Why Is Car Insurance So Expensive in Denver? Here’s What You Need to Know

If you’ve ever just opened your car insurance bill in Denver and said to yourself, “Why is this so expensive? ”—you’re not the only one. 

Denver homeowners have some of the highest car insurance premiums in Colorado, and they just keep raising them. But what is it that drives the cost?

From the information below, I 'll cover the main reasons why car insurance in Denver is so expensive and what you can do to possibly lower your premiums.

1. High Population Density and Urban Congestion

One of the easiest answers to why insurance rates are so high in Denver is that there 's just so much population density. Denver has a population of over 700k people in the city, and many more in the outside metro area.

Congestion leads to more accidents, both minor fender benders as well as major ones. Insurance companies take accident frequency into account when setting rates and it 's much higher in an urban area such as Denver that those risks are than rural or suburban settings.

The takeaway - There are more people on the road - more risk of an accident - higher premiums.

2. Vehicle Theft and Vandalism Rates

Today Denver is one of the best cities in the USA to break into cars. According to some recent statistics Colorado has the highest per capita auto theft rate in the country (and Denver is definitely a contributor).

High theft rates cause a increase in the cost of comprehensive coverage. The part of your insurance policy that will pay for things other than a collision ( theft, vandalism, etc. ). Even if your car is never thief, the general environment increases your cost.

Use this as an insight: You can install anti theft devices or a secure garage to minimize this portion of your premium.

3. Severe Weather and Hail Damage

Weather in Denver can be beautiful, but it’s also possible that it can cause damage to your vehicle. Colorado is in what ’s called “ Hail Alley “ and Denver is home to some pretty bad hailstorms in the spring and summer.

 

This type of weather can cause thousands of dollars worth of car damage a year and cause so many insurance claims. And because that money is so often claimed it 's not in the pockets of companies and they raise premiums all over hail prone areas.

Pro tip: if you live in an area that is consistently hit by hail you might want both covered parking and comprehensive with a reasonable deductible.

4. Increasing Medical Expenses and Repair Costs 

The car repair industry has seen dramatic increases within the past few years due to supply chain difficulties, advanced vehicle technologies, and rising wages. 

The Denver metro area, being one of the largest in the region, usually has above average prices for both parts and labor. 

Furthermore, the state of Colorado, and especially its metropolitan areas, tend to have higher medical costs. Insurance companies are getting into greater financial struggles which results in greater costs for policy holders.  

What This Means: This results in even the most insignificant accidents leading to high costs, consequently increasing both liability and collision coverage costs. 

5. Drivers with Insufficient Coverage  

The percentage of uninsured and underinsured individuals driving in Colorado is considerably high. 

If you happen to be in an accident with someone who has inadequate coverage, you may end up paying for the damages out of your own pockets. 

Uninsured/underinsured motorist (UM/UIM) coverage is provided by insurers to shield drivers, but this drives up the cost of insurance. 

This is especially true for places like Denver which are considered high risk areas and tends to become a necessity rather than an option.

6. Claims History and Local Risk Data

The prices of insurance do not solely depend on one’s age or driving history, but rather includes information that is associated with one’s address. In the event that there is a greater claim volume for accidents, vandalism or even theft in some areas, it will greatly affect the insurance premium.

7. More Legal Suits and Legal Costs

Colorado works on an at-fault basis, which in practice means that the person who caused the accident has to pay for the losses. 

In Denver, this has resulted in that a lot more personal injury claims and lawsuits are made in connection with car crashes.

The legal costs are included in the liability section of your insurance. If the proportion of collisions that lead to a dispute in court is larger, the more you will have to pay for the same coverage.

How to Reduce Your Auto Insurance Costs in Denver

You may not be able to choose which city you live in, but there are a few things you can do that can help you manage, and at the same time reduce, your insurance expenses:

ü  Get Quotes from More Than One Company: Different insurance companies evaluate the risk differently. By getting a few quotes, you may end up with a much cheaper premium.

ü  Bundle Policies: Here, the idea is to have both your car insurance and homeowners, or/ renters insurance with the same insurer, who will then give you a discount. 

ü  Choose a Higher Deductible: With a higher deductible, your insurance provider will set a lower premium for you. Beware though – make sure you are able to pay the deductible if you must. 

ü  Keep Your Credit Score High: In Colorado, your credit standing is one of the factors insurers consider when they set the rate. If you increase your credit score, you can get a cheaper rate.

ü  Use a Telematics Program: Many insurance companies offer so- called usage-based programs that track your driving habits and give a discount for safe driving.

To Finish off

That Denver's auto insurance prices are higher than average has a legitimate explanation: increased traffic, more frequent car thefts, extreme weather, and rising prices on many different fronts. And while this isn’t going to change shortly, the knowledge of what makes your policy more expensive can help you control the expense.

Staying ahead of the game—whether it’s by trying your best to stay safe on the road, scouting out different cars, or by making smart policy decisions—can really assist you to save some dollars when it comes to car insurance right here in Denver.

 

NEXT POST>