Rremember those partial refunds auto insurers issued to policyholders during the pandemic because fewer people were driving? It’s time to recuperate. Now auto insurance rates are skyrocketing, up 11.3% last June, from the same month in 2020, according to the Consumer Price Index.
With more Americans on the roads, insurance rates have rebounded to where they were before the pandemic. Rising inflation will only push insurers to raise rates even more. Overall, consumer prices are up 5.4% from a year earlier, the biggest 12-month increase in more than 13 years, driven by an economy at full throttle.
Like most Americans, you might be anxious to spend after a year of lockdown-induced depravity, but splurging car insurance wasn’t exactly what you had in mind. Fortunately, there are many ways to lower your auto insurance premium, including these nine proven methods.
Get a mileage-based discount
If you used to travel some distance to get to your office and now work from home or have since retired, you may be eligible for a low mileage reduction. Most auto insurers offer one when your annual mileage drops below 7,000 or 7,500., which is significantly lower than the typical 12,000 miles most Americans travel per year, according to Michael Barry, director of communications for the Insurance Information Institute.
Increase your deductible
It’s not good for everyone, but paying a higher deductible could save you a lot of money on premiums. For example, increasing your deductible from $ 200 to $ 500 could reduce the cost of your collision and your comprehensive coverage by 15 to 30%, according to III. “Switching to a $ 1,000 deductible can save you 40% or more,” the institute says. Just make sure you keep a cushion in your savings account so you can pay that higher deductible when needed.
Abandon unnecessary cover
Although most people tend to be underinsured, your policy may include coverage you don’t need, says Chaya Milchtein, automotive educator and founder of Mechanic Shop Woman in Milwaukee, Wisconsin. For example, if you already own multiple vehicles, coverage that pays for a rental car when yours is in the repair shop is probably unnecessary, and collision coverage may be unnecessary if your vehicle is so old that even an accident. minor would likely result in the need for replacement.
But don’t be too quick to drop collision coverage, comprehensive, or both.. Comprehensive coverage protects you in the event of theft, vandalism or damage from a storm or deer, for example. Most leasing companies require both collision and full insurance, as do lenders for financed vehicles. States also have minimum requirements. Four in five U.S. drivers buy these optional covers, according to a 2018 report from the National Association of Insurance Commissioners. “Comprehensive coverage is significantly cheaper than a collision and should only be given up with great reluctance,” says Barry.
If your automobile policy is issued by a company other than the one that insures your life or your home, call all three insurers and ask if bundling policies would be cheaper. “Customers could save up to 17% if they purchased home, tenant, condominium or life insurance with State Farm, in addition to auto insurance,” says State farm spokesman Jordi Ortega. When requesting quotes, be sure to compare similar levels of protection.
Drive more carefully
Insurers love safe drivers and are willing to reward them for their behavior. You may be able to reduce your premium by 10-15% if you improve your driving record, take a defensive driving course, or install telematics equipment that alerts your insurance company to dangerous driving., such as hard braking, cornering, cell phone use, and speeding.
Ortega notes that installing telematics equipment is valuable for more than just discounts. “By checking the feedback on their driving provided by the app, customers can potentially learn more about dangerous driving. [or] bad habits they can have, ”he says.
The same strategy can be used to help reduce premiums for young new drivers in your household. “We got a discount when my 16 year old daughter submitted her transcript, presented proof that she had taken a driving course, and used an insurance company app on her phone for five hours to measure. its driving performance ”, explains Sunit Bhalla, a certified financial planner in Fort Collins, Colorado.
Seniors may be eligible for additional discounts, says Milchtein. “There are insurance companies that offer discounts to people over 50 or 55 if they take a defensive driving course.”
Your driving history influences your premium regardless of which company insures you. A Bankrate report found that the average auto insurance premium is $ 1,674 in the United States. On average, the premium increases by $ 355 if you get a speeding ticket, $ 731 for a car accident, $ 187 for loss of coverage, $ 1,662 if you are found guilty of driving under. influence and $ 1,883 to insure a teenage driver. “Being a good driver is the # 1 way to get good insurance rates. The extra 10 miles an hour you drive on the road won’t get you there any faster,” Milchtein said. .
Security and anti-theft features on a newer car may also reduce your price.. Geico, for example, offers up to 25% off the full portion of premiums to customers who install burglar alarm systems.
Improve your credit
You may be able to lower your auto insurance premium by paying your bills on time and reducing your debt load. “Credit has a big impact on auto insurance,” says Milchtein.
Like lenders, insurers look at how their customers handle credit to get a picture of risk and price policies. Better rates are given to those with good credit scores, typically 700 or more. To lower your premium, pay attention to the criteria that go into your credit rating, including the length of that credit history, as well as late payments and credit applications.
Leverage your memberships
Organizations you belong to may be your ticket to a lower insurance premium. Insurers offer discounts through educational, professional, employer and military organizations, not only AARP. For example, Geico offers discounts of 12% to 15% to members of many alumni, educational and professional organizations as well as military personnel and federal employees.
Consider your car model
If you are shopping for a new vehicle, ask for an insurance quote before deciding what to buy. “Some vehicles are safer and cost less to repair than others,” says Ortega. “Insurance companies collect data on every make and model and use it to determine how much to charge customers.” For example, a Honda Odyssey has an average annual premium of $ 1,454, compared to $ 2,225 for a BMW 330i or $ 1,740 for a Toyota Prius, according to Bankrate.
Counterintuitively, newer cars with better safety features can be more expensive to cover because they rely on complex electronics built into the entire car. Often times, the sensors for some of these electronic devices are located behind the windshield, which must be specially designed to protect and work with the sensors. Don’t give up the glass cover for a car made in the last three to five years because windshields have gotten ridiculously expensive, Milchtein said, adding, “Subaru windshields can cost $ 1,500. going to cost more than expected. “
You won’t know if your current premium is competitive unless you periodically check what other insurers charge. “Compare auto insurance products at least every few years. You can save hundreds if not thousands of dollars, ”says Michelle Madhok, online shopping expert. Online brokers love Gabi and Jerry can make the process easier by handling the paperwork, says Madhok.
In addition to the cost of the policy, check rating agencies, such as AM Best Where Moody’s, to assess the financial health of the insurer. Consider the company’s track record of how easily complaints are processed and paid by researching customer satisfaction reviews and surveys like those from JD Power. “Everyone says, ‘I’ll go and get the cheapest insurance coverage’,” says Zaneilia Harris, Certified Financial Planner in Upper Marlboro, Maryland, and author of Finance ‘n Stilettos (Dog Ear Publishing, $ 18). But “cheap is not always better”.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.