Sampath Kumar
Chair of Marketing & Management, Chair of MS Management, Chair of MS Data Science, Professor of Marketing for the Austin E. Cofrin School of Business at UW-Green Bay
Why have car insurance premiums been increasing over the past years?
Usually, car insurance premiums rise the same way as they always have—slowly, steadily, and with everyone acting surprised every single year. But in recent times, the price hikes have surprised everyone.
But the real reasons aren’t mysterious. Repair costs have exploded because modern cars are basically rolling ipads. A tiny tap on the bumper can involve sensors, cameras, and wiring that costs more than some used cars from the 90s.
Medical bills continue to climb, making even minor injuries expensive to treat. Distracted driving has turned the roads into obstacle courses, fraud is more common than most people realize, and severe weather is causing more claims than ever.
Add all of this together, and insurers are simply paying out far more than they used to. Premiums rise because the math demands it.
How can drivers lower their Average Car Insurance Costs?
Drivers can still lower their costs, though it does take a bit of discipline—much like dieting, which we all love in theory. Shopping around is the easiest win, because each insurer calculates risk differently. Raising your deductible lowers your premium, as long as you can afford it.
Improving your credit score often helps, since many states allow insurers to factor it in. Keeping a clean driving record is one of the biggest money-savers, and asking for discounts—bundles, low-mileage programs, telematics, safe-driver incentives—can make a real difference.
And of course, choosing a sensible car to insure will always cost less than insuring a flashy, high-tech, high-repair-bill machine.
Why do some groups pay so much more for car insurance than others?
Some groups pay more simply because insurance pricing is based on data, not drama. Young drivers have far higher accident rates, so their premiums reflect that. People with poor credit tend to file more claims, so they pay more too.
Drivers in dense urban areas deal with more accidents, thefts, and claims. Certain cars are magnets for thieves or cost a fortune to repair. And drivers with violations—speeding, DUIs, fender-benders—carry those consequences in their premiums for years. It isn’t personal; it’s just actuarial math.
Can insurers really save drivers as much on their Average Car Insurance Costs as they advertise?
As for those ads promising hundreds of dollars in savings, here’s the honest truth: the savings are real, but they’re not for everyone. Insurance companies love big headline numbers because they get your attention. Some people will save hundreds, some will save enough for a sandwich, and some won’t save anything at all.
The biggest savings usually go to drivers who were overpaying dramatically to begin with. So yes, insurers can save drivers money—but whether they’ll save you that much depends entirely on your driving record, your vehicle, where you live, and what you’re currently paying.
Source: Average Car Insurance Cost