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Why Car Insurance Is at an All-Time High and What You Can Do About It

Why Car Insurance Is at an All-Time High and What You Can Do About It

7 Minute Read

Have you taken a look at your car insurance bill recently? As you shake your head at the amount you owe, a few questions probably pop up—questions like, Why is my car insurance so high? or Why have my premiums gone up again?

Don’t worry. It’s not just you.

Auto insurance prices went up by 50% between 2006 and 2016.(1) Today, the typical American driver pays an average annual premium of $1,470 for coverage. That’s an all-time high!(2)

But what’s been driving up car insurance rates for most of the country? And is there anything you can do to stop rising premiums from cramping your budget?

Why Are Car Insurance Rates So High?

Here’s the short answer: More risk equals costlier insurance rates. Several factors and trends during the past few years have pushed insurance companies to charge more for auto coverage. Here are some of them:

  • More people, more problems. The U.S. population has increased 6% since 2010, and some metro areas have grown even faster.(3) With more folks moving to major cities—where there’s more traffic, more crime and more uninsured drivers on the road—they’re likely seeing a bump in how much they pay for car insurance.

  • When Mother Nature goes crazy, it ain’t good for vehicles. Recent hurricanes, wildfires and other natural disasters have led to more insurance claims, leaving insurance companies on the hook for billions of dollars in payouts.(4) As a result, many insurers are adjusting their risk estimates and increasing premiums to make up for those losses. 

    Do you have the right auto insurance coverage? You could be saving hundreds!

  • Smartphones haven’t necessarily led to smarter driving. Drivers are more distracted by technology than ever before. Whether they’re on their smartphones or playing with all the fancy features in their newer car models, they’re driving like they’ve seen one too many Fast & Furious movies.(5)

And that’s on top of all the other factors that already go into calculating an auto insurance quote—things like your age, the type of car you drive and your driving record. Add all this together, and you have the perfect recipe for rising insurance rates for most drivers. 

Today, the typical American driver pays an average annual premium of $1,470 for coverage. That’s an all-time high!(2)

Which States Have the Highest (and Lowest) Car Insurance Rates?

Depending on the state or city you call home, you might be getting a pretty good deal for insurance coverage—or you may feel like you’re on the wrong end of highway robbery.

The cost of car insurance has gone up in 40 states (plus Washington, D.C.) and drivers in Colorado have been hit the hardest by escalating prices. Their rates jumped up by a whopping 19% last year!

Here are the five states that have the highest car insurance rates in 2019:(6)

  1. Michigan ($2,693)
  2. Louisiana ($2,339)
  3. Rhode Island ($2,110)
  4. Florida ($2,059)
  5. Nevada ($1,915)

If you live in Detroit, MI, your car insurance bill might be enough to keep you up late at night. Ironically, the Motor City is by far the most expensive city to buy car insurance with an annual insurance premium of (wait for it) $5,464.(7) That’s about $455 per month. Yikes.  

But it’s not all bad out there. There are 10 states where car insurance rates actually dropped in the past year. Drivers in Montana enjoyed the largest dip in their rates (21%).(8)

These five states have the lowest annual auto insurance premiums in 2019: (9)

  1. Maine ($896)
  2. Virginia ($918)
  3. North Carolina ($947)
  4. Iowa ($988)
  5. Idaho ($1,018)

Depending on the state or city you call home, you might be getting a pretty good deal for insurance coverage—or you may feel like you’re on the wrong end of highway robbery.

You Don’t Have to Settle for High Car Insurance Premiums

Sure, car insurance rates may be in the stratosphere in some places. But are you really destined to pay sky-high rates forever? Not so fast! 

If you’re wondering whether or not you’re getting the best deal on car insurance in your area, work with an independent insurance agent who can help you find the lowest available rates.

The truth is that most people are overpaying for coverage by hundreds of dollars! Here are some ways you can lower your premiums faster than a Ferrari going from 0 to 60 mph:

1. Raise Your Deductible

If you get into an accident or a tree branch conveniently decides to fall on your windshield, your deductible is how much you have to pay to fix your car before your insurance company starts paying for the rest. If you have a low deductible, that means you’re letting the insurance company take on more risk. You’ll pay less for the repairs in the moment, but you’re going to have much higher premiums as a result.

If you have a full emergency fund, raise your deductible! Having a higher deductible means lower premiums. That’s because you’re taking on more risk (usually a few hundred dollars more per year), but you have money in the bank that allows you to cover it if you get in an accident. You only want to pay insurance premiums for the risks you can’t handle yourself without breaking the bank—like if you total your car.

2. Get Rid of Coverage You Don’t Need

Now it’s time to look under the hood of your policy and find out what kind of coverage you’re actually paying for.

Let’s be very clear: There are certain types of car insurance you should almost always have in place. Those include liability, comprehensive and collision coverage. Together, these three insurance types give you "full coverage"—from injuries and damage done to others to theft and damage done to your own car. .

But there are also plenty of types of coverage you can probably drop from your policy to shave some of the cost from your premiums. Here are some coverages you might consider cutting if they’re not required in your state:

  • Extended Coverage
  • Guaranteed Auto Protection (GAP)
  • Personal Injury Protection (PIP)

3. Shop Around for Car Insurance

Think about it: When was the last time you shopped around for car insurance? Was it when you bought your car? Was that a year or two ago? Maybe longer? In fact, one in three Americans with car insurance has never looked around for better coverage.(10) That’s crazy! 

If you have a clean driving record, you could save more than $400 per year on auto insurance just by taking the time to compare quotes.(11) That’s why it’s a good idea to look for a better deal at least once each year. You have nothing to lose and potentially hundreds of dollars to gain!

If you have a clean driving record, you could save more than $400 per year on auto insurance just by taking the time to compare quotes.(11)

Work With an Independent Agent

A lot of people make the mistake of working with an agent who can’t (or won’t) compare quotes from different insurance companies. You want someone who is committed to getting the best deal for you—not for the insurance company that pays them. And we know just the right people to call.

Dave’s independent insurance Endorsed Local Providers (ELPs) are professionals who work with several insurance companies to help you compare rates and find the right coverage at the right price. That way, you know you’re getting the most bang for your buck when it comes to auto insurance!

Find your ELP today!

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