This year, car insurance costs for many people in the US went up. Consumers already feeling squeezed by rising prices for gas, groceries, and housing will find this increasingly hard to handle.
Drivers are lucky that there are things they can do to lower the cost of their car insurance. This article talks about why most of us pay more for car insurance and how we can reduce our costs.
Auto Insurance Premiums – Statistics
Most things’ prices are going up in the US. The Bureau of Labor Statistics says that from March 2021 to March 2022, the Consumer Price Index went up by 8.5%. We haven’t seen this much inflation since 1981. Inflation makes it more expensive for insurance companies to run their businesses, so they have to pass some of the costs on to customers.
When things like health care and cars go up, insurance companies pay out more money. They have to pay more to fix damaged vehicles and pay for the medical bills of hurt drivers. In 2021, car prices went through the roof because of problems with the supply chain, especially a lack of computer chips.
USA Today says that the average cost of a new car went up by 12.2 percent last year, while the average price of a used car went up by a shocking 40.5 percent. Healthcare costs also increased because of the COVID-19 pandemic and a lack of workers.
Insurance premiums vary depending on coverage and the driver’s state, age, gender, and driving record. For example, the average premium for a 40-year-old with a clean record in Michigan is $2,858, but in Hawaii, it’s only $824. Car insurance costs a teenager age 18 an average of $5,646 a year. A 60-year-old woman, on the other hand, only has to pay $1,537. Luxury and high-performance cars also cost more to insure.
Even though you can’t change how old you are and might not want to move to a different state, there are a few things you can do to lower your premium. First, be careful. Your rates are likely to go up if you get a ticket for speeding, causing an accident, or getting a DUI. If you get a DUI, your premium will, on average, double. Second, compare prices.
Car insurance companies charge rates that are all over the place. In 2021, a 40-year-old driver with a clean record paid $2,438 on average with All-State and $1,297 with Geico.
But don’t make your choice based on what the average premium is. Insurance rates are figured out in different ways by each company. Even though Geico had a reputation for being cheaper, I was pleased to find that I could save $180 a year by switching to State Farm.
Don’t forget that insurance companies have to compete for your money. If you’ve been a good driver for a while, your insurance company might give you a lower rate if you tell them you’re thinking about switching.
Choose an insurance plan that fits your needs. There are six kinds of coverage you could add to your policy. If you cause an accident, liability coverage helps pay for the damage to other drivers’ cars and the cost of getting them back on the road. If an uninsured or underinsured driver hits you, uninsured motorist coverage will pay for your medical bills and car repairs.
Theft, vandalism, fire, and hail damage are all covered by comprehensive insurance. Collision coverage helps pay for damage to your car after an accident, and medical payments coverage helps pay for your medical bills. Lastly, personal injury protection, which is only available in some states, helps pay for childcare and lost income.
Insurance Premiums to Go – Liability
Drivers are required to have liability insurance in all states except New Hampshire. Some states also need coverage for drivers who don’t have insurance, medical payments, or personal injury. Collision and comprehensive coverages are usually optional unless you lease your car since the dealer still owns it and wants to make sure it is protected.
Think about that when you decide if you want to buy or lease your next car. Find out how much insurance your state requires you to have at a minimum, and think carefully about whether you need more. For example, you might not need to buy health insurance if you already have good health insurance. If you have enough money to fix or replace your car in an emergency, you might not need collision or comprehensive insurance.
After you pick an insurance policy, you can do many things to lower your premiums. Most states will let you get rid of points on your driving record from tickets for speeding or other violations if you take a defensive driving course. You might also be able to choose an insurance plan with a higher deductible and a lower premium. If you choose this option, make sure you have enough savings to cover the deductible in an emergency.
Ask your insurance agent if there are any discounts you can get. Insurance companies often give discounts to groups like veterans of the military, good students, federal employees, and others. People who drive less than 10,000 miles a year on average can also get a discount.
More people work from home, so their cars don’t get as many miles. If you install an app on your phone that tracks how you drive, some insurance companies will lower your premium as long as you don’t speed. You might also get a discount from your insurance company if you put in anti-theft devices.
You might also save money if you pay your premium all at once instead of every month. Also, if your family owns more than one car, you might get a better rate if you get your home and car insurance from the same company and cover more than one car with the same company.
Car insurance is getting more expensive, but there are many ways to lower your premiums. Avoid driving violations, shop around, only get the coverages you need, think about high-deductible insurance, bundle your policies, and ask for discounts. Spend the time to find the best car insurance policy for you, and you’ll save money. With inflation at a record high, we could benefit from putting money away.