Overall inflation might be slowing down somewhat, but drivers everywhere are still feeling the pain of rising car insurance costs. Average annual premiums rose from about $3,017 last year to $3,699 this year — a $682 increase. Drivers with accidents on their records or histories of traffic violations could see even bigger jumps.
But savvy shoppers who put the following three moves into action should be able to find a competitive offer, whether they’re looking for minimum or full coverage car insurance.
1. Shop around
Every car insurance company evaluates risk uniquely. Some might penalize a driver more for accidents, while another charges higher rates to younger drivers. A third might charge motorists in a specific city higher rates than many of its competitors.
The only way to know how much an insurer will charge a specific driver is to get a quote. Most insurers have online quote tools these days, but some companies may make applicants call an agent for help.
It’s best to compare quotes from three to five companies to see which offers the most affordable car insurance for you. Premiums are the biggest factor people look at, for good reason, but there are other important factors too, including:
- Available coverage
- Customer service
- Available discounts
Weigh all of these factors together to determine which company offers the greatest value for your money.
2. Raise the deductible
Going with a higher deductible can reduce car insurance premiums significantly. Raising a car insurance deductible from $200 to $500 can reduce the cost of collision and comprehensive coverage by 15% to 30%, according to the Insurance Information Institute. And going with a $1,000 deductible could slash premium costs by 40% or more.
The tradeoff is higher out-of-pocket costs in the event of a claim. But drivers who are able to save for their deductible in an emergency fund might not be overly concerned about this.
It’s worth exploring a few deductible options to see how they affect premium costs before purchasing a policy. Typically, deductibles vary from around $100 on the low end to $1,000 or $2,000 on the high end.
3. Selectively reduce coverage
Reducing coverage is typically a method of last resort because less coverage could lead to greater out-of-pocket costs in an accident. But there are times it makes sense to take this route.
For example, older cars might be worth less than the cost of collision and comprehensive coverage for that vehicle. It doesn’t make sense to pay $1,000 in the event of a claim, for example, to only get $800 back. In this case, dropping collision and comprehensive coverage would be a smart move, as long as the driver doesn’t have a lease or loan on the car.
Beyond that, drivers in a financial bind might consider dropping optional protections or even reducing their liability coverage. But it’s best to purchase more than the state minimum protection whenever possible. Otherwise, a driver may not have enough protection in a severe accident.
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