Auto insurance is up by more than 15% this year in some states. Here’s how to keep your premium down

key points

  • According to a recent study, the average annual cost of auto insurance premiums in the US is $2,014, but in a few states, it exceeds $3,100.
  • Although auto insurance typically represents around 3% of a person’s income, there are ways to lower the cost even further.
  • To reduce your auto insurance premiums, experts offer the following tips:

auto insurance

How much?

The cost of auto insurance has gone up in 2023, just like many other items in your household budget. The increase varies based on several factors, including your location. According to a recent study by Bankrate, the national average for full coverage, which typically includes liability, collision, and comprehensive coverage, is $2,014 this year, representing a 2.6% increase from 2022.

In certain states, the increase in auto insurance rates is even higher than the national average. For instance, in Illinois, rates have gone up by 16.7% (a $258 increase), resulting in a yearly premium of $1,806. Similarly, Alaska has seen an increase of 15.4% (a $260 increase) with a yearly premium of $1,946, while in Florida rates have gone up by 15.2% (a $421 increase) to $3,183 annually.

  • Florida is one of two states where the average Auto insurance premium has exceeded $3,000; the other state is New York with an average premium of $3,139.
  • This year, the average premium has decreased in two states: New Jersey by 7.2% to $1,754, and Massachusetts by 2.6% to $1,262.
  • It’s important to note that the amount you pay for auto insurance depends on various factors such as your car’s make and model, your coverage choices, your age, and your driving record.

auto insurance

According to a study by Bankrate, the average person spends around 3% of their income on auto insurance. However, there are ways to lower this cost even further.

Below are some tips from experts on how to do so:

how to keep your premium down 

  • If you want to lower your auto insurance premium. In most states, insurance companies can use your credit information to determine the cost of your policy.
  • Industry research indicates that people with good credit tend to file fewer claims, making them less risky to insure. According to a study by Bankrate, the average annual premium for someone with very good or excellent credit (generally above 740) is $1,764, while someone with a poor credit score (below 580) can expect to pay an average yearly premium of $3,479, resulting in an additional cost of $1,715.
  • It’s important to note that improving your credit score can take time, so you may not see an immediate reduction in your auto insurance premium.
  • Ultimately, the best way to keep your auto insurance premium down is to be a safe and responsible driver.
  • This means following traffic laws, avoiding distractions while driving, and staying alert and focused on the road.
  • By taking these steps and being proactive about finding discounts and comparing quotes, you can save money on your auto insurance and still get the coverage you need.

According to recent data

the rate of inflation for auto insurance costs in the United States has increased significantly in the past year.

In fact, the year-over-year percent change in auto insurance costs more than doubled from 2021 to 2022, indicating a significant upward trend in insurance prices.

This increase in costs is likely due to a number of factors, including rising medical costs, increased frequency of accidents, and the cost of repairing and replacing modern vehicles with advanced technology.

While it’s important to have auto insurance for protection and peace of mind, it’s important to shop around and compare prices to find the best deal for your needs and budget.

  • auto insurance percentageIf your credit score isn’t where you want it to be, it’s worth taking steps to improve it. Not only can a higher credit score result in a lower auto insurance premium, but it can also lead to better terms on loans and credit cards.
  • By improving your credit score, you could potentially save thousands of dollars in interest payments over the life of a loan or credit card. So, if you have room for improvement in your credit score, consider taking action to boost it.
  • This could include paying bills on time, reducing your credit utilization ratio, and disputing any errors on your credit report. The effort you put in to improving your credit score can pay off in the long run.

When shopping for auto insurance, it’s important to ask about all available discounts.

  • Many insurers offer discounts for a range of things, such as having an anti-theft device in your car or insuring multiple vehicles on the same policy.
  • You may also be able to save money by “bundling” your auto insurance with other types of insurance, like homeowners or renters insurance.
  • According to Insurify, bundling can save you an average of 8% per year. Additionally, there may be specific discounts available to you based on your profession or demographic. For example, members of the military may be eligible for a discount of 2.2%.
  • Older Americans who take a driver safety training course may be able to save as much as 15.2% on their auto insurance premium. By asking about all available discounts, you can maximize your savings and get the most affordable auto insurance policy for your needs.
  • If you drive fewer miles than the average driver, you may be eligible for a discount on your auto insurance premium. Some insurers offer low mileage discounts for drivers who travel below a certain number of miles per year.
  • This is particularly relevant for those who work from home, as they may not be commuting to work as much as they used to. By informing your insurance company of your lower mileage, you could potentially reduce your premium and save money on your auto insurance.
  • As Brian Moody, executive editor of Kelley Blue Book, suggests, it’s worth letting your insurance company know about any changes in your driving habits or circumstances to see if you qualify for any discounts.

To potentially lower your auto insurance premium, you may want to consider increasing your deductible.

  • Your deductible is the amount you pay out of pocket when you file a claim, and raising it can lead to lower premiums.
  • According to Mark Friedlander, spokesperson for the Insurance Information Institute, increasing your deductible from $250 to $500 could reduce your coverage cost by 15% to 30%.
  • However, it’s important to have enough money set aside to pay the higher out-of-pocket cost in case you do need to file a claim.

In addition, it’s a good idea to shop around

  • shop around for auto insurance on a regular basis, ideally once a year. While price shouldn’t be the only consideration when choosing a policy, comparing costs and coverage options from multiple insurers can help you find the most affordable policy for your needs.
  • Be sure to look for a company with solid financials and good customer service, as well as competitive pricing.

According to Mark Friedlander, spokesperson for the Insurance Information Institute, the auto insurance market is highly competitive, and companies are constantly vying for new customers to increase their market share. As a result, prices can vary significantly between different insurers, and it can be worth your while to shop around to find the best deal. By comparing quotes from multiple insurers, you may be able to save money on your auto insurance premium while still getting the coverage you need.”

Usage-based insurance policies

  • Usage-based insurance policies are an option that many auto insurance companies offer, allowing drivers to potentially save money on their premiums.
  • These policies involve the use of a mobile app or plug-in device that monitors various aspects of the driver’s behavior, such as speed, acceleration, and braking patterns. By demonstrating safe driving habits, drivers may be able to qualify for discounts on their insurance rates.

Insurance coverage on older cars

  • In some cases, it may be possible to reduce your insurance coverage on older cars.
  • While most states require drivers to carry a minimum amount of auto insurance, it may be worth considering whether you really need comprehensive or collision coverage if your car is older and not worth much.
  • Collision coverage typically covers accidents with other cars or objects, while comprehensive coverage covers non-collision events such as theft or damage from falling objects.
  • As Mark Friedlander notes, “If your car is worth less than 10 times the premium, purchasing these optional coverage may not be cost-effective.”

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