With rising petrol and car-repair costs, it’s an expensive time to be a driver. And car insurance is no exception. While you cannot control factors such as labor shortages and supply chain challenges, you may take actions to reduce your insurance costs.
Here’s what to do if your auto insurance prices have gotten overwhelming, as well as recommendations for lowering your premiums.
Don’t cancel your policy
While you may be tempted to go without insurance altogether, this can have long-term effects. Because every state except Virginia requires most drivers to have some form of auto insurance, being caught driving uninsured might result in an insurance lapse on your record, which can affect your future insurance rates. “Starting a new policy is usually costlier than staying continuously insured,” stated Janet Ruiz, director of strategic communications for the Insurance Information Institute, in an email.
An insurance lapse may also result in your state asking you to file an SR-22 form, which is legal confirmation that you have purchased the required minimum quantity of auto insurance. An SR-22 can remain on your record for several years, and some insurers will not insure a driver with one.
Driving without insurance can have other ramifications, including:
- Paying out of pocket for any expenditures incurred as a result of an accident you caused.
- Having your license suspended.
- Heavy fines.
- If you have an auto loan or lease, you may lose your car due to repossession.
Try these options
Dropping your insurance should not be an option, but there are other ways to save money on car insurance. These are some of the most effective.
Contact your insurance company
If you can’t afford an upcoming bill, contact your insurance agent or firm right away. Ethan Warren, managing director of Goosehead Insurance Agency, indicated in an email that you may be able to postpone it or combine it with future payments. “It is always better to be proactive than reactive,” she remarked.
If you miss a payment, insurers often provide a grace period during which you can still pay without risking policy termination. Grace periods vary by state and firm, so contact your insurer right away to find out how much time you have.
Ask for discounts
Check with your insurance company to see what discounts they offer. While discounts vary by insurer, you could save for a variety of reasons, such as having a student with outstanding grades, consolidating your vehicle insurance with another policy, or enrolling in automated payments and paperless billing.
Raise your deductible
Raising your deductible is a surefire strategy to reduce auto insurance prices. If you’re a consistently safe driver who hasn’t made a claim in the past, or if you don’t drive frequently, you may be more willing to accept a higher deductible than people who drive more or have a history of traffic offenses. Only consider this option if you can afford a higher deductible in the event of a claim.
Change your coverage
If you drive an older car and your policy contains comprehensive and collision coverage, you may probably drop both because they only pay out up to your car’s market value, less your deductible. For example, if you drive a $1,000 automobile and have a $1,000 deductible, you will not receive a cash settlement for a comprehensive or collision claim.
To get the cheapest vehicle insurance, only carry the minimal amount allowed by your state. According to a recent ReliableInsurance analysis, good drivers with minimum coverage spend an average of $561 per year, while full coverage costs $1,630. It’s worth noting, however, that in many jurisdictions, the minimum coverage only includes liability insurance, which pays for others’ medical bills and expenses after a collision you cause, up to your policy limits. You will be responsible for any damage done to your vehicle.
Consider pay-per-mile insurance
Pay-per-mile insurance is calculated by combining a monthly basis with a mileage rate that takes into account the number of miles you travel. Mileage is often tracked via a smartphone app or a gadget plugged into your vehicle’s diagnostic port. Pay-per-mile insurance may be a more cost-effective option than a conventional policy if you drive infrequently, utilize public transit, or need to insure a rarely used second car. Keep in mind that your driving behavior may be observed, and poor driving behaviors, such as forceful braking and driving late at night, may result in a higher premium.
Shop for a new policy
Shopping around for new insurance is usually the best method to find the lowest rates. As a new customer, you may even be eligible for a discount. Every year, compare quotes from at least three different insurance companies to ensure you’re getting the best cost available.
Work on your credit
Most states, with the exception of California, Hawaii, Massachusetts, and Michigan, use credit to determine car insurance prices, and drivers with low credit typically pay higher rates. While boosting your credit won’t happen overnight, it might help you save money on your insurance over time.
To improve your credit, pay your bills on time and maintain credit card balances well below the card limit.
Use alternative transportation temporarily
If you try the techniques listed above and still can’t lower your bill down to a reasonable amount, explore transportation alternatives. Many cities provide affordable public transit, rideshare services, and carpooling until you can afford a monthly fee. If you are able, you can travel short distances by walking or riding a bike.
If you have access to someone else’s vehicle, consider purchasing non-owner auto insurance, which is often less expensive than normal coverage. It will compensate for any injuries or property damage you cause in an accident, as well as prevent an insurance lapse, which may allow you to save money on your premium when you return to your ordinary coverage.
