents or infractions on their records pay higher auto insurance premiums than those with clean records. The difference in rates is because these drivers are statistically more likely to be involved in another accident.

But do keep in mind that not all insurers treat high-risk drivers the same way. Some companies will assess much harsher rate penalties than others on high-risk customers, which means it’s always wise to compare car insurance quotes before buying a high-risk policy. Some insurance companies may charge you a lot more after, say, a credit ding or speeding ticket, while others may charge you much less.

Example – speeding tickets. According to an Insure.com rate analysis, here is how companies compared on a full coverage after a minor speeding violation:

  • Geico – $1,449
  • State Farm – $1,807
  • Nationwide – $1,900
  • Progressive – $1,916
  • Farmers – $2,146
  • Allstate – $2,239

Your credit score

Car insurance companies frequently consider your credit score while setting your premiums, and people with terrible credit or no credit history are commonly charged more for insurance. Insurance companies can charge you more for your car insurance if you have a poor credit history in all but three states- California, Hawaii, and Massachusetts. The reason drivers with poor credit history pay more for auto insurance is because they are more prone to file a claim against their coverage than those with good credit.  

You have a lapsed insurance policy

If you failed to pay your car insurance premium and had your policy canceled by another insurance company, other car insurance companies will likely find out and factor that into your premium. You’ll also pay higher rates if you drove without insurance for a while — in some states, it has to be at least 30 days — during the previous 12 months.

You drive for your job

People who drive great distances for their job, i.e., delivery drivers, are considered high-risk drivers by many car insurance companies. If you drive for work and not just to work, you probably need a business auto policy, not a regular personal lines policy.

Is your car a high-risk car?

Your vehicle's make, model, and year help your insurance company predict how likely it will be involved in a claim, how severe the accident, and how much it will cost them.

According to Insure.com, here are the most expensive cars to insure in 2021:

Other vehicles that made the top 20:

  • BMW M8 XDrive
  • Audi R8 5.2L V10 Spyder Quattro
  • Nissan GT-R Nismo
  • Maserati Levante GTS
  • BMW M5 Competition XDrive
  • BMW 750xi
  • Audi S8 4.0T Quattro Plus
  • Porsche Panamera 4S Sport Turismo
  • Porsche Taycan Turbo 4S
  • Mercedes S560 4MATIC
  • Mercedes S63 AMG 4MATIC
  • BMW M850i XDrive
  • BMW Alpina B7 XDrive
  • Infiniti Q50 Red Sport 400
  • BMW 840i XDrive

Which factors make these cars expensive to insure?

There are a few key factors that typically make cars more expensive to insure:

Imports

It’s no secret the most expensive cars to insure are imports such as Maserati, BMW, Audi, Porsche, Mercedes Benz, Nissan, and Infiniti. The sticker price will impact how expensive insurance is.

The Maserati Quattroporte S GranSport was the most expensive car to insure in 2021. While this is undoubtedly a shocking number, if you can afford the $112,000 price tag of the GranSport, you can most likely cover the additional $5,000 a year to protect it.

Repairs & Thefts

The cost of parts and complexity to fix a vehicle are vital factors. Insurance companies will always consider the vehicle’s sticker price when setting a premium. They will have to replace the car if it is damaged or destroyed by a covered peril.

The Audi R8 5.2L V10 Spyder Quattro was the only convertible to make the top 10 in 2021, thanks to its $211,000 price tag, an aluminum body structure, a 602HP engine, and a top speed of 205mph. There are a few other convertibles in the top 20, and convertibles are typically more expensive to insure as they are easier to steal and vandalize. A damaged convertible roof can be a costly repair.

Performance and Technology

All the top 20 cars come with a higher sticker price, a bigger engine and are bursting with cutting-edge technology and luxury finishes. It doesn’t help that these vehicles tend to attract a more aggressive driver. And all of this leads to sky-high insurance bills.

For instance, even though the Maserati Ghibli S Q4 is not the most expensive supercar, it does have all of the hallmarks of an expensive to insure car: a 3.0L V6 that puts out 424HP that will push the Maserati to 178mph.

Technology is another factor that insurers consider, and luxury vehicles are packed to the gills with high-end technology. Tesla is known for its technology and safety features, but while its safety technology helps keep drivers and passengers safe out on the road, it can also push up the cost of claims and repairs, and thus insurance.

Target audience

Any performance vehicle not only has the power to be driven aggressively, but it tends to attract buyers who do just that. And aggressive driving leads to more mishaps and resulting claims. Insurance rates tend to be influenced by the likely buyer, so even the most careful driver who purchases a performance vehicle pays the penalty.

Tesla is known for its technology and safety features, and its connected nature protects them against theft. But the hefty price tags, bigger batteries, and their complex and leading-edge technology under the hood are factors that pushed up the insurance cost. The Plaid cars have a claimed top speed of 200 mph, with 0-60 mph acceleration in a manufacturer-estimated 1.99 seconds, and a driving range of up to 520 miles. In the hands of an aggressive driver, the Plaid cars will be super expensive to repair after a crash.

And you’re telling me to spend more on a dash cam?

Most U.S. insurance companies do not offer dash cam users discounts. But that might start to change!

In November 2021, Nextbase partnered with Branch Insurance to offer customers the chance to save on car insurance. Branch Insurance will offer Nextbase customers an additional 8% savings on car insurance, and Nextbase will offer Branch members a 10% discount on new dash cam purchases.

While insurance companies in Asia and the UK have long embraced the dash cam, this Bridge-Nextbase partnership is one of the first in the U.S. But, we have a feeling it won’t be long before more dash cam-insurance alliances start popping up. We spoke to Jeff Chuh, VP of Marketing at Nextbase North America, and he advised that dash cam users should inquire about car insurance discounts with their current insurer.

So, say you manage to get a 5% discount from your insurer for your brand-new Tesla Model X Plaid, which lowers your insurance costs from $4025 to $3703. A savings of $201.25 might not seem a lot, but there are many reliable options in this price range, especially when combined with our frequent 5% OFF flash sales. And as we all know very well, the actual savings of having a dash cam goes beyond the 5% discount - it can save you hundreds of dollars in claims and premiums.

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