…and 5 ways to help lower it again
It seems like the cost of just about everything is on the rise these days. Groceries, gas, and all types of goods are becoming more expensive. And if you’re one of the more than 62.5 million car insurance policyholders in the US, you may have noticed even your insurance bill has increased too. In fact, car insurance rates have been increasing this year by an average of 4.9%.
Reasons for increased car insurance rates are both in and out of your control. However, the good news is that regardless of why your rate has gone up, there are still things you can do to save on your car insurance.
Why your car insurance might cost more
Most people know they can expect rate increases when they cause an accident, but there are actually a lot of other factors that go into the price you pay for car insurance coverage. Here are just a handful.
Poor driving record
Speeding tickets, accidents (whether your fault or not), traffic violations, and other reckless driving behaviors cause premiums to go up because the likelihood these actions cause damages that the insurance companies must pay for are high. In order to make up for any losses they have incurred or may incur, insurers increase the price you pay as a result of your risky behavior. As such, the average rate increase is 21% after a speeding ticket, 41% after an accident 41%, and 74% after a DUI.
If you do find yourself facing consequences from a poor driving record, there are things you can do. Look for carriers that are more forgiving in such scenarios; some offer programs like “accident forgiveness” to help keep rates low.
But as the old saying goes, it’s better to be safe than sorry, especially when it comes to driving. Good driving habits not only will protect you, your loved ones, and others from harm, but will also save you money in the long run.
The type of car you drive
Newer cars boast the latest and greatest technology and often have advanced safety features to keep you safe on the road, which actually can help reduce your insurance rate. However, the more technology added to newer cars, the more expensive they are to fix and replace. Plus, newer cars are more attractive to thieves that want to break into or steal a car.
These added risks result in higher premiums for most newer model cars, so if you’re looking to buy a car, keep in mind any implications your chosen vehicle may have on the insurance rates you’ll have to pay.
Adding a driver to your policy
Adding drivers to your policy can increase your rate for the pure reason that insuring more people means that the insurance company is opening themselves up to more risk. Plus, if an added driver has more risk factors than you (maybe they drive to and from work and you don’t), it will cause an increase in premium. Afterall, the more they drive, the more opportunities they have to get in an accident.
Age also factors into insurance rates. If you’re looking to add a new teenage (read: riskier) driver to your policy, expect to pay a whopping 173% more than the average driver’s premium. Still, adding a young driver to your policy is often more affordable than securing a separate policy for them.
Lack of coverage
If you haven’t been insured for some time, you’re often going to have to pay more for coverage. Insurers consider a “lapse in coverage” – when you neglect to pay your premiums; your insurer cancels your policy; or you cancel an existing policy before a new policy goes into effect – very risky. Lapse in coverage can lead to anywhere from an 8% increase in premiums (for a lapse less than 30 days) or as high as 35% for longer periods of time.
There are exceptions to this, like serving overseas, so make sure you cover any such situations with your insurance company or agent. Regardless, it’s important to remain cognizant of your coverage and keep it up to date to ensure you don’t face any additional penalties.
Rising costs
While the other four reasons for rate increases above are usually within your control, unfortunately, there are some things that can affect your rates that have nothing to do with you, your car, or how you drive.
Remember how I mentioned the cost of just about everything has gone up recently? Auto repair costs are no exception, and have increased steadily due to supply chain issues and labor shortages. Meaning when claims do inevitably occur, insurers are now paying more to settle them. In order to account for higher costs of claims, insurance companies typically will increase their rates across all their customers to make up for losses they experience themselves.
How to save on car insurance
While car insurance rate increases may seem daunting, there are still ways you can save on car insurance; you just have to be proactive.
Compare rates
It may seem obvious that one of the first things you should do when you experience a rate increase is to shop around to see if you can get a better rate somewhere else. However, with the multitude of insurance companies out there, it’s not always easy to research, contact, and communicate with each one individually.
That’s why shopping through an insurance marketplace like MyLifeProtected is one of the easiest ways to make sure you’re getting the best price on car insurance. Just provide some basic information to get a quote online, and our agents will search our extensive list of national and regional carriers to help make sure you’re getting the best value for the coverage you want and need. This will not only save you money, but also time and effort.
Many insurance companies may even allow you to purchase a car insurance policy from them online, without needing to speak with an agent. But it’s best to only buy online if you fully understand how coverages work to ensure you’re getting the exact type of car insurance policy you need. If you don’t have the option to buy online, or if you prefer to work with an expert, MyLifeProtected agents can help review your quotes and any available discounts specific to you.
Regardless of how you choose to buy, you’ll be able to see all at once quotes from any of the insurers we work with that have coverage available for you, without the hassle of going to each one individually.
Bundle up
Insurance companies will often reward customers with discounts for buying two or more insurance policies from them, what’s known as “bundling.” Most often, people will bundle their home and auto insurance policies.
Even if you’ve experienced a rate increase on your car insurance, adding home insurance to your policy can help offset the increase via a bundled discount, usually 5% to 15% or more in savings, which could save you more than $500 per year.
Try telematics
Telematics, usually coupled with the term “usage-based insurance”, are implemented in insurance programs that leverage technology such as mobile apps, plugins, and other physical beacons to collect data about how, where, and when you drive. Insurers then use this data to calculate your risk level and produce personalized car insurance rates based on your driving behavior. For example, a driver who drives long distances at night while speeding will most likely be charged a higher car insurance rate due to their risky behavior compared to a driver who most often drives short distances during the day and at slower speeds.
By sharing your data with your insurance company over a few months (most programs last for a 90-day period), it’s possible to save up to 40% for being a safe driver. After that, any discounts are locked in for the life of your policy.
Discover other discounts
Beyond what’s already been mentioned, there are a variety of other discounts many insurers offer. For example, your insurance company may offer a discount for simply going paperless so that you receive policy documents and billing statements via email instead of snail mail. If you’re able to, signing up for autopay can also result in a discount.
And remember how expensive it is to add a teenage driver to your policy? Some companies offer “good student” discounts for high school and college students who earn good grades. C’s may get degrees, but B’s get better policies!
Speaking of school, many alumni or other membership groups offer savings for their members not only on insurance, but on other products and services too.
Work with an agent
As with any financial decision, it’s always a good idea to speak with an expert, especially when you’re unsure of what’s best for you. Sometimes policies can be confusing, or maybe you aren’t sure of how much coverage you actually need.
Consulting a knowledgeable and licensed insurance agent, especially if they work with multiple insurance companies, is important because they have an inside look into the market and know the differentiators between companies and coverages. By working with someone who has access to multiple rates and can help you compare coverage options, you’ll have the peace of mind knowing you’re getting that meets your needs today and into the future.
Cut costs, not your coverage
As a general rule, whether or not you’ve experienced a rate increase, it’s always a good idea to review your car insurance policy every 12 months or so to make sure you’re getting the best rate and coverage, especially if you have a major life event like getting married or moving. Plus, insurers’ rates and products change over time, so prices or coverage options you might have seen in the past may have improved since you last checked.
But be cautious not to choose coverage based on price alone. Sometimes it’s worth the extra costs to make sure you’re getting the appropriate and most comprehensive coverage for your needs, helping you avoid out-of-pocket costs, and ultimately saving you money if you do have to make a claim.
If you have any questions about your current car insurance, or are looking for new coverage, reach out to one of our helpful and knowledgeable agents who can make sure you’re getting the best car insurance rate for your needs. Contact us today!
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