Auto Insurance: Unaffordable For Many

Can't Afford Auto Insurance? Here's What to Do

Auto insurance is legally required in almost every state, and for good reason. Accidents are unexpected and can be extremely costly. However, insurance can be expensive, and many people struggle to afford it. If you're in this situation, there are several options to consider that can help lower your premiums or make insurance more affordable.

Firstly, it's important to note that you should not cancel your insurance or drive without it. This is illegal and can result in fines, licence suspension, and even jail time. Instead, you should shop around and compare quotes from different insurance companies. Rates can vary significantly between providers, so getting multiple quotes can help you find a more affordable option.

Another way to make insurance more affordable is to look for policy discounts. Many insurance companies offer a range of discounts for various reasons, such as being a safe driver, having a good student, bundling policies, or signing up for automatic payments. You may also be able to raise your deductible, which will lower your premiums. However, this means you'll pay more out of pocket if you need to file a claim, so consider this option carefully.

Additionally, you can consider adjusting your coverage. If you have an older car, you may not need comprehensive and collision coverage, which only pays out up to your car's market value minus your deductible. You can also explore pay-per-mile insurance, which is typically cheaper for those who don't drive often.

Finally, improving your credit score and keeping a clean driving record over time can also help reduce your insurance costs. While these measures may take longer, they can have a significant impact on your premiums.

Remember, it's essential to maintain auto insurance to protect yourself and others on the road. By exploring these options, you can find ways to make insurance more affordable and ensure you're covered when you need it most.

Shop around for quotes from different insurers

Shopping around for quotes from different insurers is one of the most effective ways to get cheaper car insurance. Each company uses its own "secret sauce" to set rates, so comparing quotes can reveal wildly different results for the same driver.

• Get quotes from at least three different insurance companies at least once a year to ensure you're getting the best rate possible.
• Compare quotes from both national and local insurance companies.
• Make sure each quote includes the same levels of liability and uninsured/underinsured motorist protection, as well as the same deductibles for collision and comprehensive coverage (if you're buying them).
• Include all discounts you're eligible for in each quote. Most insurers list their discounts on their websites.
• Use an online insurance comparison site to make the process easier. However, be aware that some sites may sell your data to insurance companies, so choose a site that pledges not to sell your information, like The Zebra.
• If you're happy with the service you're getting from your current provider, you can use the quotes you've gathered to negotiate a better rate with them.

Seek out all available discounts

If you're struggling to afford auto insurance, it's worth seeking out all the available discounts. While they vary by insurer, there are a variety of reasons you might be eligible for savings.

Firstly, look into safe driver discounts. If you haven't had an accident or even a ticket in years, you might get a better rate. Some insurers offer discounts for taking a safe-driving course, or they might track your driving behaviour through a smartphone app or device plugged into your car's diagnostic port.

If you're a student with good grades, you could be eligible for a discount. Some insurers also offer discounts for students away at school without a car.

You can also get savings for having multiple policies with the same company. This is called "bundling" and it often applies to home and auto insurance, but you can also bundle car insurance with other policies like renters, life, or motorcycle insurance.

If your car is relatively new, you might qualify for a new car discount. Cars with safety features like anti-lock brakes, airbags, and daytime running lights may also be eligible for discounts. Anti-theft devices, such as GPS-based systems, stolen vehicle recovery systems, or VIN etching, can also help you save on insurance.

You can also save money by paying your policy upfront, or by setting up automatic payments and paperless billing.

Finally, don't forget to shop around. Get quotes from different insurance companies and compare rates. You might be surprised at how much prices vary.

Raise your deductible

Raising your deductible is a guaranteed way to lower your car insurance costs. However, it is important to note that this option is only suitable for those who can afford to pay the larger deductible in the event of a claim. If you are a consistently safe driver with no history of driving violations or a driver who doesn't drive frequently, you may be more comfortable taking on a higher deductible.

A deductible is the amount you are responsible for paying out of pocket before your insurance coverage kicks in. Typically, you can choose a deductible of $250, $500, or $1,000, but amounts can go as high as $2,500. By increasing your deductible from $500 to $1,000, you may lower your car insurance rate by around 10%. This increase could result in average savings of approximately $188 per year on comprehensive and collision coverage collectively.

It is important to carefully consider your financial situation and driving habits before raising your deductible. While it can lower your premium, you need to ensure you can afford the higher out-of-pocket expense in the event of a claim. Additionally, it is recommended to have a stable financial situation and a good driving record if you opt for a higher deductible.

Before making any changes to your deductible, it is advisable to review your emergency fund to ensure you have enough savings to cover the higher deductible if needed. It is also crucial to remember that raising your deductible means having to pay more each time you file a claim. Therefore, it is important to be financially prepared for this increased responsibility.

Change your coverage

If you're struggling to afford your auto insurance, changing your coverage is one way to reduce your costs. Here are some tips to help you modify your policy:

Assess Your Current Coverage

Before making any changes, it's important to understand your current coverage. Review your policy to identify the types of insurance you have, such as liability, collision, or comprehensive coverage. Determine if there are any areas where you may be over-insured or if there are specific coverages that you can reduce or eliminate.

Adjust Your Deductible

Increasing your deductible is a guaranteed way to lower your insurance costs. If you're a safe driver with a clean record, consider raising your deductible. Just make sure that you can afford to pay the higher deductible in the event of a claim.

Remove Comprehensive and Collision Coverage for Older Cars

If you drive an older car, you may want to remove comprehensive and collision coverage from your policy. These coverages only pay out up to the car's market value, minus your deductible. If your car's value is low, the payout may not be worth the cost of the coverage.

Carry Only the Required Minimum Coverage

To reduce your premiums significantly, consider carrying only the minimum amount of coverage required by your state. However, keep in mind that minimum coverage usually only includes liability insurance, which pays for others' medical bills and expenses after a crash you cause. You will be responsible for any damage to your own vehicle.

Consider Pay-Per-Mile Insurance

If you don't drive frequently, pay-per-mile insurance could be a more affordable option. This type of insurance combines a monthly base rate with a mileage rate, so you only pay for the miles you drive. However, keep in mind that your driving behaviour may be tracked, and poor driving habits could increase your premium.

Shop Around for a New Policy

Comparing quotes from different insurance companies is a great way to find more affordable coverage. Don't settle for the first policy you come across; get multiple quotes to ensure you're getting the best rate. You may even be eligible for a discount as a new customer.

Consider pay-per-mile insurance

If you're struggling to afford auto insurance, you may want to consider pay-per-mile insurance. This type of insurance is ideal for people who don't drive a lot of miles annually and can be a great way to save money on your insurance premiums.

Pay-per-mile insurance is a relatively new type of insurance policy that charges a premium based on how many miles a customer drives. It is usually only worth it for people who drive less than 12,000 miles a year, which is the national average. With this type of insurance, you will pay a daily or monthly base rate, plus a per-mile fee of about 2-10 cents. Some companies also have a mileage cap, which means you won't be charged for miles over a certain limit.

When deciding if pay-per-mile insurance is right for you, it's important to get an accurate estimate of your annual mileage and compare quotes from several companies. You can do this by tracking your mileage for a few weeks and then contacting insurance providers for quotes.

Some of the best pay-per-mile insurance companies include Allstate, Metromile, and Mile Auto, as they offer competitive rates and easy-to-use programs. USAA and Nationwide also offer pay-per-mile insurance, but their availability is more limited.

It's also important to note that pay-per-mile insurance is different from usage-based insurance programs, which track driving habits to give existing policyholders a discount or rebate. Additionally, pay-per-mile insurance is not available in every state, so be sure to check the availability in your area.

Frequently asked questions