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Finding the best deal is simpler than most drivers realize.
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Car insurance is a must for drivers in all states, but it can be tough to stomach that premium sometimes. While young drivers and those with accident histories tend to pay the most, it’s normal for even the safest drivers to spend thousands of dollars on car insurance each year.
The average 2023 auto insurance premium is expected to be about 7% higher than last year’s, according to recent data from Insurify. But that doesn’t mean all drivers should expect a big increase. Here are three things that can help motorists get the coverage they need while keeping costs as low as possible.
1. Shop around
Each car insurance company has its own algorithm for assessing risk. They all look at similar factors, like a driver’s age, history of tickets and accidents, vehicle make and model, and location. But every company weighs this information differently, which is why the same driver gets a variety of quotes from different companies.
It’s a good idea for everyone to shop around once in a while to see if there’s a different insurer that can offer them a better rate. Most companies enable drivers to get quotes online these days, so it’s not too difficult to compare options side by side. It’s usually possible to save quotes as well so there’s no need to re-enter all the same information when it’s time to buy.
2. Claim all possible discounts
Insurers apply many policy discounts to a driver’s rate automatically if they qualify for them. Though more discounts doesn’t always translate to a lower rate, it doesn’t hurt to seek out companies with several relevant savings opportunities. Those with hybrid vehicles and military members, for example, should be able to find special savings with certain providers that could tip the scale in their favor.
Some companies also have optional discounts that drivers must sign up for. Driver monitoring programs are a good example. These usually involve an app or a small device installed in the vehicle that monitors driving habits for a certain period of time. Most companies give drivers an upfront discount if they participate in these programs. And if the driver demonstrates safe behavior behind the wheel, they could qualify for an even lower rate.
3. Opt for a higher deductible
Deductibles are the out-of-pocket costs a driver pays when they file a claim before the insurance company pays for the rest. Nearly all car insurers charge deductibles, though some have a vanishing or disappearing deductible program for drivers who go several policy periods without a claim.
Generally, choosing a higher deductible reduces monthly premiums. This can be a great way for drivers to save, but it’s important to keep enough money for the deductible in an emergency fund in case of an accident.
Why reducing coverage isn’t a good idea
Some drivers think that the best way to reduce their auto insurance payments is to purchase less coverage. While this will certainly lower monthly premiums, it could create costly long-term problems in the event of an accident.
If a driver only has state minimum coverage and they severely injure or kill someone in a crash, the damages are likely to exceed the policy’s limits. The insurer will pay out their portion, but the driver will likely have to pay for the remainder of the damages out of their own pocket. This could amount to tens or even hundreds of thousands of dollars.
And if a driver skips their state minimum car insurance, they’re breaking the law. This could lead to fines, driver’s license or vehicle registration suspension, or even jail time.
It’s much better to rely upon the tips above to reduce car insurance rates. If reducing coverage is absolutely necessary, drivers should drop their policy limits as little as necessary to ensure they still have adequate coverage for expensive accidents.
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