You know the phrase “Nothing in life is guaranteed but death and taxes,” or however your uncle put it at your family barbecue. While this is arguably true, it’s impossible to forget another inevitable. You cannot drive a car in the U.S. without it being insured. If this is your first time buying or trading a vehicle, you may notice a hike in average car insurance costs.
Why? Why charge us so much for something we may never need?
That second question is a whole other discussion. Everyone ends up needing car insurance eventually. If they don’t have it, their pockets can be in trouble.
Regardless, without discussing the necessity of insurance, let’s break down what average car insurance costs are, why they are high and what you can do about it.
Average Car Insurance Cost in Denver
Ah, Denverite. You get to bask in 300 days of annual sunshine, proximity to beautiful nature and crippling snow (though that’s a bit of a negative). But it isn’t all mountains and sunshine. The price of living in one of the country’s largest cities is. Well. Expensive.
WalletHub noted in 2022 that the average car insurance cost in Colorado is $2,101 per year for full coverage car insurance or $725 per year for minimum coverage.
For comparison, the average car insurance cost for the U.S. is $1,630 per year for full coverage.
So why the increase here in the Centennial State?
There Are Largely Populated Areas
As of 2022, Denver Metro’s population sits at approximately 2,897,000 people. This would place it as one of the top-20 highest-populated cities in the country. That’s simply nothing to balk at.
When there are more denizens, that means two things. One, there are more cars on the road. Two, the insurance market can be more competitive.
Simply put, it’s more expensive to live in a city. This is a universal concept. From grocery store prices to rent, everything is inflated in an urban area. More people are willing to pay the prices.
Sure, you may live in a rural area but still have to pay city insurance prices. This is due to the average population of the state. Places like Denver, Colorado Springs and Boulder hike that up exponentially.
There Are More Accidents
More people means more drivers. More drivers mean higher chances of accidents.
Ultimately, car insurance companies look at the overall risk of the area while determining their rates. If there are more accidents in the area, they will charge more to cover their expenses.
It makes sense from a business standpoint.
There Is Inclement Weather
Along with more people, harsher weather also calls for more automotive accidents. It’s no surprise that Colorado deals with its fair share of ice and snow and sometimes even clouds of dust and tornados. These dangerous weather hazards increase the average car insurance costs.
Basically, the higher the risks, the higher the prices will be.
What Factors Outside of Colorado?
All in all, your location may increase the average car insurance costs, but there are plenty of other factors that may be hiking up your prices.
What else can increase your car insurance costs? Is there anything I can do about it?
Well, you’ve come to the right place, disgruntled buyer. Let’s get into it.
How old the driver is can cause massive spikes in car insurance rates. Rates can vary by 367% depending on your age.
Younger drivers see the biggest increase. This makes sense. They have significantly less experience behind the wheel, and their brain hasn’t fully developed. They are at the highest risk of car accidents (grim but true). This means that car insurance companies have to charge more for higher liability. Luckily, rates begin to decrease significantly once a driver reaches 25 and their prefrontal cortex is strong and steady.
Drivers over 65 also see an increase in costs. They are considered easily impaired by oncoming issues that parallel with increasing age. Furthermore, older drivers are more likely to sustain serious injuries in car accidents.
What to do: If your child is just beginning to drive, see if your insurance company can put them on your plan. If you own and insure the car and place them as a liable driver, it may help reduce prices significantly. Just be honest with your insurance agent.
Your Driving Record
This is a huge one. Exponential, even.
If you have a plethora of speeding tickets or car insurance claims in the past, expect your average car insurance costs to be dramatically higher than they were before.
Overall, you are seen as a liability through your driving history. If companies expect you to be at a higher risk of accidents and claims, then why wouldn’t they charge you more for coverage?
We all make mistakes. We all can get better at driving.
What to do: First, drive safer. Most traffic violation points on your license will go away over time if you continue to abide by driving laws. This will eventually lower your rates. Not only that, but you don’t want to keep putting your life at risk. The laws exist for a reason.
Two, call your local Department of Motor Vehicles and insurance company to inquire about Defensive Driver Courses. These courses prove that you are working towards becoming a responsible driver and can lower your rates.
All in all, keep your driving record squeaky clean. It may take a while, but a safe record will eventually lower your insurance costs.
What Car Are You Driving?
Insurance companies would rather insure vehicles that are reliable and safe. Speedier, more expensive and more dramatic vehicles often lead to higher insurance claims. It’s as simple as that.
If you plan on purchasing a sports car that can hit 60 mph in the time it takes to yelp, don’t expect your insurance rates to be dirt-cheap.
Overall, trucks and SUVs have a higher safety rating. Therefore, their average car insurance costs will be lower. There are fewer chances of costly claims.
Fancy and attractive cars are more likely to be stolen, too. This also raises insurance prices.
What to do: If you find that your insurance is cripplingly high, maybe it’s time to switch to a different vehicle.
Companies like Sell My Car Colorado (yeah, we did) can help you get cash for your car immediately and offer $100 more than the competition. We can also help you find a vehicle that will be cheaper on the insurance side.
Your credit history can directly affect your average car insurance costs. If you have a higher credit score, expect your rates to be a bit lower. In fact, customers with poor credit scores pay an average of 71% more than drivers with good credit scores.
Fortunately, California, Massachusetts and Hawaii do not allow insurance companies to go off your credit score. Everywhere else, you’re out of luck.
What to do: Unfortunately, we are not a site for financial advice. I cannot break down the ins and outs of credit scores. That’s a whole other beast that I’m not qualified to tackle.
Check out Fundera’s article on the subject.
How Much Do You Drive?
Insurance companies also look at how many miles you put on your car annually. If you drive more, you are on the road more. This means that you have a higher chance of getting into an accident.
We’re not trying to freak you out. It’s just math. Horrible math is striking fear into our hearts once again.
If you have a long commute or work on the road, this is pretty much impossible to avoid. The only tip to lower this would be to drive less, but that may be impossible to some. Otherwise, why should you have to limit how much you use your vehicle, right?
Luckily if your record is clean and you have a reliable vehicle, the mileage on your vehicle should not make that big of a difference.
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