10 Reasons You May Be Paying Too Much for Auto Insurance

Arm Yourself with Knowledge to Help Lower Your Auto Insurance Premium

Woman looking at review mirror in car
Photo: Jamie Grill/Getty Images

No one likes to pay more for auto insurance than they have to, but you may be paying a higher premium than is necessary. Auto insurance premiums are rated by insurance companies based on several key criteria: the vehicle’s make and model, safety features, usage and driver information, including tickets and accidents. These criteria are known by most people, but there are other factors used in determining your auto insurance premium that you may be less familiar with.

Below are 10 reasons you may not have known about that could be causing you to pay more for auto insurance. Take these into consideration and you may find ways to save even more on your auto insurance premium. It can also help to use insurance comparison websites to get multiple quotes before choosing the right one for you.

#1 You Rent Rather Than Own Your Home

It may surprise you to know that renters pay higher premiums for auto insurance on average than home owners by as much as 7%, accord to a 2016 Consumer Federation of America report. Different auto insurance companies have their own formulas for calculating rates and not all charge more for renters, so it pays to check this out before you buy auto insurance. You can ask outright if you are being charged a higher premium because you do not own a home. If the answer is yes, then you will likely be better off purchasing your car insurance through another company.

#2 Your Car Performs Poorly in Crash Studies

If your car happens to be a model that does not perform well in crash safety studies (your car's make and model suffers more damage in a crash test than other car types), this can increase your insurance rate significantly. These vehicles are considered to be a safety risk to your insurance company. To avoid higher fees in insurance, check out which cars performed best in crash tests conducted by the National Highway Traffic Safety Administration (NHTSA) and the Insurance Institute for Highway Safety (IIHS).

#3 You Have a Long Work Commute

For people who have a long route to and from work, your commute could be costing you more in auto insurance rates. In the eyes of the insurance company, the longer you are on the road each day, the more likely you are to be involved in an accident. It doesn’t mean you aren’t a safe driver, but you never know what you may encounter during your commute; hazardous weather conditions, road construction, traffic delays, reckless drivers, etc. If you can find a way to shorten your work commute or maybe even carpool a few days a week, you could end up saving on your premium.

#4 Your Car Is More Likely to be Stolen

If you drive a full-size Ford pickup, or a Honda Civic, your car could be target of car thieves, according to the National Insurance Crime Bureau's 2019 Hot Wheels report. Your insurance company may factor in the likelihood of your getting stolen in its insurance quote. Instead of the whole vehicle, car thieves may also steal just parts of your car, especially if you drive a late-model vehicle.

#5 You Have Bad Credit

Some insurance companies do use your personal credit score in determining the cost of your auto insurance. If you have to give your social security number to obtain an auto insurance quote, you can expect that your credit is going to be checked and used as one of the determining factors for your insurance rate.

Studies have shown that people with lower credit scores are more likely to file a claim (and require a pay-out) than those with high credit scores. The good news is you can improve your credit score over time.

#6 Your Vehicle Costs More to Repair

It makes sense that a vehicle that costs more to repair will also cost more to insure. Even if you have a fuel-efficient vehicle with all the safety features you could ask for, if your vehicle has expensive parts to service and replace, your insurance may go up if you add this type of vehicle to your policy. It may be worth it to look up the costs of ownership over time for your vehicle.

#7 Your Address

High crime neighborhoods and larger cities have higher accident rates, car thefts and incidents of car vandalism than more rural areas. This is part of the criteria taken into consideration when rating your insurance premium. The greater the number of auto accidents and car thefts in an area, the greater the exposure is to the insurance company. Many times, the rate of insurance will be based on where the car is stored or parked. Keeping your vehicle in a locked garage could help in some cases.

One thing young drivers in college may be able to do is to remain on their parents’ policy. Some companies will allow college students to do this until the student has graduated and moved to a permanent residence.

#8 You Have a Teenage Driver

While it is indeed an exciting–and sometimes scary–time for parents when a teenager gets their license and begins to drive, it is also a time when your pocketbook can take a huge hit. Adding a teenager driver to your policy can make your insurance premium go up hundreds of dollars. Why is this? Studies show that teenage drivers are more likely to cause accidents than older drivers, especially within their first month. Try to offset the increased premium by looking for insurance companies that offer teenage driver discounts and offer credit for driver’s safety training.

#9 You Are Not Bundling

You could be losing out on discounts offered by auto insurers if you are not insuring multiple lines of coverage, or “bundling,” through the same company. This includes homeowners, renters and auto insurance. For example, you could save an average of 16% in 2020 if you bundled your home and auto insurance.

#10 You Are Not a College Graduate

This may seem unfair, but some auto insurance companies may charge you higher rates if you did not graduate from college. A 2007 report from the Florida Insurance Commissioner found that professionals with degrees are being offered preferred auto policy rates.

A 2013 Consumer Federation of America report backed up these conclusions by showing how some major auto insurers charged higher insurance rates based on education level and profession. For example, a factory worker with a high school degree in Louisville was charged 23% more for their GEICO insurance compared to a plant supervisor with a college degree.

You won’t always know if an auto insurer is considering your education level as a factor in rating your auto insurance premium. However, a good indication of this is if the auto insurance application asks how many years of secondary education you have and whether or not you have a college degree.

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The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. Consumer Federation of America. "Good Drivers Pay More for Basic Auto Insurance if They Rent Rather Than Own Their Home."

  2. National Insurance Crime Bureau. "NICB's Hot Wheels: America's Top Ten Most Stolen Vehicle Makes."

  3. National Insurance Crime Bureau. "Rising Cost of Parts Fuels Interest of Car Thieves."

  4. Insurance Information Institute. "Does Your Credit Score Affect Your Car Insurance Rate?"

  5. Insurance Information Institute. "What Determines the Price of an Auto Insurance Policy?"

  6. Accident Analysis and Prevention. "Young Driver Crash Rates by Licensing Age, Driving Experience, and License Phase."

  7. Experian. "Should You Bundle Your Home and Auto Insurance?"

  8. Florida Office of Insurance Regulation. "The Use of Occupation and Education as Underwriting/Rating Factors for Private Passenger Automobile Insurance," Page 2.

  9. Consumer Federation of America. "Major Auto Insurers Charge Higher Rates to High School Graduates and Blue Collar Workers."

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