Auto Insurance Unaffordable? Here's What You Can Do

Auto insurance is a necessity, but it can be expensive. If you're struggling to afford it, there are several options to consider. Firstly, don't cancel your policy or drive without insurance, as this can lead to legal consequences and higher future insurance costs. Instead, contact your insurance company to discuss payment options anddiscounts. You can also raise your deductible, change your coverage, or shop for a new policy with lower rates. Additionally, look into state-funded assistance programs and consider alternative transportation options if necessary.

Don't cancel your insurance policy, but consider contacting your insurer about payment options and discounts

If you can't afford auto insurance, it's important that you don't cancel your insurance policy. Driving without insurance is illegal in every state in the US, except New Hampshire, and can result in serious consequences. These can include having to pay out of pocket for any costs resulting from an accident, getting your license suspended, and losing your car through repossession if you have an auto loan or lease.

Instead of cancelling your insurance, you should contact your insurer to discuss payment options and discounts. Insurers typically offer a grace period for late payments, so getting in touch as soon as you know you can't afford an upcoming bill will allow you to delay it or have it combined into future payments. You can also ask your insurer about the discounts they offer. These can include savings for having a student with good grades, bundling your car insurance with another policy, or signing up for automatic payments and paperless billing.

Another option to consider is raising your deductible. This will lower your insurance costs, but make sure you can afford the larger deductible in the event of a claim. You could also think about changing your coverage, especially if you drive an older car. Comprehensive and collision coverage may not be worth the cost if your car is only worth a few hundred dollars.

Before making any changes to your insurance policy, be sure to weigh up your options carefully and consider your level of risk. It's important to ensure you have adequate protection while also finding ways to reduce costs where possible.

Raise your deductible

If you're struggling to afford auto insurance, one option to consider is raising your deductible. This can be a good strategy to lower your insurance costs, but it's important to understand how it works and the potential risks involved.

A car insurance deductible is the amount of money you need to pay out of pocket when you file a claim. For example, if your vehicle incurs $1,500 of damage and your deductible is $500, you'll pay the deductible amount, and your insurer will cover the remaining $1,000. Typically, deductibles range from $250 to $2,000, and you choose the amount when purchasing your policy.

Raising your deductible leads to lower insurance premiums because you're assuming more financial responsibility in the event of a claim. This can be a smart move if you're a safe driver with a clean record, don't drive frequently, or own an older car. By increasing your deductible, you can reduce your monthly insurance costs.

However, it's crucial to ensure you have enough savings to cover the higher deductible in case of an accident or claim. Raising your deductible means you'll need to pay more each time you file a claim. Therefore, it's important to assess your emergency fund and ensure you have sufficient cash reserves before opting for a higher deductible.

Additionally, consider the likelihood of filing claims. If you choose a high deductible and end up filing multiple claims, you'll have to pay the deductible amount each time. Evaluate your driving habits, the age and condition of your car, and the probability of needing repairs before deciding to raise your deductible.

In summary, raising your deductible can be a strategic way to lower your auto insurance costs, but it requires careful consideration of your financial situation and driving habits. Make sure you understand the trade-off between lower premiums and higher out-of-pocket expenses in the event of a claim.

Change your coverage

If you can't afford car insurance, it's important to remember not to cancel your policy or drive uninsured. Instead, you can consider changing your coverage.

One way to do this is to reduce your coverage to the minimum state requirements. This can help make your policy more affordable, but it's important to note that minimum coverage may not include comprehensive or collision insurance, which protect your vehicle in an accident. As such, you may want to consider only reducing your coverage to the minimum if you drive an older car.

When reducing your coverage, you can select the lowest possible amount of liability coverage, which will give you the lowest possible rate. If you lease or finance your vehicle, you may have to carry collision and comprehensive coverage. In this case, choosing a high deductible can also help lower your premium costs.

You can also remove any custom coverage or riders from your policy. For example, if you don't travel often, you may not need rental car insurance. While removing these items may only save you a few dollars each, they can add up to significant savings over the course of a year.

Another option to consider is pay-per-mile or usage-based insurance. These types of insurance charge a base rate and then a rate per mile driven. This can be a good option if you don't drive often, as you'll be rewarded with a discount for driving less than the average driver. However, it's important to note that your driving behaviour may be tracked, and poor driving habits may increase your premium.

Finally, you can also consider changing insurance providers to find a cheaper rate. Different providers offer different rates and discounts, so it's worth comparing quotes from multiple companies to find the best option for you.

Compare prices from multiple insurance companies

Comparing prices from multiple insurance companies is a great way to find a cheaper car insurance policy. The Zebra, for example, is an insurance comparison site that generates real insurance quotes without selling your information. It's important to compare the same type and amount of coverage when reviewing quotes.

• Decide on the coverage you need: Most states require drivers to carry a minimum amount of liability coverage. However, if your vehicle is newer or leased, you may need to carry additional coverages, such as comprehensive and collision coverage.
• Gather your personal information: To get an accurate quote, you'll need to provide basic personal information such as your name, date of birth, address, driver's license number, and vehicle information.
• Research insurers: Look into the customer service, claims handling, and reputation of different insurance companies. Also, check which companies offer discounts that you may be eligible for.
• Get quotes: Visit insurance company websites or contact agents to get quotes. You can also use comparison sites or work with an independent agent to get quotes from multiple insurers at once.
• Compare rates: Review the quotes you've received, considering factors such as price, coverage, and the reputation of the insurer.
• Make a decision: Choose the insurance company that best meets your needs and budget. Be sure to read the policy carefully before purchasing.

By following these steps, you can effectively compare prices from multiple insurance companies and find a car insurance policy that fits your budget.

Improve your credit score

Improving your credit score can help you qualify for cheaper rates on loans, credit cards, mortgages, and insurance. Here are some tips to improve your credit score:

• Make on-time payments: Payment history is the most important factor in determining your credit score. Set up autopay for at least the minimum amount due and create calendar reminders to ensure timely payments.
• Pay down revolving account balances: The amount you owe makes up 30% of your credit score. Aim to keep your credit utilisation rate, or the percentage of available credit you're using, as low as possible.
• Don't close your oldest account: The length of your credit history accounts for 15% of your credit score. Keeping old accounts open, especially the oldest one, can help improve your score.
• Diversify your credit: Having a mix of different types of credit, such as credit cards, loans, and mortgages, can improve your score.
• Limit new credit applications: Each new credit application results in a hard inquiry, which can negatively impact your score. Only apply for credit when necessary and consider doing a soft credit check first to determine your eligibility.
• Dispute inaccurate information: Inaccurate information on your credit report can negatively impact your score. Review your credit reports and dispute any errors with the credit bureaus.
• Become an authorised user: If you're new to credit, consider having a loved one add you as an authorised user on their credit card. Make sure the account has a positive payment history and a low credit utilisation rate.
• Register to vote: In some countries, being on the electoral roll can improve your credit score.
• Automate bill payments: Set up direct debits to ensure timely payment of your bills, which can improve your credit score.
• Avoid multiple credit applications: Applying for too much credit in a short period can negatively impact your score. Space out your applications and use eligibility checkers to determine your chances of approval before applying.
• Correct errors on your credit report: Review your credit reports for any inaccuracies and dispute them with the credit bureaus.
• Address financial difficulties early: If you're struggling with debt, contact your lenders and seek independent support. Defaults, County Court Judgements, and bankruptcy will negatively impact your score.

Frequently asked questions