The High Cost Of Staying On The Road: Auto Insurance Affordability

Auto insurance is a necessity for most Americans, but it can be expensive. There are, however, a number of ways to save money on your insurance. Firstly, shop around and get quotes from different insurance companies to find cheaper rates. Secondly, look for policy discounts and make sure you're not over-insuring yourself. Thirdly, consider pay-per-mile insurance, which is priced by combining a monthly base rate and a mileage rate. Fourthly, reduce your coverage. Finally, if you're a safe driver, consider usage-based insurance, which monitors your driving habits and can result in cheaper premiums.

Shop around for quotes from different insurance companies

Shopping around for quotes from different insurance companies is a great way to find the best deal on auto insurance. By comparing rates from multiple providers, you can find the most affordable option for your needs. This process can be done quickly and easily online, with many websites offering to compare quotes from over 100 insurance companies at once.

When shopping around, it is important to have certain information on hand to get the most accurate quotes. Basic personal facts such as your name, phone number, email address, and occupation will be needed, as well as your driver's license number and the license numbers of any other drivers in your household. You should also be prepared to share information about your driving history, including any traffic violations or accidents in the past three to five years. Additionally, you will need to provide information about the vehicle(s) you want to insure, including the make, model, and vehicle identification number (VIN).

It is also important to decide how much insurance coverage you need before getting quotes. This will ensure that you are comparing rates for the same amount of coverage across different companies. You may also want to consider the different types of coverage available, such as liability, collision, and comprehensive insurance, and choose a deductible amount that you are comfortable with.

When reviewing quotes, pay attention to the coverage limits and deductibles offered by each company, as these can vary significantly and impact the cost of your policy. It is also worth considering the quality of the insurance company and the level of service they provide. Reading online reviews or interviewing agents can help you make an informed decision about which company is right for you.

By taking the time to shop around and compare quotes, you can save hundreds of dollars on your auto insurance and find a policy that offers the best value for your needs.

Look for policy discounts

Policy discounts are a great way to save money on your car insurance. While insurance companies will automatically apply some discounts, others require a bit of legwork on your part. Here are some tips to help you find policy discounts and lower your insurance premium.

Know the Available Discounts

First, you need to know what discounts are available. Common policy discounts include:

• Multi-policy or bundling discounts: Offered when you buy multiple policies from the same company, such as home and auto insurance. This is usually one of the biggest discounts, often between 5% and 25% off.
• Vehicle safety discounts: If your car has safety features like anti-lock brakes, airbags, and daytime running lights, you may be eligible for a discount. Airbag discounts can be as much as 40% applied to your medical payments or personal injury protection coverage.
• Anti-theft device discounts: If your car has anti-theft features, you can typically get a discount of up to 5% to 25% off your comprehensive coverage.
• Good driver discounts: Insurance companies often reward safe drivers and those who have been incident-free for a certain amount of time, usually at least three to five years. Good driver discounts can range from 10% to 40%.
• Defensive driver discounts: Some companies offer discounts if you take an approved defensive driving course. These are usually for qualified drivers of a certain age, typically 50 or older, and range from 5% to 10%.
• Good student discounts: If you or your student driver is enrolled full-time at high school or college and maintains a certain GPA (usually at least a B average), you could qualify for a discount of up to 15% to 25%.
• Student away at school discounts: If your student is away at school and doesn't have regular access to your car, you may be able to get a discount. The student is typically required to be under 25 years old and more than 100 miles from home.
• Pay-in-full discounts: Many companies offer a discount if you pay your full policy term upfront.
• Electronic funds transfer (EFT) discounts: If you pay in installments, you may be able to get a small discount (around 3% to 6%) for using automatic withdrawals.
• Paperless discounts: With many people preferring paperless billing and documents, these discounts are not as common as they once were. However, some companies may still offer a small discount (around 3%) for opting for electronic billing and automatic payments.
• Online quote discounts: Some companies offer a discount (ranging from 4% to 12%) if you get an online quote and sign up for a policy.
• Advance quote discounts: Shopping around and buying a policy in advance of your current one expiring can bring about a discount, typically between 2% and 15%.
• Occupational discounts: Depending on your occupation, you might qualify for a discount. For example, teachers or military personnel.
• Alumni associations and professional organizations: Being a member of certain groups, such as college alumni associations, fraternities, sororities, or professional organizations, may make you eligible for a discount.

Shop Around and Ask

Insurance companies don't always automatically apply discounts, and you may have to ask for them. It's a good idea to review the discounts available to you periodically and make sure they are added to your policy. Contact your insurance provider to find out what discounts they offer and whether you qualify. You can also shop around and compare quotes from different companies to see if you can get a better deal.

Don't Pay for What You Don't Need

Review your policy to make sure you're not paying for things you don't need. For example, if you have medical insurance through work, you might not need a comprehensive personal injury policy.

Combine Strategies

Combining multiple strategies is the best way to save money on your car insurance. For example, you could shop around for a new policy that offers bundling discounts, and then ask about other discounts you may qualify for, such as a good driver discount. Remember, it's always worth asking!

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 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.

When choosing a deductible, consider your financial situation and driving habits. If you can afford a higher out-of-pocket cost in the event of a claim and want to lower your premium, a higher deductible might be suitable. On the other hand, if you prefer lower out-of-pocket expenses at the time of a claim, opt for a lower deductible.

It's also important to consider the value of your vehicle. It doesn't make sense to have a high deductible on a car valued at only a few thousand dollars, as you would end up paying a significant portion of the car's worth in the event of a loss.

Additionally, if you have a history of tickets and accidents, a higher deductible might help you manage costs. However, some finance companies might not allow you to have a deductible higher than a certain amount if your car is being financed.

By increasing your deductible from $500 to $1,000, you can lower your car insurance rate by around 10%. This could result in average savings of approximately $188 per year on comprehensive and collision coverage collectively.

Before raising your deductible, ensure you have enough money in savings to cover the higher costs in the event of a claim. While a higher deductible can lower your premium, it will increase your financial obligation after an accident or damage to your vehicle. Therefore, carefully consider your options and choose a deductible amount that aligns with your financial situation and comfort level.

Change your coverage

Changing your coverage is one of the most effective ways to save money on your car insurance. Here are some ways to do this:

Drop comprehensive and collision coverage

If you drive an older car, you can likely drop comprehensive and collision coverage. This is because 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.

Carry only the minimum required coverage

To get the cheapest car insurance possible, carry only your state's required minimum amount. Good drivers with minimum coverage pay an average of $561 per year compared to $1,630 for full coverage. However, it's important to note that minimum coverage only includes liability insurance in many states, which pays for others' expenses after a crash you cause, up to your policy limits. You will have to pay for any damage to your car.

Consider pay-per-mile insurance

If you don't drive often, pay-per-mile insurance might be a cheaper option. This type of insurance is priced by combining a monthly base rate and a mileage rate. However, keep in mind that your driving behaviour may be tracked, and poor driving habits may increase your premium.

Raise your deductible

Increasing your deductible is a guaranteed way to lower your car insurance costs. However, only consider this option if you can afford the larger deductible in the event of a claim.

Re-evaluate your coverage needs and remove add-ons

If your needs have changed since purchasing your current policy, you may be paying for add-ons that you no longer need. For example, if you have medical insurance through work, you may not need a comprehensive personal injury policy.

Switch to a different insurer

Switching to another insurer can sometimes get you a better rate for the same coverage. It's recommended to compare quotes from at least three insurance companies to find the best option for you.

Improve your credit score

If you improve your credit score, you may be able to access lower car insurance rates by shopping for a new policy.

Adjust your current policy

If you want to save money, you may be able to do so by adjusting your current policy. For example, you could raise your deductible or lower your coverage limits.

Consider pay-per-mile insurance

If you're looking to save money on your car insurance, pay-per-mile insurance could be a good option. This type of insurance is ideal for low-mileage or infrequent drivers. It's priced by combining a monthly base rate and a mileage rate, which takes into account the number of miles you drive. This means that the less you drive, the less you pay.

Pay-per-mile insurance is usually tracked through a smartphone app or a device that you plug into your car's diagnostic port. It's worth noting that your driving behaviour may also be tracked, and poor driving habits like hard braking and driving late at night may increase your premium.

Some insurance companies that offer pay-per-mile insurance include:

• Allstate: Milewise
• Metromile
• Mile Auto
• Nationwide: SmartMiles
• USAA: Pay As You Drive

Pay-per-mile insurance is a relatively new type of policy and is not available in every state. It's also worth noting that this type of insurance is usually only compatible with cars manufactured from 1996 onwards.

To decide if pay-per-mile insurance is right for you, it's a good idea to spend a few weeks tracking your mileage. Then, you can get quotes from multiple companies and compare how much you'd spend on pay-per-mile insurance with the cost of a standard auto insurance policy.

Frequently asked questions