If it seems like you’re paying a lot for auto insurance these days, you may be right. According to the Insurance Information Institute (I.I.I.), auto insurance costs have risen, on average, by about 10% over the last two years.
The good news is that the insurance marketplace is highly competitive right now. With smart shopping and a little strategy, you can save money on your car insurance bill.
Why Auto Insurance Costs Have Risen
There are a few reasons why many drivers are paying higher insurance premiums:
- More people are driving. This is largely due to improvements in the job market. It’s good that more people are now employed, but most of these individuals have to drive themselves to work. So, there are more cars on the road and, unfortunately, more accidents. According to the National Safety Council, motor vehicle crash fatalities rose 8% from 2014 to 2015. That was the largest year-over-year increase in 50 years.
- Speed limits are higher. It is generally believed that raising speed limits on major highways has no impact on vehicle crash rates. However, recent data suggests that this may not be true. Since 2012, 12 states have raised their speed limits to 70 or 80 mph. Texas has raised theirs all the way up to 85 mph. And the results of these speed limit bumps don’t appear to be positive. For example, in Ohio, a study has found that accident rates have increased by 19% since the speed limit was changed.
- Drivers are filing more expensive claims. A better economy means that more people are driving expensive cars. If these pricier vehicles are totaled in a crash, insurance companies have to pay out more money. And even if these cars aren’t totaled in the accidents they are involved in, they may be more expensive to fix. Also, medical costs, litigation costs and prices associated with auto repair work continue to rise.
So, first and foremost, you should do everything you can to be a safe driver. In areas of heavy traffic, be mindful of the other cars on the road and try to keep plenty of space between you and the vehicle ahead of you. And while allowing yourself to be distracted while behind the wheel is always dangerous, it is even worse when you’re on a road with a high speed limit. Put the phone away and your focus on driving.
Getting a Better Auto Insurance Rate
Your auto insurance premium is based on several factors. These include your driving record, how many miles you drive on average, where the car is typically parked and where you live. This information is taken into consideration along with what kind of vehicle you drive, your age and gender, your credit score and the type and amount of coverage you’ve chosen.
In order to get the best rate possible, you can also do the following:
Do your research. Shop prices and coverage levels offered by several different companies because these can vary from one provider to the next. In addition to looking for the best prices, you should also look at online reviews to find a company that has a reputation for good customer service.
- Get insurance quotes before buying your next car. Some vehicles are much more expensive to insure than others. Factors such as the price of the car, anticipated repair costs, its safety scores and the likelihood of it being stolen determine how much you will pay to have it insured. So, if you are strongly considering a particular vehicle, check with an insurance professional before committing to the purchase.
- Consider increasing your deductible. The deductible is the amount you have to pay for damages or theft before your insurance kicks in. And while it’s a risky move for some drivers, if you raise your deductible, you can significantly reduce your premium.
- Repair damaged credit. If your credit rating is currently less than perfect, this could mean that you’re paying more for auto insurance. Statistically, drivers with bad credit file more claims than those with good credit, so your credit report is considered when your premium is determined. By improving your credit, you could be offered a better rate for your coverage.
- Ask about discounts. Most insurance companies offer discounts for a variety of things, but you have to ask for them. If you are a college student, a long-time customer, have taken a defensive driving course, have low annual mileage or have installed an antitheft device in your car, you might qualify for a discounted rate. There are other reasons why certain drivers are awarded auto insurance discounts, so ask your provider for a complete list of opportunities to save.
Having auto insurance is absolutely necessary if you own and drive a car, but insurance providers have to compete with each other for your business. This is important to know if you think you’re paying too much for your current policy because you can always take your business elsewhere.