Auto Insurance: Unaffordable For Many

Car insurance is a necessity for most Americans, but it can be expensive. If you can't afford it, there are several options to consider. Firstly, shop around and compare quotes from different insurance companies, as rates can vary significantly. You may also be eligible for discounts, so be sure to ask about these. Additionally, consider adjusting your coverage and raising your deductible to lower your premium. If you have an older car, you may not need comprehensive and collision coverage. Another option is pay-per-mile insurance, which can be more affordable if you don't drive often. Improving your credit score and maintaining a clean driving record can also help secure cheaper rates over time. It's important to remember that driving without insurance is illegal and can result in costly consequences, so explore these options to find a solution that works for you.

Shop around for quotes from different insurance companies

Shopping around for quotes from different insurance companies is a great way to find cheaper rates and save money on car insurance.

When it comes to car insurance, prices can vary significantly from one company to another because they use different formulas to calculate their rates. By shopping around, you can find the best price for the insurance coverage you want.

How to shop around effectively:

• Get multiple quotes: Compare car insurance rates from at least three different insurers to find the best deal.
• Consider new customer discounts: Many insurers offer discounts to new customers, so switching companies can sometimes lower your rate.
• Look for companies with a variety of discounts: Some common discounts include safe driver discounts, good student discounts, low-mileage discounts, and bundling discounts if you combine your car insurance with another policy, such as home insurance.
• Check company reviews: In addition to the price, consider the company's customer service and claims satisfaction. Look at reviews to get an idea of what you can expect as a customer.
• Compare the same types and amounts of coverage: When getting quotes, make sure to include the same levels of liability, uninsured/underinsured motorist protection, and deductibles for collision and comprehensive coverage (if applicable) so that you can accurately compare rates.

When to shop around:

• When you first buy auto insurance: Don't panic if you receive a high quote from one company. Shop around to get multiple quotes from different insurers before deciding.
• When your circumstances change: Certain life changes, such as getting married, moving to a new state, or adding a teen driver to your policy, can impact your insurance rates. When these changes occur, it's a good time to shop around and see if you can find a better deal.
• When your current rate increases: If your current insurance company raises your rate, it may be time to look for a new provider.

Remember, driving without insurance is illegal in most states and can result in costly penalties and consequences. Therefore, it's essential to maintain continuous coverage and shop around to find an insurance policy that fits your budget and needs.

Seek out all available discounts

If you're struggling to afford auto insurance, one of the best things you can do is seek out all available discounts. There are many different types of discounts offered by insurance companies, and you may be surprised at how much you can save. Here are some tips to help you get started:

Shop around for quotes

Don't just settle for the first insurance company you come across. Take the time to shop around and get quotes from multiple companies. This will allow you to compare rates and find the best deal. You may find that one company offers a much lower rate than another, or that you are eligible for more discounts with a different insurer.

Look for policy discounts

When you're getting quotes, be sure to ask about any policy discounts that may be available. Insurance companies often offer a variety of discounts, such as:

• Safe driver discounts: If you have a good driving record with no accidents or violations, you may be eligible for a discount.
• Multi-policy or bundling discounts: If you buy multiple policies from the same company, such as car insurance and home insurance, you can often get a discount.
• Vehicle safety discounts: If your car has safety features like anti-lock brakes, airbags, or daytime running lights, you may be able to get a discount.
• Anti-theft device discounts: If your car has anti-theft features, you may be able to get a discount on your comprehensive coverage.
• Good student discounts: If you or your teen driver has good grades, you may be eligible for a discount.
• Low-mileage discounts: If you don't drive your car often, you may be able to get a discount.
• Paperless or automatic payment discounts: Some companies offer small discounts if you sign up for paperless billing or automatic payments.

Ask about specific discounts

In addition to the general policy discounts mentioned above, there may be other specific discounts that you are eligible for. For example, if you are a student, a member of the military, or part of a certain alumni association or professional organization, you may be able to get a discount. It's always worth asking about any potential discounts that may apply to your specific situation.

Be a smart shopper

When you're comparing insurance policies, make sure you are not over-insuring yourself. You don't want to pay for more coverage than you need. Carefully review the different types of coverage and choose the ones that are most relevant to your situation. For example, if you have medical insurance through work, you may not need a comprehensive personal injury policy as part of your car insurance.

By following these tips and seeking out all available discounts, you can significantly reduce the cost of your auto insurance. Don't be afraid to ask questions, shop around, and negotiate to get the best deal.

Raise your deductible

Raising your deductible is a guaranteed way to lower your car insurance costs. A deductible is the amount you pay out of pocket for a repair before the insurance money kicks in. Typically, you can choose a deductible of $250, $500, or $1,000, but amounts can go as high as $2,500.

If you opt for a higher deductible, you will pay less for your insurance policy premium. For example, increasing your deductible from $500 to $1,000 may lower your car insurance rate by 10%. In some states, such as Michigan, Washington D.C., and California, you can save hundreds of dollars a year by raising your deductible from $250 to $1,000.

However, it is important to remember that raising your deductible means you will have to pay more each time you file a claim. Therefore, you should only consider raising your deductible if you can afford the larger outlay in the event of a claim. It is also worth noting that if you have a history of tickets and accidents, a higher deductible might help you manage costs.

Before raising your deductible, take a look at your emergency fund to ensure you have enough money to cover the higher deductible if needed. It is important to be proactive and contact your insurance company as soon as possible if you know you can't afford an upcoming bill.

Change your coverage

If you're struggling to afford car insurance, you can reduce your coverage to the minimum state requirements. While it's a good idea to have full-coverage auto insurance, it's not legally required in most states.

If you drive an older car, you can likely drop comprehensive and collision coverage, as they only pay out up to your car's market value, minus your deductible. For example, if your car is worth $1,000 and your deductible is $1,000, you won't receive a cash payout from a comprehensive or collision claim.

However, if you reduce your coverage, you'll be responsible for any damage to your car.

You can also save money by switching to pay-per-mile insurance, which charges a base rate and a rate per mile. This is a good option if you don't drive often.

Explore pay-per-mile insurance

If you're struggling to afford auto insurance, pay-per-mile insurance could be a good option for you. This type of insurance is ideal for low-mileage or infrequent drivers, and it's available from several companies, including USAA, Nationwide, and Allstate.

Here's how it works: pay-per-mile insurance charges a daily or monthly base rate, plus a small fee for each mile driven. The base rate and per-mile fee are calculated using standard factors such as driving record, age, gender, ZIP code, and vehicle. Most pay-per-mile insurance policies use a device that plugs into your vehicle's diagnostic port to track your mileage, or a smartphone app.

Pay-per-mile insurance is usually worth it only for people who drive less than 12,000 miles annually, which is the national average. It's important to note that pay-per-mile insurance is different from low-mileage discounts offered by some insurance companies. Low-mileage discounts reduce a percentage of the total cost of your premium, whereas pay-per-mile insurance costs are calculated based on how far you drive.

When considering pay-per-mile insurance, be sure to shop around and compare rates from multiple companies. Additionally, check for any discounts that may be available, such as safe-driving habits or having a student with good grades. Keep in mind that pay-per-mile insurance is not available in every state, so be sure to check the availability in your area.

Frequently asked questions