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Cost of car insurance: What drivers can and can't control

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Published  August 23, 2024 9:45pm EDT
Georgia
FOX 5 Atlanta

Rising cost of car insurance

FOX LOCAL Host Ariyl Onstott and Atlanta insurance broker John D'Angelo explore why car insurance costs are on the rise.

In Brief

  • Uncontrollable Factors: Age, gender, and location (urban vs. rural) are key factors that affect insurance rates but are beyond your control.

  • Controllable Factors: Driving history, vehicle type, and credit score can significantly impact your insurance costs.

  • Population Density: Higher premiums are common in urban areas due to more accidents, higher crime rates, and dense traffic.

  • Income and Crime: Higher disposable income leads to more expensive cars to insure, while rising auto theft rates increase premiums in high-crime areas.

ATLANTA - Has your car insurance cost increased recently? If so, you are not alone—and it’s probably not your fault.

We recently asked our Facebook followers if they had noticed a rise in their car insurance premiums, and nearly 2,000 people responded with a resounding "yes." For the vast majority of these individuals, nothing had changed—they hadn’t bought a new car, been in an accident, received a traffic ticket, added anyone to their policy, or moved. Yet, FOX 5 viewers reported that their rates had increased by 10% to 30%, and in some cases, even more.

With so many people experiencing these unexpected hikes, we decided to take a closer look at what’s happening with car insurance and see if we could uncover some answers.

READ ALL THE STORIES

Several factors influence your car insurance rate. Some of them are things that you can control, but some are not. 

Factors that affect car insurance rates you cannot control

Age and gender

Age:

Teenagers and Young Adults: Drivers aged 16 to 25 generally face the highest car insurance premiums. Within this group, teenage drivers (particularly those aged 16 to 19) pay the most. Insurance companies consider this age group to be the most risky due to their lack of driving experience and higher likelihood of being involved in accidents.

Rates Decrease with Age: Insurance premiums typically decrease as drivers gain more experience and enter their late 20s and 30s. However, they may rise again slightly as drivers reach their senior years, usually starting around age 65.

Gender:

Males: Young male drivers, particularly those under 25, generally pay more for car insurance than their female counterparts. This is because statistics show that young men are more likely to engage in risky driving behaviors, such as speeding and driving under the influence, which results in a higher incidence of accidents and claims.

Females: While young women also face higher premiums, they generally pay less than young men in the same age group. The gap in premiums between genders typically narrows as drivers age.

Population density and where you live

Automobile premiums tend to be higher in urban areas. Therefore, those states with
a higher percentage of the population in urban areas will tend to have higher average premiums (more drivers, more crashes/collisions). 

In Georgia, it went from 186 persons per square mile in 2020 to 190 people per square mile in 2024, according to the most recent data. In 2020, 74.1% of Georgia residents lived in an urban area. Now, approximately 80% live in an urban area. 

Bottom line, if a driver lives in a big city like Atlanta, their insurance will be much higher than car insurance for someone who lives in a rural area. 

Disposable income of residents 

Higher disposable income usually means newer and higher-priced vehicles, which cost more to repair when something happens. Higher disposable income also means more money is needed for coverage limits greater than state minimum requirements to protect policyholder assets. 

Disposable personal income in Georgia increased from $41,847 in 2018 to $46,664 in 2020 and $49,538, according to most recent data. 

Rising crime rates, especially auto theft

High crime rates, especially related to auto theft, can definitely impact the cost of car insurance in your area. Drivers who live in urban areas risk having their vehicles stolen more than those who live in rural areas.

Nationally, the number of vehicle thefts has been increasing in recent years, with an estimated 1,020,729 thefts nationwide in 2023. Only 801,023 vehicles were reported stolen in 2019 and 888,0111 were stolen in 2021.

Georgia has reported 28,171 vehicle thefts in 2024 so far, which is one of the highest totals in the country. In 2022, Georgia reported 26,529 vehicle thefts and in 2021, 17,985 automobiles were stolen.

A bit of good news for those living in Atlanta. For the week ending Aug. 17. 2024, Atlanta Police Department reported 52 vehicles were stolen. However, even though it was an increase from 39 the week before, motor vehicle theft is reportedly down 20% since the same time in 2023. At this time, 2,477 vehicles have been stolen in APD's jurisdiction in 2024. The previous year's total was 3,108.

State laws related to driving habits

State laws related to drunk driving and seat belt usage also impact insurance rates.

Fortunately, Georgia's drunk driving laws are generally considered strict compared to many other states. The state enforces a "zero tolerance" policy for underage drivers and imposes severe penalties on those convicted of driving under the influence (DUI). 

Georgia's seat belt laws are also generally considered strict compared to those in many other states. Georgia enforces a primary seat belt law for drivers and front-seat passengers. This means that law enforcement officers can stop and ticket a driver solely for not wearing a seat belt, without needing any other traffic offense as a reason for the stop.

Additionally, Georgia has strict child passenger safety laws, requiring children under 8 years old to be in an appropriate child safety seat or booster seat, depending on their height and weight. This is enforced with no exceptions, making Georgia’s child passenger safety laws among the stricter in the nation.

Changes in driving behavior

Overall, the number of miles being driven each year has gone up nationwide, which means the more time spent on the road, the more likely a driver will be in a crash/collision.

Distracted driving has also become more of an issue. In 2022, distracted driving killed 3,308 people.

According to NHTSA, drivers were 30% more distracted in February 2022 than they were in February 2020. NHTSA also says that roughly 20% of injuries occur in car crashes/collisions caused by distracted driving. 

According to a March 2024 study by The Zebra, 60.2% of respondents reported talking on the phone while driving; 47% said they sent or received a text; 40% admitted to using an app on their phone while driving; 59% said they adjusted their GPS; 59% ate or drank in their vehicles; 22% took a photo or made a video; and 11% applied makeup. 

The Zebra conducted the same survey in January 2021. At that time, only 52.5% of American drivers said they ate/drank in their cars; 23.6% admitted to texting; 11.7% said they took photos; and 6.5% put on makeup. 

Additionally, drivers are often distracted by their children or their pets. 

In 2011, a distracted driving violation raised a driver's car insurance rates by less than 16%, equating to less than $100 per year in extra premiums. In 2024, cell phone violations can increase a driver's insurance premium by 21.56%, according to The Zebra. 

Last but not least, more drivers than ever have a sense of entitlement, which often leads to aggressive driving and road rage.

Aggressive driving and road rage are not only dangerous, but they can also lead to an increase in car insurance rates if they result in a serious crash or injury. 

The national average insurance rate increase is 45% for drivers who cause an accident with property damage, while the average rate increase is 47% for drivers who cause an accident that results in injuries.

Just like car insurance rates vary from state to state, so does the average increase in auto insurance rates if you cause an accident. For instance, not only do California drivers have to contend with some of the worst road rage in the nation, but they also experience the biggest increase in insurance rates for causing an accident with injuries (97% increase).

Surprisingly, a new study just revealed that Georgia drivers are actually pretty nice on the road. It was ranked No. 47 out of 50. Unfortunately, road rage incidents involving guns has dramatically increased overall and Atlanta is one of the cities with the highest rate of road rage incidents involving guns. 

State-mandated car insurance requirements 

State-mandated car insurance requirements significantly influence insurance rates, as they determine the minimum level of coverage drivers must carry. States with higher mandatory coverage limits generally see higher premiums, while those with lower requirements tend to have more affordable insurance costs.

In Georgia, drivers are required to carry liability insurance with minimum coverage limits of $25,000 per person for bodily injury, $50,000 per accident for bodily injury, and $25,000 for property damage. While these limits are relatively standard, factors like Georgia's status as an "at-fault" state and its high rate of uninsured drivers contribute to higher insurance rates. Additionally, urban areas like Atlanta, with heavy traffic and higher accident rates, further drive up premiums. Click here for car insurance requirements in each state.

Factors that affect car insurance rates you can control

Individual driving history

This is pretty simple to understand. Drivers who don't get tickets and don't get into crashes generally have lower insurance rates. 

On average, drivers in Georgia can expect their insurance rates to increase by around 50% to 80% after a DUI conviction. In some cases, premiums may even double.

In Georgia, after a DUI conviction, drivers are required to file an SR-22 form, which is a certificate of financial responsibility that verifies the driver has the minimum required insurance coverage. This requirement further contributes to higher insurance costs.

Type of vehicle being driven

This is also pretty easy to understand. The more expensive the car, the more it will cost to insure (although there are some ways to save money on certain types of cars). Read this story for a list of the least and most expensive vehicles to insure. 

Credit history of driver

Credit scores significantly influence car insurance rates because insurers use credit-based insurance scores to assess risk. Studies have shown a correlation between lower credit scores and a higher likelihood of filing claims, leading insurers to charge higher premiums to individuals with poor credit. In contrast, those with good or excellent credit typically enjoy lower rates, as they are perceived as lower-risk drivers.

The impact of credit scores on insurance premiums can be substantial, with drivers who have poor credit sometimes paying up to 50% more than those with excellent credit. However, this practice varies by state, as some states like California, Hawaii, and Massachusetts prohibit or limit the use of credit history in setting insurance rates. Improving your credit score can lead to reduced premiums, making credit management financially beneficial​.

Academic grades

Also, a student's grades can impact car insurance rates for teenage drivers. Many insurance companies offer a "good student discount" for young drivers who maintain a GPA of 3.0 (B average) or higher. This discount, which can range from 5% to 25% off the premium, is based on the idea that academically successful students are likely to be more responsible and safer drivers.

To qualify, students typically need to provide proof of their grades each semester. This discount is available to both high school and full-time college students, making it a valuable way to lower the generally high cost of insuring teenage or young adults. 

Life events that affect cost (average nationwide costs)

  • Lapse in coverage: Added yearly cost of $446
  • Insurance for teenage driver: Added yearly cost of $4,781
  • Decrease in credit score: Added yearly cost of $1,776
  • Given a speeding ticket: Added yearly cost of $578 (Drivers in Hawaii have the lowest increase with an average of $109 more per year).
  • Caused a crash: Added yearly cost of $1,064 (Biggest increase seen in California with average increase of $1,764 per year).
  • DUI: Added yearly cost of $1,500 (This varies wildly depending on the state. Drivers in Detroit, for example, pay an additional $8,585 per year for insurance after one DUI. North Carolina drivers have to pay an average of 287% more).

Previous history of vehicle

A car's previous involvement in a crash/collision can affect the insurance rate. If the vehicle's history report shows significant damage, insurers may view it as a higher risk, potentially leading to higher premiums. This is because a car with a history of accidents might be more prone to future issues, and repair costs could be higher.

However, the impact on the rate depends on factors like the severity of the prior damage, the quality of repairs, and the insurance company's policies. If the damage was minor and well-repaired, the effect on your insurance rate might be minimal.

Insurance companies don't want certain drivers

It's true. Sometimes, insurance companies raise their rates as a way to encourage drivers to go elsewhere.

The most obvious reasons are:

Risk Assessment: Insurers adjust premiums based on the perceived risk a driver presents. If a driver has multiple claims, accidents, or traffic violations, the insurer may raise rates to reflect the higher risk. In some cases, these increased rates may become unaffordable for the driver, leading them to seek coverage elsewhere.

Profitability: Insurance companies are businesses, and their primary goal is to remain profitable. If a driver consistently costs the company more in claims than they pay in premiums, the insurer may raise rates to cover those costs. This could result in the driver choosing to leave, but the primary goal is to ensure profitability rather than intentionally driving the customer away.

But, insurance companies also seek to rid themselves of "perfect" drivers and long-time policyholders. 

A car insurance company might drop a long-time "perfect" driver for several reasons, despite their flawless driving record. Once again, profitability is a major reason. Insurers continuously assess whether policyholders contribute to their bottom line. If a driver consistently opts for low deductibles or lives in a high-claim area, the company might find them less profitable and decide to part ways.

Another reason could be changes in underwriting guidelines. As insurers adjust their criteria based on new risk assessments or market conditions, a driver who once fit their profile may no longer meet the updated standards. Additionally, strategic shifts in market focus might lead insurers to prioritize different types of customers, leaving some, even those with excellent records, at risk of being dropped.

Lastly, while less common, administrative errors or miscommunications can sometimes lead to a policyholder being dropped inadvertently. 

Car Insurance companies don't always want your business

John D'Angelo of Insurance PM explains why some insurance companies don't have an "appetite" for your business.

Do you really need all that insurance?

Most insurance agents are going to encourage drivers to purchase a policy with higher limits than required by state law for greater protection, and it is for good reason. One serious car crash with injuries can ruin a driver financially. And if a driver is seriously injured, they will need money to cover medical bills etc. 

In the event of a serious injury from a car crash/collision, drivers should consider raising bodily injury liability coverage. This coverage helps pay for medical expenses, lost wages, and other costs for injuries you cause to others. Opting for higher limits, such as $100,000 per person and $300,000 per accident, can protect your assets in case of a severe accident​.

Additionally, increasing uninsured/underinsured motorist (UM/UIM) coverage is crucial. This ensures that a driver is covered if injured by a driver who lacks sufficient insurance. By raising these limits, a driver can protect themselves against substantial out-of-pocket costs in crashes/collisions where the other driver is underinsured or uninsured.

As of the most recent data, approximately 12% to 13% of drivers in Georgia are uninsured. This rate places Georgia slightly above the national average, which hovers around 12%.

Odds of being in a crash/collision in Georgia

The average driver in the U.S. faces a 1 in 107 chance of dying in a car crash, according to the National Safety Council. 

Almost 54,000 crashes (of any kind) were reported by the state of Georgia to the National Center for Statistics and Analysis in 2022. That same year, there were 7,360,697 licensed drivers. That means that the odds of a driver being in a car crash in Georgia were approximately 0.73% or about 1 in 136. 

That same year, there were 1,797 fatal crashes in Georgia, which was a rate of 17.5 per 100,000 people. That's the highest rate and most fatalities in the last 14 years. 637 of those crashes happened in rural areas and 1,159 happened in urban areas. 

The top 5 counties with the most fatal crashes were Fulton County, DeKalb County, Cobb County, Gwinnett County, and Clayton County. 

Massachusetts had the lowest death rate in 2022 and Mississippi had the highest. 

Sources

Thanks to John Emil D'Angelo, owner of InsurancePM.com for sharing his expertise.