Car insurance costs are tough right now, with prices up more than 22% since this time last year. There's a lot you can do to lower your bill, but some of the best advice out there still requires you to pay a certain amount upfront.
For example, paying an annual premium all at once eliminates the additional monthly fees some insurance companies pay their customers. But if you're on a tight budget and insurance premiums are rising, that may not be an option.
Stephen Crewdson, senior director of insurance intelligence at J.D. Power, said insurers have been playing catch-up since the pandemic. Interest rate hikes were delayed when car prices were skyrocketing, and are now being raised even though car prices are falling. A recent J.D. Power survey found that nearly 14% of consumers reported purchasing new insurance last month, the highest monthly rate since the survey began in 2020.
“Over time, we would like to see these premium increases taper off,” Crewdson said.
In the meantime, there are still ways to lower your bill this year. Let's start here.
Shop widely at discounted prices
Lee Baker, an Atlanta-based financial planner and founder of Apex Financial, said auto insurance customers “will have to be more proactive” in finding savings this year. Ta. “We may need to cast a wider net.”
This means starting with your current carrier and checking all the discounts they offer. From military discounts to bundle opportunities, policyholders often leave money on the table by simply not answering the phone. J.D. Power surveyed consumers and found that many were not fully aware of the savings available to them, Crewdson said.
Benefits are full of little pitfalls that people ignore, at least for large employers.
“Ask your insurance company person. If you have an agent, ask your agent,” he said. “If you don't have an agent, call your insurance company, visit their website, look at their apps and find out what discounts they offer.”
Experts also suggest considering your orbital organization. Many professional and trade associations, alumni associations, and even fraternities and sororities often negotiate discounts with insurance companies.
However, the best place to start looking for perks may be your employer.
“There are a lot of little pitfalls in benefits that people ignore, at least for the big employers,” says Preston Cherry, founder of Concurrent Financial Planning in Green Bay, Wisconsin.
Employers typically only work with a single insurance company, and while the discounts likely won't be huge, experts say they can help you start chipping away at your monthly costs. It is said that there is.
Choose a defensive driving course
Financial experts say this is one of the simplest strategies. Many insurance companies offer significant discounts when policyholders complete defensive driving courses (most of which are online) offered by organizations such as the National Safety Council and Defensive Driving by Her IMPROV.
“I always recommend driving defensively every year,” Cherry said. “The discount is worth it.”
Airlines in at least 34 states and Washington, D.C., typically offer discounts of up to 10% for course completion, according to I Drive Safely, the supervisor of the defensive driving course.
Many carriers also offer their own programs for good driving behavior, while some require consent to monitoring measures. For example, Progressive's Snapshot provides policyholders with a mobile app and a plug-in device for their vehicle that tracks things like braking patterns and time behind the wheel, among other things, and uses that information to determine discount eligibility. To do. .
“One word of caution: Doing risky things around insurance renewal time could result in higher premiums,'' says Jude Boudreau, a certified financial planner and partner at Planning Center in New Orleans. But, he says, “If you're trying to drive fairly conservatively around town, you could potentially save yourself some extra costs by using these.”
Boudreau also offers pay-per-mile plans for people who work remotely or don't drive much. They also rely on devices that track mileage and behavior, which can come with privacy trade-offs but could be a boon for some. For example, Nationwide's SmartMiles program offers a low base rate, plus variable rates based on distance driven. Also, if you regularly drive long distances, only the first 250 miles per day will be counted.
Check out family-friendly details
For consumers who drive or have children who are about to start driving, there are many things to consider that can affect your bill.
Adding a teen driver to an existing policy or bundle is generally cheaper than purchasing new insurance, but repeated violations (tickets, fender benders) can increase household expenses. Therefore, weigh the trade-offs carefully.
“Sometimes putting them in a bundled package works, sometimes it doesn't,” Cherry said. “That's always a difficult question.”
If you have young drivers in your family, he advises starting with an inexpensive car, or one that is mostly paid for. Car repairs are expensive these days, so think about how much cash you're willing to risk for your child.
“They're actually trying to save money by putting employees in vehicles that don't need to be insured, to offset the risk level of their inexperience in insuring them,” Cherry said.
Baker said academic performance can also help reduce insurance costs. Many airlines offer “student in good standing” discounts to high school and college students, usually under the age of 25. Maintaining a B average or performing well on the SAT or ACT can result in substantial savings. For example, State Farm offers up to 30% off for high scores.
“There's no guarantee that a high-achieving student won't do something crazy behind the wheel,'' Professor Baker acknowledged, but insurance companies, for better or worse, say “if you're doing well in school, you're not guaranteed to get good grades.'' I'm betting that we're in control.” Probably less risky. ”
Eliminate waste from policy
Experts say your current insurance plan may not offer you savings.
Check your policies for redundancies or areas of overlap, Cherry said. For example, if you pay for AAA roadside assistance, you may be able to omit similar coverage from your auto insurance policy. He added that some new cars already have some form of roadside assistance.
A common technique to lower your monthly premiums is to choose a policy with a high deductible. Marcus Miller, a Jacksonville, Fla.-based financial planner with Mainstay Capital, urges caution here. He said some customers “suddenly start reducing” items on their insurance policies and end up being underinsured.
Instead, it's wise to first build up an emergency fund to cover high deductibles before making the switch, he advised.
Customers “can reasonably increase their deductible as long as they have the cash available,” Miller said. “That way, your insurance premiums will go down.”
