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If you drive a car, you have probably noticed that your car insurance has increased dramatically over the last year. Auto insurers have been increasing policy rates, and state regulators have been doing little to stop them, even in states with more consumer-friendly laws like New York and California. In the 12 months ending May 2023, rates increased on average 17% nationwide. Insurers have been hit with higher costs related to an increase in the number of accidents, higher repair costs, larger medical bills, an increase in extreme weather, and more litigation. These have combined to lead to large losses for insurance companies, amounting to an average of 12 cents for every dollar of premium written. The extent of their losses means that rates could also continue to rise higher over the next year. This is happening at a time when consumers are feeling the pinch of inflation on their wallets, amplifying the effects of the higher premiums. So, with policy rates running higher, how can consumers save on their monthly auto insurance bill? 

  • The first and probably most obvious thing that can be done is shopping rates. Different insurance companies may offer different rates for the same coverage. Make sure to do some research before settling on a policy, as the first rate you come across may not always be the best.
  • Along with shopping different rates, you should also consider the amount of coverage you need. If you drive an older car or a car that isn’t worth much, dropping the amount of coverage you have, specifically collision or comprehensive coverage, not liability, might make sense.
  • You may also want to consider usage-based insurance. Usage-based insurance programs monitor your driving habits, like speed, mileage, and braking patterns, via telematics devices or a smartphone app, and adjust your rates accordingly. If you don’t drive much, it may save you some money.
  • Once you have settled on the amount of coverage that is right for you and have found a suitable policy for a reasonable rate, look for discounts. Many companies will offer discounts for things like good grades for students, cars with certain safety features, being members of certain organizations, and taking defensive driving courses, among other things.
  • Increasing your deductible will also lower your premiums. The caveat is that your out-of-pocket expenses will be higher should you need to use the insurance to cover something like a repair.
  • Further, bundling your policies if you have multiple different types of insurance with the same insurer may save you.
  • Maintaining a good driving record can also keep your rates lower. Safe drivers typically have lower premiums, so do your best to avoid traffic violations and accidents.
  • Finally, review your coverage periodically. You may find that you need more or less coverage as time goes on. For example, as the value of your car falls, you may need less comprehensive or collision coverage. If your financial situation has changed and you are ready to take on a higher deductible, this may save you monthly. There may also be changes to your policy or new discounts available to you. 

While car insurance rates continue to rise, there are several strategies you can implement to save on your premiums. By shopping around, seeking out discounts, increasing your deductible, bundling policies, maintaining a good driving record, and reviewing your coverage periodically, you can take proactive steps to reduce your car insurance costs without sacrificing necessary protection. Remember, every insurance provider is unique, so take the time to research and compare options to find the best fit for your needs and budget.

Written by: Brian Sawyer


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