Financing

How to Keep Your Auto Insurance Costs Low Despite Rate Hikes

Auto insurance rates are expected to increase over the coming year, but drivers can take these steps to keep their premiums low. (iStock)

Recent data from the Bureau of Labor Statistics (BLS) shows auto insurance rates have risen in recent months, after falling amid the COVID-19 pandemic.

Auto insurance rates jumped 16.9% in May, and the jump follows a 6.4% increase in April, according to BLS data released on July 13. In the midst of these rate hikes, there are several expert-recommended tips you can follow to make sure you’re not overpaying and to help you get cheap auto insurance.

In order to compare the amount you are paying for your auto insurance policy, it helps to know the average cost of auto insurance. Currently, the average cost of insuring a mediaAccording to Andrew Latham, editor-in-chief of SuperMoney, a platform that connects consumers with certified personal finance advisers, the size of a sedan with a full coverage policy was $ 1,245 in 2020.

“Your best auto insurance rate is based on several factors, such as your age, the car you drive, your credit history and where you live,” Latham said. “Therefore, the only reliable way to determine if you have a good auto insurance rate is to compare your current coverage with multiple carriers. Just make sure you’re comparing apples to apples and using the same coverage.”

If you are shopping for new auto insurance, visit Credible where you can compare multiple auto insurance companies and quotes at once and see your personal rates.

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When looking for ways to lower your auto insurance premiums, here are four tips to keep in mind:

  1. Compare several auto insurers
  2. Think about your deductible
  3. Work on your credit score
  4. Be careful what you are doing to lower your rate

1. Compare multiple auto insurance providers

Loyalty doesn’t pay when it comes to lowering your auto insurance rates, and comparing options can be a great way to lower your auto insurance premium.

“Most people who switch carriers find better rates,” Latham said. “However, low rates aren’t everything. While it’s a good idea to compare multiple quotes to find low premiums, you also want a carrier with fair and fast claims settlement and excellent customer service.”

You can search for affordable auto insurance within minutes by visiting Credible. There you can fill in your basic information and coverage preferences to view offers from multiple auto insurance companies.

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2. Think about your deductible

Going for a higher deductible can be a simple way to significantly reduce your monthly car payments. In fact, increasing your deductible from $ 500 to $ 1,000 can reduce your insurance premium by 10%. Drivers can also give up other additional coverage options to reduce their premiums.

“Consider dropping full and collision coverage when you have an older car,” Latham said. “A good rule of thumb is to remove additional coverage (collision and comprehensive) when your annual premium is 10% or more of the Kelly Blue Book value of the car. For example, if you pay $ 1,500 a year in auto insurance and your car is worth $ 10,000, you should probably give up extra coverage. “

Other extras that drivers could get out of their policy include medical payment coverage and injury protection. While it might be good to have them in the event of an accident, health insurance might already cover them. Additionally, drivers who have a second car or can rely on public transportation may want to do without rental reimbursement coverage. Often times, the owner’s or even the renter’s insurance covers some of these extras as well.

3. Work on your credit score

Aside from a clean driving record, either by having no at-fault accidents or by taking a defensive driving course, there are also other records that come into play when determining your auto insurance premium. In some states, your credit score can help you get a better rate, so improving your credit score can be beneficial for auto insurance. This is true of all states except California, Hawaii, Maryland, Massachusetts, Michigan, Oregon, and Utah, which prohibit or regulate the use of credit scores. by auto insurance companies, explained Latham.

But it’s important to note that buying auto insurance won’t hurt your credit score, Latham said. Auto insurance companies use a soft survey, which means the check will show up on your credit report, but it won’t affect your score.

To make sure you have the cheapest auto insurance available to you, shop around and compare several insurance companies to find the best rate. You can visit Credible and compare several suppliers immediately and see your potential auto insurance policy without affecting your credit score.

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4. Be careful what you are doing to lower your rate.

While there are different ways to get discounts on auto insurance, it is not a good idea to reduce your coverage in certain areas, such as personal injury liability, as it can be detrimental in the long run.

“Don’t skimp on liability coverage,” Latham said. “Drivers who don’t have as many assets to protect may be tempted to give up liability coverage altogether. However, keep in mind that your wages could be garnished if you are at fault in an accident. I recommend a minimum. $ 100,000 per person, K $ 100 for property damage and $ 300,000 per incident. “

To summarize

There are many ways to save on your auto insurance premium, including comparing multiple auto insurance quotes, increasing your credit score, and reducing unnecessary extras. Often times, veterans and the military can also qualify for a discount on the policy, so be sure to ask your provider about this. Additionally, teenage drivers will usually pay more for their insurance, but could benefit from special offers like a good student discount.

To see what types of auto insurance discounts are available to you, start today by visiting Credible to get your free auto insurance quotes.

Have a finance-related question, but don’t know who to ask? Email the Credible Money Expert at [email protected] and your question could be answered by Credible in our Money Expert column.


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