How to Lower Your Auto Insurance Costs Amid Rising Rates
Before we dive into ways to reduce your auto insurance premiums, let’s address a common question: Why is car insurance more expensive than it used to be? Several factors are driving up costs:
1. Increased Driving Leads to More Accidents
When crude oil prices are low, people drive more—and more driving means a higher likelihood of accidents. This increase in claims is one of the biggest contributors to rising auto insurance rates.
2. Advanced Vehicle Technology Raises Repair Costs
Modern vehicles come equipped with high-tech safety features, making repairs more expensive. A simple bumper replacement now often includes fixing built-in backup sensors, rearview cameras, and blind-spot detection systems, significantly increasing repair costs—and, in turn, insurance premiums.
3. Rising Healthcare Costs Impact Insurance Rates
Medical expenses have increased due to healthcare reform, causing insurers to raise rates to cover higher medical claim payouts.
4. Distracted Driving Is on the Rise
With the widespread use of smartphones, texting while driving has become a major risk factor. Shockingly, an average of 11 teens die daily in the U.S. due to texting-related accidents, and over 330,000 crashes per year result in severe injuries caused by distracted driving. This increased risk has led insurance companies to adjust their pricing models accordingly.
How to Lower Your Auto Insurance Bill
Although these factors have contributed to rising auto insurance premiums, there are several strategies you can use to reduce your costs:
1. Increase Your Deductible
Raising your deductible from $200 to $1,000 can significantly lower your monthly premium. Just ensure you have enough savings to cover the higher deductible if you need to file a claim.
2. Avoid Filing Small Claims
Every claim—whether the accident was your fault or not—can increase your insurance rate. Covering minor damages out of pocket can help maintain a lower premium over time.
3. Enroll in Telematics or Usage-Based Insurance (UBI)
Many insurers offer telematics programs, which track your driving habits, mileage, braking patterns, and acceleration through an app or a plug-in device. Safe driving behavior can lead to substantial discounts.
4. Understand Your Insurance Score
Several factors affect your insurance score, which impacts your premium:
- Driving record (accidents, tickets, and claims history)
- Vehicle type (sports cars and luxury models often cost more to insure)
- Location (urban areas typically have higher rates due to increased accident risks)
- Annual mileage (less driving = lower premiums)
- Age, gender, and marital status (younger drivers and single individuals often face higher rates)
5. Practice Defensive Driving & Avoid Distracted Driving
Defensive driving techniques—such as maintaining safe following distances and anticipating other drivers’ mistakes—can help prevent accidents. Additionally, avoiding distractions like texting, eating, or adjusting your radio can protect you and help keep your premiums low.
6. Work With an Independent Insurance Advisor
Not all insurance providers increase rates at the same time. A personal risk management expert or independent insurance advisor can compare multiple policies to ensure you get the most competitive rate with the best coverage.
Need Help With Your Auto Insurance?
If you have questions about auto insurance, personal risk management, or finding the best coverage for your needs, I can help. Contact me at cmorsberger@psafinancial.com for expert guidance.
