In the last year, car insurance rates across the country have risen exponentially. In 2024, the average annual cost of car insurance is $1,824 with some drivers paying almost 85% more depending on their personal details. So, what steps can you take to ensure you are not overpaying for car insurance even as rates continue to skyrocket?
Before we answer the how, we need to figure out the why.
By: Katie Dee
Why are car insurance rates rising?
There are several factors that contribute to the rapidly rising cost of car insurance. First of all, inflation has impacted everything in the economy from grocery bills to the rental economy. The insurance industry tends to lag behind the rate of inflation because providers don’t know how much they’ll need to increase rates to make up for inflated costs until after they need to pay out a claim. Because of this, we are starting to really feel the impact in the last year.
There is also an increased risk of car accidents with drivers returning to the road after the COVID-19 pandemic. During the health crisis, roads emptied out and insurance prices dropped, but now we are seeing the other side of that as premiums rise to make up for added risk.
Finally, tying back into the issue of inflation, the price to repair and replace car parts has gone up exponentially in recent years due to inflated costs from manufacturers. This has caused insurance rates to rise because if you need to file a claim for a damaged or broken part, the cost can be covered by the insurance company.
Even with all these factors though, you still have opportunities to save.
1: Shop around for insurance
The #1 way to be sure you’re not overpaying for car insurance is to compare multiple carriers against each other. Every car insurance company will offer you different rates depending on several different factors, and getting quotes from multiple providers offers you the peace of mind that you are getting the best price for the right coverage.
Car insurance comparison sites like Rate Retriever can help you see rates from multiple companies at the same time so that you don’t need to do the work of going to each individual provider’s website and inputting your information over and over again.
2: Improve your credit score
Credit score is probably not the first thing that comes to mind when you’re thinking about ways to lower your car insurance rates, but improving your score could drastically reduce your premium. Research has shown a connection between credit score and the likelihood of filing a car insurance claim. Because of this, insurance companies in most states will look at your score when they’re determining your rate, and if it is poor, your rate may be higher.
There are a few ways that you can work to improve your score. The first (and most obvious) is to continuously monitor it and be sure you are making payments on time. Becoming an authorized user on another person’s credit card may also help to raise your credit score, along with opening accounts that report to major credit bureaus, cutting down on any debt, and limiting how often you apply for new accounts.
3: Increase your deductible
By raising your deductible, you are essentially taking on more financial responsibility if you ever need to file a claim. So, if you had a $500 deductible and raised it to $1,000, that means you would need to pay $1,000 towards your damage repairs before your insurance kicked in. This lowers your monthly premium because you have taken on some of the risk that would normally fall on the carrier. It’s important to keep this risk in mind before you make this change – it’s not the best choice for every driver.
Consider how comfortable you are with paying your higher deductible out of pocket for any claims before you raise it because while it will save you money in the short term, you may be taking on a heavy financial burden in the long term.
4: Go with a cheaper vehicle
This tip is for drivers who are in the market for a new car and also trying to keep their car insurance premium low. When shopping for your vehicle, do some research and see what the average amount is for the specific make and model you’re looking at. Predictably, vehicles with less technological advancements may cost less to insure because there is less risk that this tech will need to be repaired or replaced.
Furthermore, cars with more advanced safety features may be cheaper to insure because these features reduce the chances that you will need to file a claim. Typically, older cars are less expensive to insure than newer cars, gas vehicles are less expensive to insure than electric vehicles, and SUVs and trucks are less expensive to insure than sedans and luxury vehicles.
5: Maintain good driving habits
This last one may sound obvious, but being a safe driver really is an effective way to keep your insurance rates low. Your driving habits are one of the primary factors insurance companies will look at to determine how much risk you introduce. If you are a consistently safe driver with little to no accidents or incidents on your record, the provider will undoubtedly feel more comfortable assigning you a lower rate.
While several aspects of your insurance premium feel out of your control (such as where you live and your age) this is one factor that is almost completely within your control.
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