Updated: 9/9/2011 1:03 PM ET|
Why car insurance is so expensive
Insurance companies consider more than accidents and speeding tickets. Find out what makes rates go up -- and how to keep yours low.
If you have been involved in a traffic accident or received several traffic tickets for speeding or reckless behavior, you are probably aware that the cost of your auto insurance can increase dramatically when you have problems in your driving history.
And since car insurance is legally required by all states but New Hampshire, you probably have to keep your car insured no matter what your driving record is.
Negative impacts on a driving history
Not every traffic ticket causes your insurance rates to go up. Parking tickets, for example, usually have no impact on your insurance coverage at all.
Things that put you in an auto insurance company's high-risk category include recent or multiple car accidents, driving while intoxicated or tickets for reckless driving. The insurance company will consider all aspects of your accident or traffic ticket when it adjusts your premium rates. If you are issued a speeding ticket, the speed recorded on the ticket will make a difference.
What you drive is as important as how you drive
Your driving history is only one of the things that establishes your insurance rating.
High-risk drivers are not always those who have been found at fault for a collision or who have received several speeding tickets.
The type of vehicle you are driving can cause you to be categorized as a high-risk driver based on the potential for damage and the expense of repair or replacement.
Expensive high-powered sports cars are considered high risk and often come with expensive premiums.
Age and experience factors
Younger drivers who have very little experience behind the wheel are also considered high risk by insurance companies.
These drivers may have never been involved in any type of accident or received any traffic tickets, but their lack of experience is considered a risk factor.
If someone has been driving for only a few years, it is difficult to gauge the driving behaviors of that person accurately. Having a very short driving history can be just as expensive as having a driving history that includes collision or ticket problems.
More severe high-risk coverage options
Some driving history problems are more expensive to cover than others are. If a driver has been convicted of driving while under the influence of drugs or alcohol, he or she will need to find an insurance agency that specializes in covering severe high-risk individuals.
Since insurance is legally required, the agencies are required to provide insurance for people who have exhibited even the most reckless behaviors.
This type of auto insurance will cost more than a standard policy, but it will keep you on the right side of the law as far as your car insurance is concerned.
It may take more time and effort to find an agency that carries such high-risk policies, but in the end, it is generally worth it to maintain your ability to legally own and drive your car after you have had a serious problem in your driving history.
Cost differences with nonstandard drivers
Everyone who has a short driving history, has been found at fault for an accident, or has received a serious traffic ticket is considered a nonstandard driver by auto insurance companies. These drivers will have to pay higher rates than standard drivers do.
The amount of increase that you will experience as a nonstandard driver depends a great deal on the reason you are considered nonstandard.
In general, high-risk drivers pay from 10% to 15% more annually than standard drivers do.
If you have been shown to be a severely high-risk driver, you may have to pay up to three times more than a driver with a cleaner driving history.
Reducing your high-risk status
There are things you can do to reduce your insurance rates, even if you are one of the most high-risk drivers.
Your best friend for bringing car insurance rates down is time. When you are involved in an accident, your rates will go up immediately.
They will begin to come down again as time passes, you are not involved in any new accidents and you avoid traffic violations. Insurance rates can return to standard after as few as three years of driving with a clean record. In the most severe cases, it may take up to five years to return to standard rates.
This article was reported by Chad Fisher for U.S. News & World Report.
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I remember about 20 years ago when one of the biggest insurers told their agents NOT to write a policy for anyone that had NOT had an accident in the previous 5 years because the odds were they would have one soon. How's that for B.S.? However, it's true.
My insurance rates keep creeping up and I haven't had an accident or a ticket in 20 years. I don't buy new cars. Explain that one.
I'm sure I know why they are high here in Las Vegas, the number one sport is Vegas is running red lights. When I moved here in 2004, I actually considered getting a bumper sticker that said, "Caution, this vehicle stops for red lights". I didn't but, I sure thought about it.
Insurance industry is the biggest rip-off in history, they extort billions off the public with their government imposed mandatory requirements. Rates are about profits, and dont ever think different. Just look at what they make per year, and you have your answer.
Insurance is about making billions in profit, period!
Anything involving public safety and protection, should be non-profit. If its truly going to be about protecting the interests of society. Any time you have private insurance, its all about profit and how to rip-off as many people as possible with inflated rates, and refusing payouts to as many as they can get away with.
that's the fear they use to milk you and profit. They do little as possible of course. Why? Profit. Insurance should be non-profit. I am so sick of capitalist leeches.
Insurance should be non-profit for shared risk. Once profit becomes the motive everything is skewed. Everything goes up. Insurance is wrong in most cases.
Did you all notice that when the national speed limit went down to 55 insurance costs dropped? NO.
Over time as alcohol incidents with vehicles have dropped 80% have rates gone down? NO.
Why not? Profit.
i haven't had a ticket in 21 years but that doesn't stop the insurance scum from finding ways
to stick it to me.
UP YOURS msn for pimping for these money grabbing nazis!!!!!!!
how much did they pay YOU to put up this collection of crap????!!!
car insurance is the biggest scam out there. if car insurance companies were really interested in making cars safer they would spend half as much as they currently spend on advertising and put that money into developing technology which allows cars to drive themselves! They won't do that though because accidents would decline precipitously, reducing the costs of insurance for all of us.
In my opinion, those with "the most reckless behaviors" should not be driving at all!
Auto Insurance is absolutely a scam. I came from the UK with 20 years no claims (certified in a letter from my insurance company). I used to pay $600 per annum but was told that in N America 'insurance is different', (despite the fact that we all know insurance is a global thing) It counted for nothing and I had to start as if I was a new driver. That cost me $2500 per annum. After one really minor bump in 5 years (less than $1000) they booted it right up to $3000a year. Americans are being scammed by insurance companies because they continue to insure high risk younger drivers who have DUI and multiple crashes behind them. It is a money making business and they will screw you to the maximum. Keep changing your insurance company as you get a better deal as a newcomer, then after 1-2 years they start pushing up the premiums and always have some b******t reason for doing so.
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