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Writer's pictureBailey Lapointe

5 Reasons You Might Be Paying Too Much For Car Insurance




In my home state of Florida, car insurance is incredibly expensive. In fact, Florida ranks as the third most expensive state in the nation for car insurance. This is largely due to a high rate of nearly 27% uninsured drivers and Florida's status as a no-fault state, which puts a financial strain on drivers.


Residents of the Sunshine State aren't alone in this predicament, though. Drivers across the United States are facing high car insurance premiums. According to The Zebra's latest State of Auto Insurance report, premiums have risen nearly 30% nationwide since 2011.


Factors Contributing to Rising Insurance Rates


What is causing these rate increases? One major factor is the uptick in natural disasters over the years, leading to a growing number of claims. Another contributing factor is the rising cost of car repairs. Although many of us are driving less these days, accidents still occur. Drivers are more distracted than ever on the road.


Why Are Your Car Insurance Rates So High?


If you find yourself nodding in agreement with one or more of the following statements, you might be paying too much for car insurance.


1. Loyalty to Your Insurer


How long have you been with your current auto insurance provider? According to a recent Auto Insurance Survey by Consumer Reports, 54% of respondents have been with their current insurer for over 15 years.


While your insurer might offer a discount for being a long-time customer, it may not be enough to offset rising rates in other areas. Auto insurance companies use a unique formula to determine their rates, and these rates are often reset regularly. So, while a 10% loyalty discount might seem beneficial, what does it matter if your rate has increased by 25%?


Most of us wouldn't think twice about comparison shopping for a better deal on internet or wireless providers, so why not do the same with auto insurance? Fortunately, websites like Squeeze make obtaining quotes easier than ever—no more spending hours calling different agents.


2. You Haven't Reviewed Your Coverage Recently


Do you know your deductible? Are you paying for rental car insurance? If you haven't reviewed your coverage recently, you could be paying for insurance coverage you don't need. If you have a decent emergency fund or could cover a car repair without going into debt, it might make sense to increase your deductible.


Also, review your policy for other types of insurance coverage you're paying for. For instance, if you had an auto loan, the lender likely required collision and comprehensive insurance coverage. But if your car is now paid off and aging, it may not be cost-effective to continue paying for this coverage. On the other hand, remember that if your car is paid off and still holds significant value, you could face a considerable financial loss if your car is damaged or totaled without these coverages.


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3. Your Credit Score Has Declined


Have you recently missed a payment on your credit card or closed a credit account? Did you just take out a personal loan? If your credit score has dropped for any reason, it might explain why your car insurance bill has increased.


Insurers view your credit score as an indicator of how likely you are to file a claim. Check your credit report and resolve any outstanding issues. Once you improve your credit score, you’ll likely receive a better auto insurance rate than someone with a lower or poor score. A good credit history can positively impact your auto insurance score, leading to a lower rate.


4. Distracted Driving


We're all guilty of being distracted while driving—sending a quick "On my way" text or grabbing a bite in the drive-thru before heading to a meeting. However, the growing trend of distracted driving is contributing to rising auto insurance premiums. Studies show that reading or sending a text while driving can take your eyes off the road for up to five seconds, which is long enough to potentially cause an accident.


Texting and driving can also result in a ticket in many states. Even a minor violation can increase your car insurance premium by 20% to 40%.


5. You Haven't Inquired About Car Insurance Discounts


Perhaps you just got married or started a new job that significantly reduces your commute time. These changes could make you eligible for substantial auto insurance discounts. But if your insurer isn't aware of these changes, you could miss out on significant savings.

Check your auto insurance company's website to see which discounts they offer. For example, it might be beneficial to combine your home and auto insurance or switch to a usage-based policy.

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