According to the Consumer Price Index, a crucial measure of inflation, auto insurance price has been rising throughout 2022 and climbed by 1.3% in July. Apart from inflation, car insurance was already going up as of the previous year.
If you are sick of paying excessive auto insurance premiums, here are a few suggestions you may attempt to lower your auto insurance expenses and give your budget a little more breathing room.
How to save money on car insurance?
Saving money wherever you can is essential given the ongoing rise in prices. That certainly relates to the costs of auto insurance as well. According to S&P Global Market Intelligence, many major auto insurers began gaining approval for significant rate increases by the end of 2021, rising rates by anywhere between 3% and 12%.
Luckily, there are areas where you could easily make cuts. Consider the following:
#1: Older automobiles may be eligible for cheaper coverage
According to experts, purchasing coverage for a vehicle that is worth less than ten times the yearly premium may not be the most economical course of action. Older cars might not require the same level of insurance coverage as your brand-new Tesla or a Mercedes-style policy with all the bells and whistles.
You might wish to forego collision coverage or comprehensive coverage for that vehicle if it is towards the end of its useful life, as both cover damages to your car. Depending on the worth of your vehicle and how much it would cost to insure it, you may want to cancel either policy.
An easy technique to determine the value of your vehicle is to browse the Kelley Blue Book website. For instance, if your annual premium is $1,200, multiplying it by ten would equal $12,000. Lowering the insurance coverage for your car may make sense if its value is less than $12,000.
#2: Find a more affordable vehicle
Consider comparing the insurance costs of various cars while shopping for a new or used car. The cost of the vehicle, the cost of repairs, and its overall safety record are just a few of the variables that go into determining auto insurance prices.
People often overlook the fact that while buying a Mercedes or a Tesla will cost more money, buying a Honda or a Kia will be less expensive. And there is a significant difference between the insurance costs for a Mercedes and a Honda: A Mercedes-Benz typically costs around $4,505 annually for insurance, while a Honda typically costs $2,151 annually. Accordingly, the Honda costs an average of $179 a month compared to $375 for the Mercedes.
#3: Settle for a higher deductible
Your premium can be decreased by raising your deductible, which is the amount you are responsible for paying out of cash before your insurer pays a claim.
If you currently don’t drive much, don’t have a history of car accidents, or need to lower your monthly insurance prices, this decision might make sense. However, if you do this and have an accident, you may pay extra money before your insurance company begins to pay for your losses.
#4: Examine the offers for safe driving
You are in luck if you take pride in being a careful traveler. There are several reductions available here that carriers offer for defensive driving and a low claims history. Ask your carrier how to sign up for these kinds of services by giving them a call. After enrolling properly, your premium ought to decrease on your subsequent bill. Through a phone app or a plug-in gadget for your car, these insurance systems track your driving habits and miles.
While discounts vary by carrier and state, calling your carrier to enroll in the plan might result in savings of up to 30% on your rate. You will begin with a base rate that will be changed in accordance with the telematics report, which will take into account things like your typical speed and braking patterns.
For instance, State Farm will evaluate your telemetry data every six months to assess how safe you have been driving and will then offer a discount to your insurance ranging from 5% to 50% based on those metrics.
#5: Combine your insurance coverage
Bundling your house and auto insurance, or purchasing multiple insurance policies from the same provider, is one of the simplest methods to save money on insurance.
Depending on the policies and coverages you purchase together, Allstate, Liberty Mutual, and GEICO each provide premium discounts for bundling. Depending on the supplier, reductions on your premium can range from 5% to 25%.
#6: Compare different offers and prices for auto insurance
Perhaps you are permanently working from home and require less coverage. Or maybe you are going back to work and need better coverage right away. It never hurts to compare rates to make sure you’re getting the best deals, as other providers can provide more significant discounts or generally lower premiums.
You can contact some of the largest insurance providers directly to inquire about possible reductions in addition to getting prices online.
#7: When possible, take public transportation or carpool
If you have a low mileage count, which means you travel fewer miles annually than the average American, carriers might give you a discount. Typically, if you drive fewer than 7,500 miles annually, you would be regarded as a low-mileage driver, although this is not a hard-and-fast rule. Your state of residence, age, and gender are the main factors that determine if you are a low-mileage driver.
If there is public transportation available where you live, using the bus or carpooling with friends could qualify you for low-mileage discounts. If you don’t have access to public transportation where you live, you might also think about carpooling to work or school to reduce your mileage.
You might also want to check out: How to save money on your gas bill?
Key Takeaways
Ultimately, how much you can save on your car insurance will depend on personal circumstances in addition to the auto insurance provider you choose. Yet, have the following in mind:
- A bulk rate reduction for insuring numerous vehicles and drivers at once is one strategy to reduce the cost of auto insurance.
- If you have additional insurance policies with the same provider, you can potentially be eligible for lower vehicle insurance prices.
- Keeping a clean driving record is essential to get reduced auto insurance rates.
