Having a high auto insurance rate can be a financial burden on your monthly budget. But there are ways you can lower your premiums and still get an awesome coverage.
Legally, many states in the country don’t allow drivers to drive a yard without having car insurance. Having auto insurance is necessary because it not only protects your vehicle but also to you in case of accidents.
What does auto insurance cover?
Typically, a full coverage auto insurance covers:
- Personal damage to your car in case of theft, accident, vandalism
- Medical expenses as a result of injuries in the accident
- Liability expenses if you have caused damage to someone else’s vehicle or property.
- Collision in case of a road accident
Auto insurance is necessary, but that doesn’t mean it is affordable. Sometimes your auto insurance rate can be very high, and that depends on several factors. Let’s look into those in detail.
Table of Contents
Why is my Auto Insurance Premium so High?
The cost of auto insurance is given to you when you make a claim, and the primary condition is that you paid premiums to keep the policy in force. Sometimes, premiums that you pay are very high, and there are some reasons. Let’s look at each one by one.
- Age factor: Young drivers pay more, and there is no escaping it. If you’re under the age of 25, you will have high insurance premiums because the insurance company finds it risky to be investing in you. Drivers with more experience pay less.
- Driving record: One major thing that dramatically affects the cost of insurance is your driving record. People with a rough record pay more. If you have road violations, DUI, or any other misdemeanor acts, you’re considered a high-risk driver and will have to pay more.
- Varies by State: If you’re in Michigan, you will pay the highest amount of auto insurance, instead if you’re living in North Carolina. Geography matters when it comes to auto insurance rates.
In 2020, these States have been rated as most expensive for auto insurance:
- Michigan ($2,693)
- Louisiana ($2,339)
- Rhode Island ($2,110)
- Florida ($2,059)
- Nevada ($1,915)
In 2020, these States have been rated as the least expensive ones:
- Maine ($896)
- Virginia ($918)
- North Carolina ($947)
- Iowa ($988)
- Idaho ($1,018)
- Previous insurance record: If you’ve already caused an accident and used up an insurance claim once, chances are your premiums will be very high. Moreover, if you also have had a history of having an insurance lapse due to failure in paying premiums on time, you will get an expensive insurance package.
- Coverage limit: Having full coverage for auto insurance seems desirable- the insurance company paying for all loss and damage of the vehicle, including medical expenses. But full coverage insurance will have higher premiums, and a basic coverage plan will have lower premiums.
- Lower deductible: A deductible is when you have to pay yourself before the insurance company chips in. If your deductible is $3000 and the car’s overall expense is $5000, you will pay the $3000 first, and the insurance company will then cover the remaining $2000. So if you have a lower deductible, you will pay a high rate of premiums and vice versa.
If any of the above situations apply to you, your insurance rate will be very high. But you don’t need to fret over it. There are ways you can adopt to lower your premiums. Let’s see how.
How to Lower Car Insurance Premiums?
Here are some ways you can lower your premiums, and these are pretty doable too.
- Type of car: It depends on the type of car you buy, which plays a role in deciding the premiums rate. If you buy an ‘insurance friendly’ car, you will be charged a lower rate- the SUV or a hybrid car probably has low premiums.
- Drive carefully: If you’ve previously had a couple of violations, but you’ve proven to be a careful driver over the years, it will positively reflect your record. It is never too late to start maintaining a clean record; drive carefully, don’t violate traffic rules, and make sure you’re never under the influence.
- Raise your deductible: If you know you’re a careful driver and don’t have a rough history, you can quickly raise your deductible if you feel it is rare for you to get into an accident. A higher rate of deductible will inevitably result in lower premiums.
- Lower your mileage: If you have a lot of daily mileage for work or personal driving, you will be charged a higher rate. Instead, what you can do is use sources of mass transit for work or a daily commute. If the mileage on your car is less, you will pay fewer premiums, and the best way to do that is to use public transport as much as you can.
- Take a defensive driving course: If you complete this course, an insurance company may give you a discount on premiums, because it proves that you’ve gone through proper training before driving on the road.
- Shop around: Many insurance companies have lots of discounts and different premium packages for different people. All you have to do is shop around and look for cheaper insurance options and ask your company if you are eligible for any discounted premium packages. Ask questions. And when you find the cheapest option with an insurance package that suits your needs, pick that one.
- Primary coverage: Even though a full-coverage plan seems appealing, everybody doesn’t need that much. Unless you’re a race driver who wants collision and comprehensive and all other benefits, a regular driver doesn’t need full coverage. A basic plan with personal and medical expenses is enough to cover injuries and repair to the damaged car. A basic coverage plan will have lower premiums. Just see what kind of plan you need and go for it accordingly.
- Ask questions: The best way of getting an excellent insurance plan is by asking questions from your insurance company. You can also use this opportunity to work up your connections; for instance, if you’re in the military, Geico Insurance Company offers a 15% military discount. It would help if you asked your agent what other types of discounts or promotions you may be eligible for, and maybe you get an amazing one.
How to Lower Car Insurance After Accident
If you’ve recently gotten yourself in an accident, you may be in for trouble. Insurance companies charge people higher rates if they have recently been in an accident. But there are still a couple of strategies you can use to lower your insurance premium even after you’ve been in an accident.
Experts advise that the first thing you should do is contact your insurance company and inform them about the accident, no matter how small or minimal. Many people don’t inform their insurance companies in case of accidents, so avoid paying higher premiums. Still, if your company finds out later that you hid important information, they could refuse to honor the policy altogether. To avoid having this issue, make sure you take the company into confidence as soon as even the slightest mishap happens.
By raising your deductible after you’ve been in an accident can help you lower your premiums. Many insurance companies give you the option of raising your deductible mid-policy as well.
An accident forgiveness clause in your insurance policy is a feature where companies tend to ignore the first accident and not raise your premiums. Many companies have understood that accidents are a part of life, and they give drivers an incentive by ignoring their first accident. If the type of policy allows you to have an accident forgiveness clause, you could use it to keep minimum premiums.
People often wonder and ask themselves, ‘why is my car insurance going up?’
Well, there are many reasons why that would happen, as discussed in the article above. You’ve just paid for a car, the last thing you want is paying a high rate of premiums each month- trust me, it could shake up your monthly budget. And if you’ve recently been in an accident, your premiums could soar high.
But that isn’t the end of the world; there are effective ways to give people a lower rate of insurance. You can use any of these strategies discussed above to bring down the cost of auto insurance.