As we’ve seen over the past few years, one of the biggest drivers of inflation has been car insurance – with the cost of car insurance rising by over 20% in the past year alone. In five years, rates have risen 88% in Florida and 50% in New York, Nevada and Colorado, to name a few examples. Insurance now costs the typical car owner $212 a month, or $2,545 a year, according to Bankrate. Part of this is due to factors consumers can’t necessarily control, such as the high cost of collision repairs involving advanced driver assistance technology.
So what? i can do to save money on car insurance? Several things actually.
How to lower your car insurance rate:
Stop speeding: This is the biggest step we can take so far. Speed kills. It also maims, injures, dents and damages. As a nation we have been speeding ever since the Covid pandemic. This caused a spike in road traffic deaths, which is only now beginning to abate. In 2021, the latest year for which NHTSA has complete data, 28% fatal crashes, 13% of injury crashes, and 9% of property damage crashes speeding — 12,330 people lost their lives in these accidents.
Paying off your insurance bill from obeying speed limits may not be immediate, but eventually the virtuous cycle of less speeding equals fewer crashes equals fewer claims will pay off. (That is, if most or all of us do.) On the other hand, there is one way safe driving is paying off right now. We’ll get to that in a bit.
User reports just posted a list of other ways you, the insurance customer, can lower your premiums:
Change of insurance companies: Most of us tend to pick an insurer and stick with it rather than playing the field. According to a survey of CR readers, consumers who switched said they got better prices and better service. So, make insurance companies compete. CR suggests reviewing your coverage on an annual basis. And to facilitate this proposition, CR says…
Get an independent insurance agent: Someone who represents multiple insurers will make it easy to compare and switch.
Increase your deductible: CR says this can save you $400-$500 per year. A deductible is what you would pay out of pocket in a claim before the insurer covers the rest. Increasing your deductible from $500 to $1,000 can lower your premium by 20-25%. You just need to have money in the bank to cover a higher deductible if needed, but you could go many years without filing a claim.
Drop Collision and Comprehensive Coverage: Savings, up to $1,000 per year. If you’re driving an older car with declining value, this makes a lot of sense. CR offers a formula: If your insurance premium is more than 10% of the market replacement value of your trip, drop those coverages.
Take a refresher driving course: Savings, $200 per year. You may think you’re a great driver, and maybe you are, and maybe that idea sounds silly to you. But in some states you can get a 10% discount on your insurance. These courses cost little of your time and only $25. And who knows, you might even learn something.
Report your mileage: Save $100. Maybe you don’t drive as much after the pandemic. Report your annual mileage to your insurer. They base your rates on the mileage they expect a typical customer to drive. If it’s less than 10,000 miles per year, you’re in luck. Meanwhile, maybe you own a garage queen, say a convertible that only comes out for a few days in the summer. For really low mileage vehicles, there are insurers that will literally cover you on a pay-per-mile basis.
Package with your home insurance: Savings, $300 and you’ll have the convenience of paying it all with one check.
Pay out of pocket for minor dents and dents on one vehicle: CR says you’ll save $300. We’re not sure what they mean by that other than the unrealized amount your coverage could increase if you filed a claim. Just be aware that in modern technology-laden cars, even a minor fender bender can be an expensive repair. But paying out of pocket can still make sense in the long run and keep your driving clean.
Buy a dividend policy: Save $100 or more. Some insurers, such as Amica, offer these policies where you are basically a shareholder who receives a dividend – it’s market based but in the 5% to 20% range. The premium price may be higher, but it turns out to be a net gain.
And here’s a big one, although you may not like how it sounds:
Sign up for Driver Monitoring: You could save $800, CR claims. The insurance company will monitor your driving habits through a phone app or by plugging a device into your car. You’ll definitely want to ask questions about how the data will be used to calculate savings, how much savings you could earn, whether your data will be sold to a third party, etc. You probably have a lot of phone apps that are collecting data on you right now, of course. But tracking movements and recording driving behavior definitely feels more personal and intrusive. Going back to our advice to stop speeding, here’s one way good driving habits can pay off right away.
CR offered several other suggestions:
Don’t skimp on liability coverage! This is the insurance you have to carry and the amount you are covered for may just not be enough. If you’re going for the minimum required by your state, it’s definitely not enough. Loretta Worters of the Insurance Information Institute told CR that the institute recommends minimum liability coverage of $100,000/$300,000/$100,000 (this is for “personal injury liability/accidental bodily injury/property damage liability limit .”) You would also be smart to get a “general policy” that has liability protection of $1 million or more and covers both auto and home (since you are pooling). Also, uninsured motorist insurance is always a good idea.
If you’re older, keep a close eye on your insurance premiums: We all know that a teenager in our family is blowing the fuses. Conversely, rates tend to decrease with age. Older drivers are more experienced, more mature, more careful. But after age 70, you may see a sharp increase in what you have to pay. Now is the time to shop around for another insurer. You can also take a refresher driver education course to get a break in your rates offered by AAA, AARP, or agencies or driving schools in your area. Lists of senior driver education resources are available online. We have more tips for older drivers here.