How to Save on Car Insurance: 5 Tips to Consider

If you own and drive a car, you’ve probably noticed your auto insurance premiums ticking up in the last few years. While overall inflation has started to gradually ease for consumers, the cost of car insurance has remained stubbornly high.

An analysis by Reuters found that premiums have gone up 20.3% last December year over year, marking the largest increase since the mid-1970s. And this upward trend has continued: According to the Consumer Price Index report for April 2024, motor vehicle insurance has increased 22.6% over the last year.

Rising premiums can be explained by a combination of factors. Of note is the overall increase in vehicle prices in the past several years, which has made cars generally more expensive to insure. Also, as cars become more technologically advanced, damages could result in more costly repairs.

For example, for cars equipped with advanced driver assistance systems, even a minor collision might damage a camera or proximity sensors, which can be expensive to repair. According to Mitchell, an automotive software provider specializing in collision repair and auto insurance, the average cost of a repairable claim for a vehicle exceeded $4,700 in early 2023.

If the cost of car insurance is starting to put a dent in your budget, you’re not alone. Here are some steps you could take to help lower your premiums.

1. Shop around

If you’ve been with the same car insurance company for years, you may want to shop around and compare quotes from other insurers.

However, it’s important to remember that the “cheapest” insurance may not always be the best or most appropriate option for your needs. As you compare quotes from different companies, pay attention to the coverage and deductible levels being offered at those prices. Each quote should carry the same coverages, limits, and amounts.

Look for a reliable insurance provider with a solid company history. Check out their customer service and satisfaction rating. How responsive is the company when it comes to servicing claims in a timely fashion?

To help you save time, consider working with an independent insurance agent who may be able to help you find a good deal for your coverage needs.

2. Revisit your coverages

When was the last time you reviewed your insurance policy details? It’s a good idea to periodically look over your coverage options and limits to ensure you’re not over or underinsured.

If you’re overinsured, you may be paying for insurance you don’t need. If you’re underinsured, you may not have adequate coverage to protect yourself financially if you were to get into an accident.

In addition to checking your coverage limits, see if there’s any optional insurance coverage you could cut back on or may no longer need. For example, if you drive an older vehicle, you may want to ask an insurance agent to help you crunch the numbers and see if it still makes sense to carry collision and comprehensive coverages.

Keep in mind that coverage needs will vary from person to person depending on a number of factors, including the age of the vehicle, your driving habits and history, as well as your financial situation. If you need help figuring out the appropriate level of insurance, get in touch with an insurance agent.

3. Think about increasing your deductible

One common way to help lower your premiums is to increase your deductible (this is the amount you’d have to pay out of pocket for a covered claim before your insurance kicks in). If you choose to take this route, make sure you have enough money saved to cover those out-of-pocket costs should you ever need to file a claim.

4. Take advantage of policy discounts

Many insurance providers offer policy discounts based on your driving habits and history, vehicle safety equipment, customer loyalty, and professional affiliations.

Some common ones to look for include:

• Multi-car or multi-policy discount for individuals who bundle insurance policies with the same provider.
• Defensive driving discount for those who have taken a defensive or safety driving course.
• Good driver discount for those who have not had an accident for a certain period of time.
• Vehicle equipment discount for those who drive vehicles that are equipped with an anti-theft system or other safety features such as collision avoidance system, air bags, anti-lock brakes, etc.
• Senior citizen discount for individuals who may not drive as often anymore.
• Military discount for individuals who are on active duty or retired from the military.