7 ways to save money on car insurance

This story is part Recession Assistance ServiceCNET’s coverage of how to make smart money moves in an uncertain economy.

Car insurance is becoming more and more expensive. The car insurance cost continued to climb throughout 2022 and rose another 1.3% in July, according to the consumer price index, a key indicator of inflation.

Inflation aside, auto insurance was already on the rise since last year. Many large auto insurers began receiving approval for substantial rate increases at the end of 2021, raising premiums by 3% to 12%, according to S&P Global Market Intelligence. To top it off, gasoline prices have also records this year, which makes driving more expensive overall.

If you’re tired of paying high car insurance premiums, we’ve got some tips you can try to lower your car insurance costs and add some extra wiggle room to your budget.

1. Increase your deductible

Increase your deductible – your out-of-pocket before your insurance picks up the bill for a claim – may reduce your premium. This decision can be useful if you don’t drive much at the moment, don’t have a history of traffic accidents, or need to lower your monthly costs to stay insured. This could cost you more later if you are in an accident, as you will have to shell out more money before your carrier covers the damage. You need to make sure you have enough money to pay the highest deductible if you end up in an accident.

2. Consider lower coverage for older vehicles

Older cars might not deserve the same insurance attention as your shiny new Tesla or all the bells and whistles of a Mercedes-style policy. If your car is on its last lap, you may want to remove collision coverage or comprehensive coverage for that vehicle, both of which cover damage to your car.

The decision to drop either coverage depends on the value of your car and the relative cost of insuring it. Experts suggest that if your car is worth less than 10 times the annual premium, purchasing coverage for that vehicle may not be a cost-effective option. One of the fastest ways to check the value is to scroll through Kelley Blue Book online. For example, let’s say your annual premium is $1,600; 10 times that would be $16,000. If your car is worth less than $16,000, it may be a good idea to reduce the insurance coverage for that car.

3. Use public transport or carpool when you can

Carriers may offer discounts if you have low mileage, which means you drive less than the average number of miles per year compared to other Americans. Generally, you’d be considered a low-mileage driver if you drive less than 7,500 miles per year, but that’s not a clear rule. What really determines whether you are a low mileage driver depends on the state you live in, your age, and your gender.

How much you can save depends on individual factors, in addition to the car insurance company you take out a policy with. State Farm offers one of the cheapest monthly bonuses at $128 for low-mileage drivers, according to an analysis.

If there is public transit in your area, taking a bus a few days a week (or carpooling with others) could qualify you for low mileage discounts. If you don’t live in a public transit area, you might also consider carpooling to work or school to reduce your mileage.

And if you’ve switched to work or study from home since the pandemic began and still haven’t returned to an in-person workplace, contact your carrier to let them know and enjoy all the savings.

4. Bundle your insurance policies

One of the easiest ways to save money on insurance is to bundle your auto and home insurancewhich means that you take out several insurance policies with the same company.

Allstate, Liberty Mutual and GEICO each offer premium discounts for grouping — depending on the policies and coverages you purchase together. You can get discounts on your premium ranging from 5% to 25%, depending on the provider.

5. Shop around for auto insurance rates

Maybe you work from home all the time and need less coverage. Or maybe you’re going back to the office and need more coverage now. Regardless of your situation, it’s always a good idea to shop around to ensure you get the best rates, as other carriers may offer deeper discounts or lower premiums in general.

If you’re not sure where to start, check out CNET’s auto insurance summaries, where you can see our picks for best overall car insurance, cheapest car insurance, the best policies for teens and young drivers and best options for military and veterans.

In addition to getting quotes online, you can contact some of the best insurance companies directly to inquire about potential discounts.

6. Explore discounts for safe driving

If you pride yourself on being a safe traveler, you’re in luck. Carriers offer discounts for safe driving and a modest claims history, and there are a number of discounts you can take advantage of here. Call your carrier to find out how you can sign up for these types of programs. Once successfully enrolled, you should see your premium decrease on your next bill.

State Farm, for example, offers both accident-free discounts, where you’ll get a discount if you’ve been accident-free for at least three consecutive years, and good driving discounts, which lower your premium when you go three years or more without moving violations or responsible accidents.

Telematics insurance programs are also a great way to get discounts for safe drivers, and they will take into account low mileage discounts as well. These programs monitor your mileage and driving behavior through a phone app or car plug-in device. Call your carrier to sign up for the plan, and while discounts vary by carrier and state, you could be looking at savings of up to 30% on your premium. You’ll start at a base rate that will be adjusted based on the telematics report, which will include factors like your average speed and braking habits. For example, State Farm will review your telematics data every six months to determine the safety of your driving, and based on these measurements, it will apply a discount to your policy ranging from 5% to 50%, according to Bankrate.

7. Find a cheaper car

If you’re looking to buy a new or used car, consider comparing insurance costs between different vehicles. Car insurance premiums are calculated based on various factors, and some of these factors are based on the car itself, including the price of the car, repair costs, and general safety record.

“That’s the thing that people forget: you can buy a Honda or a Kia, and it’s cheaper, or you can buy a Mercedes or a Tesla – it’s going to be more expensive,” said Janet Ruiz, a charter property. property and casualty underwriter and director of strategic communications at the Insurance Information Institute.

And the difference in the cost of insuring a Mercedes versus a Honda is stark: the average cost to insure a Mercedes-Benz is around $4,505 per year, compared to an average of $2,151 per year for a Honda. . That means you’ll pay an average of $179 a month for the Honda versus $375 for the Mercedes.

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