Auto insurance rates have spiked, an increased by almost 12% as of April 2024 per the U.S. Bureau of Labor Statistics. What’s behind the spike in auto insurance rates?
There’s been a sharp rise in accident frequency and severity since the pandemic began. More distracted driving. An increase in litigated claims. More expensive medical treatment for accident victims. Increases in the purchase price of vehicles. And the escalating costs of repairs.
Further, more technically advanced vehicles cost more to repair. Especially with all the new technologies and safety features, all come at a higher price.
Consider that the cost of vehicle repairs has escalated 45% since 2019, primarily due to supply chain disruption, parts shortages, and rising labor costs, according to the Insurance Information Institute.
Despite rising insurance rates, insurers continue to experience significant underwriting losses due to accident loss costs and inflation. Add this to the data collection and sales we have covered over the last few episodes, all this leads to higher insurance rates.
Chances are you’ll be charged more to insure your car going forward, be prepared for it. But there are several avenues you can explore to lower your out-of-pocket insurance costs.
- Shop around for the best rates. Getting rate quotes from at least a handful of different carriers and comparing prices carefully. Be sure to compare both the coverage and the price. Also, note that there are great deals offered online, and many insurance companies now provide some discounts for purchasing a policy over the web because you are buying directly from the company. Look at websites like Get Jerry.
- Bundle policies. Purchasing home or renters insurance as well as auto insurance from the same insurer can yield up to a 25% premium discount on both policies.
- Take advantage of benefits from multi-vehicle coverage. Ensuring more than one vehicle in your household on the same policy can trigger up to a 25% premium discount compared to purchasing separate policies for each vehicle.
- Maintain a clean driving record with no claims, which could result in a 10% savings. Most insurers will reduce your rate every time you go three years without getting into an accident. The best way to get the cheapest insurance is to have a clean record for at least five years – at that point, you should see discounts from your provider on renewal.
- Opt to pay your premium in full versus monthly or periodically. This may lower your rate by up to 15%.
- Choose to be billed electronically versus a paper bill, which is a good way to possibly benefit from a 5% to 10% discount.
- Raise your deductible. The higher your chosen deductible, the lower your premium will be. Just be careful not to make your deductible too high. If you have an accident, your deductible cost comes out of your pocket, so set some money aside just in case.
- You may save 10% to 25% if your student driver maintains a “B” grade average or better; the same discount may apply if you have a distant student who attends college at least 100 miles from home without a vehicle.
- Take a defensive driving course, which could save you 10%. Look into driving classes held in your area that offer point reductions – it’s worth the investment.
- Purchase auto insurance through an alumni association. Premiums typically run 5% to 10% below standard policy rates when you choose this route.
- Improve your credit score. Credit history is allowed as a rating factor in most states. Consumers with poor credit typically file more claims. You can improve your credit score by paying your bills on time and in full, not applying for/opening any new credit accounts or closing any existing ones, not maxing out your credit limits, and following other best credit practices.
- Sign up for a usage-based telematics program offered by your carrier. This is where you allow your insurer to track your driving habits via a mobile app or plug-in device. I’m not a fan of tracking, but you can save some money on your insurance policy. This includes tracking the time of day you drive, how far you drive, braking and acceleration patterns, and whether you engage in distracted driving behaviors, however, this move can shave up to 40% off your bill.
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Lauren Fix, The Car Coach is a nationally recognized automotive expert, media guest, journalist, author, keynote speaker and television host. A trusted car expert, Lauren provides an insider’s perspective on a wide range of automotive topics and safety issues for both the auto industry and consumers. Her analysis is honest and straightforward.