If you’ve had the sneaking suspicion that your car insurance rates have recently skyrocketed, you’re unfortunately not imagining things. Regardless of your location, chances are you’ve noticed a distinct increase on your bill, and that cost spike can be super frustrating. The silver lining is that a better understanding of the state of the auto insurance industry can empower you to make the most informed, educated choices possible when it comes to your plan. More knowledge and awareness means more opportunities to save money and drive smarter — and who doesn’t love that?
How Much Is Car Insurance Costing Americans These Days?
According to experts, the average American pays more than $1,400 a year for car insurance coverage. And if that sounds like a whole lot, you’re right: auto insurance rates have increased at more than twice the rate of inflation. Current rates are 20% higher than they were in 2011, and every state in the country has increased its rates by anywhere from 1% to 60%. And the past 6 months have been especially rough as rates have gone up by 6% in that time period alone.
What Determines Your Premium Rate?
While $1,427 may be the national average, a lot of factors can impact your personal cost:
- Local and state laws
- Population changes and urbanization
- Your claims history and driving record
- The addition of any new drivers to your policy or changes of the primary drivers of vehicles on the policy (particularly teenagers: Parents adding a male teenager to their policy may pay as much as $6,186, and in some cases, 227% more than the cost to insure an adult driver alone)
- Deleting a vehicle from the policy
- Change of employment
- Medical conditions that can increase your risk
- A history of convictions or driving violations
- Changes to your insurance plan’s structure or payment plan fees
- Your credit score
But Why The Recent Surge?
While all the factors mentioned above can certainly have an impact on your premium, they don’t account for the recent surge in premium pricing. Experts believe a few different factors could be at play:
- Extreme weather. In recent months, various parts of the United States have experienced hurricanes, wildfires, and other major natural disasters. Devastating events like these can result in more claims, which drive up the cost of insurance rates.
- Distracted drivers. Texting and driving don’t mix under any circumstances. As drivers allow themselves to be distracted by their smartphones, they cause more accidents; many of which could be deadly. According to reports, 40,200 people died in 2016 in traffic accidents, an increase of 14% over 2014. Because more road accidents equate to higher costs for insurance companies, those insurers are forced to raise their rates, passing the increased costs along to customers. That’s why in some states if you’re caught texting or using your phone while driving, you’ll see your insurance premium go up by anywhere from 16% to 40%.
- Better (pricier) technology. While cars are becoming safer thanks to ever-improving technology and design, those very same features are making cars way more expensive to fix in the event of an accident. As insurance companies have to pay more to repair more expensive cars, so do customers.
- Fraudulent claims. According to a study by the Insurance Research Council, up to $7.7 billion in car insurance injury claims filed in 2012 were fraudulent or included fudged numbers (that’s 33% more than the reported $5.8 billion in 2002). The more claims an insurance company has to pay out, the more the cost of premiums increases. According to the National Insurance Crime Bureau, “not only does fraud cause higher insurance premiums for all of us, but it also raises our taxes and inflates prices for consumer goods.”
Tips For Keeping Your Premiums As Low As Possible
Luckily, there are some easy ways you can keep your car insurance rates as reasonable as possible:
- The simplest way: Stop paying for miles you’re not driving and switch to pay-per-mile insurance — you’ll pay a low monthly base rate plus a few cents per mile when you sign up with Metromile. Because you are paying-per-mile, you’ll always have visibility into what your monthly bill is, giving you greater control over your premium amount.
- Maintain a clean driving record. Staying accident-free on the road may help you score a lower rate.
- Keep your credit score up. All insurance companies factor your credit score into your quote, so stay on top of those bills. In fact, bumping your score one tier, like from Good to Excellent, can save you up to 17%.
Ready to start saving? Get your personalized quote right now and see how much you could be saving.
Michelle Konstantinovsky is a San Francisco-based journalist/writer/editor and UC Berkeley Graduate School of Journalism alumna. She’s written extensively on health, body image, entertainment, lifestyle, design, and tech for outlets like Cosmopolitan, Harper’s Bazaar, Marie Claire, Teen Vogue, O: The Oprah Magazine, Seventeen, and a whole lot more. She’s also a contributing editor at Fitbit and the social media director at California Home + Design Magazine. She is an avid admirer of shiny objects, manatees, and preteen entertainment.