10 Reasons Why Is Car Insurance So Expensive in Colorado

Many Colorado drivers have to pay a lot for car insurance. However, the more important question is why car insurance is so expensive in Colorado. Colorado car insurance can be pricey for several reasons, such as the state's fault-based system, the cost of living, the high cost of repairing cars, more severe weather, increased vehicle theft rate, and the high number of crashes in densely populated cities. The average price of full coverage car insurance is approximately $3,000 annually and the minimum coverage costs about $664, according to Bankrate. This means the cost of full car insurance in Colorado is about 25.6% higher than the national average. The unique driving conditions in cities and rural areas in the state, along with a rise in the number of uninsured drivers, make the rates even higher. 

In this article, we’ll take a closer look at the key factors driving up auto insurance rates in Colorado. Plus, we’ll explain what’s causing premiums to surge, and share a few tips on how you might lower costs. 

Why Is Car Insurance So Expensive in Colorado? 

In short, what we've said so far is that Colorado car insurance is expensive for a number of reasons. The state's fault-based system and growing costs for medical care and car repairs are key factors. Also, Colorado faces severe weather conditions, like hailstorms, which makes claims more common, and surprisingly a lot of drivers don't have auto insurance. 

Also, more accidents happen in urban densely populated cities like Denver, while risks like wildlife collisions happen in rural areas. Besides, the demographics of drivers and their driving habits, such as young and older drivers who are statistically more accident-prone, also play a role. When setting rates, insurers also look at credit scores and other signs of risks, which makes costs even more variable. These things make a challenging environment for insurers, so they have to charge higher rates to cover the risks.  

Let's look at the top 10 reasons why Colorado car insurance is so expensive:

1. Impact of Vehicle Repair and Replacement Costs
2. High Minimum Liability Coverage Requirements
3. High Percentage of Uninsured Drivers
4. Effects of Severe Weather on Insurance Premiums
5. Increased Vehicle Theft Rates
6. Influence of Demographics and Driving Patterns
7. High Number of Accidents and Claims
8. Legalized Marijuana  
9. Rural Areas with Higher Wildlife Collision Risks
10. Insurance Companies Using Credit Scores to Set Rates  

1. Impact of Vehicle Repair and Replacement Costs 

Colorado is the second most expensive state for auto repair after Connecticut. According to Fox News, on average the Coloradans pay roughly $417.14 to get their car fixed. These high car repair and replacement costs significantly influence the rise of car insurance prices. A 2023 report noted that the average repair cost for a vehicle has risen about 20% over the past years. Some of the reasons for these high repair costs are the complexity of modern cars, the high costs of parts, and fewer auto repair technicians. Plus, the labor costs for repairing your car have also increased by 15% in recent years.

Insurance companies consider these rising costs when calculating premiums. Higher repair costs simply mean that insurers will pay out more on claims which directly impacts the rates they set for the policyholders. 

2. High Minimum Liability Coverage Requirements 

Another reason for expensive car insurance in Colorado is because of the state’s minimum liability coverage requirements. If you want to legally drive in Colorado, you’re required to carry at least 25/50/15 in liability insurance. Here’s what it means:

1. 25,000 for bodily injury per person
2. 50,000 for bodily injury per accident
3. 15,000 for property damage

Although these limits are set to cover damages from accidents, they eventually result in higher premiums compared to states with lower requirements. 

3. High Percentage of Uninsured Drivers 

A lot of Colorado drivers face costly car insurance for those who are unwilling to take financial responsibility. This means they drive uninsured. In fact, according to the Insurance Information Institute (III), approximately 17.5% of drivers lack minimum liability insurance coverage in Colorado (2022), which is higher than the national average of about 13%.  When this high percentage of uninsured drivers causes accidents, costs increase for insured drivers, as car insurance companies raise premiums to cover expenses related to uninsured motorist claims. 

4. Effects of Severe Weather on Insurance Premiums 

Severe weather is another significant factor for costly auto insurance premiums in Colorado. The state experiences a variety of extreme weather events such as hailstorms, wildfires, floods, and heavy snowstorms. All these contribute to increased car insurance claims. A lot of vehicles and property are damaged by these events which leads insurers to raise car insurance rates to cover these frequent and costly payouts.

In recent years, Colorado has experienced several weather events that have caused significant property and vehicle damage. Here’s a table of notable incidents, the year they occurred, and the estimated damages: 

5. Increased Vehicle Theft Rates 

The high vehicle theft rate in Colorado also causes insurers to raise their auto insurance rates. Colorado has faced a significant issue with car thefts. In fact, Colorado state had the highest rate of motor vehicle theft in the United States with 785.7 cases per 1000,000 inhabitants, according to Statista. In 2022, 41,656 vehicles were stolen across the state which ultimately caused insurance premiums to go up. 

Even though vehicle theft rates in Colorado dropped in 2023, the numbers are still high compared to other states. Such theft rates substantially influence auto insurance costs, as insurance companies adjust premiums based on the likelihood of claims related to stolen vehicles. 

6. Influence of Demographics and Driving Patterns 

Car insurance is also expensive in Colorado because of the people who live there and the way they drive. There are more cars on the road in larger cities like Denver, which makes accidents more likely. With more people moving into the state, there are more cars, which raises the risks. This is especially true in cities where there is a lot of traffic. 

Young drivers also affect auto insurance rates. Accidents are more likely to happen to younger drivers because they don't have as much experience. Since insurance companies see this as a higher risk, they raise the rates to reflect that. 

Also, a lot of drivers in Colorado choose outdoor activities, like going on long trips or driving through hilly areas, which increases the risk of an accident. The different types of weather in the state, like a snowstorm, also make driving more dangerous. All of these factors, along with higher vehicle use, push rates up for drivers across Colorado. 

7. High Number of Accidents and Claims 

It's simple: the more accidents there are, the more likely your car insurance rate will be high. Colorado has more car accidents than a lot of other states. Over 94,000 accidents occurred in Colorado in 2023, and 644 of them were deadly, killing 659 people. This high accident rate leads to increased claims and triggers insurance companies to raise premiums to cover the costs.

Also, the state’s rising population means more cars on the road which further increases the chance of collisions. When accidents happen, insurance companies pay for property damage, medical bills, and liability claims, all of which drive up your car insurance expenses in Colorado. On top of that, your car insurance rate will go up after an accident as well. 

8.  Legalization of Cannabis in the State 

Colorado voters legalized recreational marijuana for adult use in 2012, making it the first state (along with Washington) to do so. This legalization has already affected the Colorado traffic crash trends. The Colorado Department of Transportation says that 15% of accidents in 2022 were caused by marijuana-impaired drivers. These drivers were reported to drive at least once within two to three hours after using cannabis. The number of fatal car crashes involving a driver who tested positive for marijuana hit 20% in 2023. This is simply a scary fact. 

Insurance companies these rising accident rates when determining car insurance premiums. When more drivers are under the influence, the chance of accidents increases and leads to more claims for property damage, medical bills, and liability. So, obviously, this is also a key factor that has been pushing the car insurance rate up in Colorado. 

9. Rural Areas with Higher Wildlife Collision Risks

Rural areas in Colorado experience a higher risk of wildlife collisions which is also responsible for the expensive car insurance rates! In fact, for the past ten years, Colorado has seen an average of 3,300 wildlife-vehicle collisions each year, according to the Colorado Department of Transportation. Due to this increased number of collisions happening in rural/forest areas every year, auto insurance companies usually take it under consideration while offering a quote for your car insurance. If you’re living in any of the areas that are susceptible to wildlife collision, your insurer might increase your insurance rate. That’s why you should always prioritize safe driving for yourself and the wildlife on the roads.  

According to the Colorado Parks and Wildlife, the following roads are at high risk for wildlife accidents:

• Interstate 70 (Floyd Hill, Mt. Vernon Canyon and Eagle)

US 285 (Morrison)

• Highway 160 (Durango to Pagosa Springs and Durango to Mancos)
• Highway 550 (north of Durango and from Montrose to Ouray)
• Interstate 25 (Castle Rock to Larkspur)
• Highway 82 (Glenwood Springs to Aspen)
• Highway 36 (Boulder to Lyons)
• Highway 93 (Golden to Boulder)

Note that while driving on these roads, make sure to slow down your speed. Also, follow wildlife warning signs.

10. Insurance Companies Using Credit Scores to Set Rates

In Colorado, car insurance companies often use your credit score to set premium rates. If you have lower credit scores, the insurer will see you as a higher-risk policyholder. This factor will eventually cost you higher auto insurance premiums. In essence, drivers with poor credit can pay significantly more than those with excellent credit.

Insurance companies argue that credit scores are a reliable way to predict the chance of filing car insurance claims. However, this practice raises rates for many people, especially those facing financial difficulties. So, this is one of the reasons why Colorado’s car insurance costs are high since it affects how rates are fixed across the state. 

Relevant Article: Why Is Michigan Auto Insurance So Expensive? 

Factors to Consider to Reduce Auto Insurance Costs in Colorado

If you have been struggling with finding the cheapest insurance in Colorado, don’t worry! Everything doesn’t depend on your insurer. There is a lot to do on your side. 

Apart from the reasons we've already discussed, there are a few other important factors that affect car insurance rates. If you’re considerate enough of these factors, you can save money on your auto insurance premiums. Typically, your rate depends on the following variables such as:  

• Your Age
• Location  
• The type of car you own
• Your claim history
• Your financial responsibility

Age affects insurance rates significantly. In Colorado, young drivers (under 25) and older drivers (over 65) tend to pay high premiums because of the high accident risks. That means that if you are younger than 25, you can choose to drive a car where the primary driver is one of your family members, relatives, or friends. 

In the case of location, living in densely populated areas tends to increase premiums because of higher accident rates, property crimes, and claims. For instance, cities like Denver, Northglenn, and Aurora have higher insurance rates. However, rural areas have lower premiums. So, if there is an option for you to live in an area where crime rates and accident rates are low, you can save a few bucks! 

Besides, for regular traveling, consider using a cheaper and older model vehicle. Because the type of vehicle you own also affects your insurance rate. In case you have a luxury SUV, you’ll have to pay higher rates for that expensive vehicle. 

If you have already claimed too many times, the insurer will consider you as a high-risk driver and they will raise your insurance rate which they usually do in any other state. So don’t claim for small scratches and dents unless it costs you too much money or if a claim doesn’t get you much more than your deductible. 

Lastly, always try to maintain your financial responsibility as a driver and citizen. Note that someone with an excellent credit score pays 64% less compared to those with no credit. 

Read Relevant Article: Do You Need Insurance to Register Car in Colorado? 

A Few Important Tips for Reducing Auto Insurance Cost in Colorado

Apart from these factors, there are a few additional to remember so that you obtain cheap full coverage auto insurance. These additional tips can also help you save more on your premiums: 

• Compare Insurance Rates Across Companies: Shop around and compare rates from multiple insurance companies. Each insurer evaluates risks differently which leads to varied car insurance quotes. So, try to find the most affordable insurance company!
• Maintain a Clean Driving Record: Drivers with clean records – free of accidents and violations – often receive lower premiums. Besides, insurance companies reward safe drivers as they pose less risks. So be a good safe driver and get good driver discounts.
• Review and Adjust Coverage Based on Vehicle Age and Use: As cars age, their value declines. So, you can lower costs by adjusting coverage, such as reducing comprehensive or collision insurance. If you’re driving an older vehicle that is used less frequently, you can maintain liability-only coverage for it to save money.
• Choose Higher Deductible for Premium Reduction: Raising deductibles can lower monthly premiums. If you choose higher deductibles, it means paying more out of pocket during a claim, but it reduces overall insurance costs.
• Utilize Usage-Based Insurance (UBI): Many auto insurance companies offer UBI programs that monitor driving habits using a device or app. Safe drivers who avoid risky behaviors like speeding or hard breaking can earn discounts. So, if you enroll in one of these programs, you can get a customized rate based on your driving habits and patterns.
• Improve Credit Score for Better Rates: In Colorado, insurers consider credit scores when setting premiums. If you have a good credit score, you can save money on your car insurance. Credit scores can be improved by paying bills on time and reducing debt and by doing so drivers can be qualified for more affordable insurance options.
• Complete Defensive Driving Course: If you complete a defensive driving course, it can help lower insurance premiums. Usually, these safety courses teach safe driving techniques and may qualify drivers for discounts.
• Adapting Driving Patterns (Remote/Hybrid/or Low Mileage Discounts): Working remotely or using hybrid schedules can reduce the number of miles driven. Insurance companies in Colorado offer discounts for low mileage, as it lowers the chance of accidents.

The Bottom Line

The high costs of car insurance in Colorado are due to several factors: severe weather events, high uninsured driver rates, and increased vehicle theft. Also, the legalization of marijuana, higher wildlife collision risks in rural areas, and using credit scores drive up costs. Besides, densely populated areas like Denver see more accidents and claims, raising premiums. Together, these elements make auto insurance rates significantly higher in Colorado than the national average. However, adjusting coverage, and implementing the few cost-lowering tips we discuss can help reduce your car insurance costs. 

Frequently Asked Questions (FAQs)

How Much is Car Insurance in Colorado Per Month 

The car insurance rate in Colorado varies depending on several factors. However, as of 2024, the cost of full coverage auto insurance in Colorado is $251 per month and for minimum coverage, you can expect to pay around $51 per month. If you’re a good driver with a clean driving record and an excellent credit score, you might qualify for discounts. 

Why Is Car Insurance So Expensive in Denver, CO? 

In Denver, car insurance is pricey for a number of reasons. As the city's population grows, there are more cars and crashes, raising the insurance risk. Also, Denver has bad weather like hailstorms and snow, which cause more vehicle damage. Also, high traffic congestion increases the likelihood of accidents. 

Can My Credit Score Affect My Car Insurance Rates in Colorado? 

It depends on the insurer and how they evaluate specific drivers. But generally, in Colorado, insurance companies can use your credit score as a factor when setting your rates. A lower credit score may result in higher premiums, while a strong credit score could help you qualify for lower rates. 

How Does Living in Colorado Impact My Car Insurance Costs?

Your car insurance costs in Colorado are heavily influenced by where you live. Cities with higher population densities, such as Denver and Aurora, have higher rates due to increased traffic and a higher chance of crashes. Conversely, more rural areas may offer you lower premiums due to less traffic congestion and fewer accidents. 

Why Are Car Insurance Rates in Colorado So High?

Car insurance rates in Colorado are higher than the national average due to several reasons. These include high accident rates, increasing population density in cities like Denver, and the state’s frequent severe weather events, such as hailstorms, which lead to more claims. Also, Colorado is a “fault” state, meaning drivers found responsible for an accident are liable for damages. This also further raises the premiums. 

Are Young Drivers Paying More for Car Insurance in Colorado? 

Yes, like any other state, younger drivers, particularly those under 25, tend to pay higher car insurance premiums in Colorado. This is due to their lack of driving experience and risk-taking behavior which make them more susceptible to car crashes. On average, young drivers can expect to pay roughly $3485 per year. However, this may also vary depending on other relevant factors. 

Sources:

1. Gastelu, G. (2022, September 6). This state has the highest car repair costs. Fox News. https://www.foxnews.com/auto/state-highest-car-repair-costs
2. Iacurci, G. (2023, July 25). Car repair costs are up almost 20% over the past year. Here are 6 reasons why. CNBC. https://www.cnbc.com/2023/07/25/car-repair-costs-are-up-almost-20percent-over-the-past-year-heres-why.html
3. Facts + Statistics: Uninsured motorists | III. (n.d.). https://www.iii.org/fact-statistic/facts-statistics-uninsured-motorists
4. Statista. (2024, July 5). Motor vehicle theft rate in the U.S. 2022, by state. https://www.statista.com/statistics/232588/motor-vehicle-theft-rate-in-the-us-by-state/
5. News: 2023 Auto Theft Intelligence Coordination Center Annual Report | The Colorado Auto Theft Authority. (2024, March 22). https://lockdownyourcar.colorado.gov/blog-post/news-2023-auto-theft-intelligence-coordination-center-annual-report
6. Cannabis and Driving: Data and research. (n.d.). Colorado Department of Transportation. https://www.codot.gov/safety/impaired-driving/druggeddriving/data
7. Wildlife on the move! (n.d.). Colorado Department of Transportation. https://www.codot.gov/programs/environmental/wildlife/wildlifeonthemove
8. Wildlife collisions. (2024, July 21). Colorado Parks and Wildlife. https://cpw.state.co.us/wildlife-collisions