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More than 40% of drivers say they’re paying more for auto insurance now than they did last year. Read on to find out how you can lower your car insurance premiums.
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I’ll be the first to admit it; keeping tabs on my car insurance policy is low on my to-do list. And it’s probably not the first thing you think about in the morning, either. But the latest data shows this set-it-and-forget-it approach to car insurance may not be the best for our finances.
A recent Policygenius survey found that 43% of car owners pay more for their auto insurance than last year. Even more shocking is that nearly half of the insured drivers between the ages of 18 and 34 considered driving without car insurance because it’s become so expensive.
Since ditching your car insurance isn’t a smart move and is illegal in nearly every state, it’s worth taking a closer look at why car insurance costs are rising and how you may be able to lower your premiums.
Why car insurance costs are rising
One of the biggest culprits for rising insurance is inflation. As the cost of goods and services has increased, car insurance prices have also increased. But rising inflation isn’t the only factor pushing premiums higher.
A New York Times article published in March stated that auto insurance prices had increased 15% compared to the previous year, while inflation had only risen 5% over the same period.
Part of the reason car insurance costs have gone up is because the price of vehicles and the cost to service them has increased. Progressive Insurance says that labor shortages and the disruption of auto parts supply chains have increased the price of repairing vehicles, pushing insurance premiums higher.
And finally, there’s been an increase in vehicle crashes and their severity over the past few years. A LexisNexis survey found that automotive bodily injury and property damage severity increased 35% between 2019 and 2022. And the severity of collisions has increased by 40% over the same period. With those costs rising, insurance companies pass those increases on to customers.
How you can lower your car insurance premiums
One quick way to reduce car insurance costs is to reduce coverage on older cars. The Insurance Information Institute, an industry association, says that if your vehicle is worth less than 10 times the insurance premium, paying for collision and comprehensive coverage may not be worth the price.
You can also increase your deductible, which is the out-of-pocket expense you have to pay before your insurer begins paying for things like an accident repair. The higher your deductible is, the more you could save on your insurance costs. Just make sure you set aside money in an emergency fund to cover the expense if needed.
In some cases, you can lower your insurance premiums if you boost your credit score. This year, a Consumer Federation Report found that New York drivers with fair credit paid 57% more for their car insurance than drivers with excellent credit.
And finally, you can shop around for a new car insurance company. Getting a few quotes from competing insurers will help you determine which offers the right type of coverage for you at a price you can afford. You should take a quick look at your current coverage to accurately compare what you’re paying now with what another insurer charges.
Finding cheap car insurance is possible, but you may need to shop around a bit before finding the best deal for your situation. And now that I’m thinking about it, I’m making a note for myself to spend some time looking for the best deal too.
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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Chris Neiger has no position in any of the stocks mentioned. The Motley Fool recommends Progressive. The Motley Fool has a disclosure policy.
