Auto insurance rates rise in 2022. Across the United States, major auto insurers are receiving approval for substantial rate increases – with Geico, Progressive and Allstate leading the charge. This trend began late last year, with major insurers raising their premiums by 3% to 12%, according to S&P Global Market Intelligence.
Skyrocketingis the main reason for these rate hikes, for goods and services throughout the United States. Along with rising car insurance rates, gasoline prices have also which makes driving more expensive.
Despite these rising costs, there are plenty of ways to keep more money in your pocket. Here is an overview of ways to mitigate rising insurance costs.
1. Increase your deductible
Increase your– your out-of-pocket before your insurance picks up the bill for a claim – may reduce your premium. This decision can be useful if you don’t drive much at the moment, don’t have a history of traffic accidents, or need to lower your monthly costs to stay insured. This could cost you more later if you are in an accident, as you will have to shell out more money before your carrier covers the damage. You need to make sure you have enough money to pay the highest deductible if you end up in an accident.
2. Consider lower coverage for older vehicles
Older cars might not deserve the same insurance attention as your shiny new Tesla or all the bells and whistles of a Mercedes-style policy. If your car is on its last lap, you may want to remove collision coverage or comprehensive coverage for that vehicle, both of which cover damage to your car.
The decision to drop either coverage depends on the value of your car and the relative cost of insuring it. Experts suggest that if your car is worth less than 10 times the annual premium, purchasing coverage for that vehicle may not be a cost-effective option. One of the fastest ways to check the value is to scroll through Kelley Blue Book online. For example, let’s say your annual premium is $1,600; 10 times that would be $16,000. If your car is worth less than $16,000, it may be a good idea to reduce the insurance coverage for that car.
3. Reduce your mileage by using public transport or carpooling
Carriers may offer discounts if you have low mileage, which means you drive less than the average number of miles per year compared to other Americans. Generally, you’d be considered a low-mileage driver if you drive less than 7,500 miles per year, but that’s not a clear rule. What really determines whether you are a low mileage driver depends on the state you live in, your age, and your gender.
How much could you save? The national average annual premium for Americans who travel 5,000 miles or less is about $1,612, according to Bankrate. State Farm also offers one of the cheapest monthly bonuses at $128 for low-mileage drivers, according to an analysis.
If there’s public transit in your area, taking a bus a few days a week (or carpooling with others) could qualify you for low mileage discounts. If you don’t live in a public transit area, you might also consider carpooling to work or school to reduce your mileage.
And if you’ve switched to working or studying from home since the pandemic began and still haven’t returned to an in-person workplace, contact your carrier to let them know and enjoy all the savings.
4. Bundle your insurance
One of the easiest ways to save money on insurance is towhich means that you take out several insurance policies with the same company.
, and each offer premium — depending on the policies and coverages you purchase together. You can get discounts on your premium ranging from 5% to 25%, depending on the provider.
5. Shop around for rates
Maybe you work from home all the time and need less coverage. Or maybe you’re going back to the office and need more coverage now. Regardless of your situation, it’s always a good idea to shop around to ensure you’re getting the best rates, as other carriers may offer deeper discounts or lower premiums in general.
If you’re not sure where to start, check out CNET’s auto insurance summaries, where you can see our picks for, , and .
In addition to getting quotes online, you can contact some of the best insurance companies directly to inquire about potential discounts.
6. Safe travel discounts
If you pride yourself on being a safe traveler, you’re in luck. Carriers offer discounts for safe driving and a modest claims history, and there are a number of discounts you can take advantage of here. Call your carrier to find out how you can sign up for these types of programs. Once successfully enrolled, you should see your premium decrease on your next bill.
State Farm, for example, offers both accident-free discounts, where you’ll get a discount if you’ve been accident-free for at least three consecutive years, and good driving discounts, which lowers your premium when you go three years or more without moving violations or responsible accidents.
Telematics insurance programs are also a great way to get discounts for safe drivers, and they will take into account low mileage discounts as well. These programs monitor your mileage and driving behavior through a phone app or car plug-in device. Call your carrier to sign up for the plan, and while discounts vary by carrier and state, you could be looking at savings of up to 30% on your premium. You’ll start at a base rate that will be adjusted based on the telematics report, which will include factors like your average speed and braking habits. For example, State Farm will review your telematics data every six months to determine the safety of your driving and, based on these measurements, apply a discount to your policy ranging from 5% to 50%, according to Bankrate.
7. Buy a cheaper car
If you’re looking to buy a new or used car, consider comparing insurance costs between different vehicles. Car insurance premiums are calculated based on a variety of factors, and some of these factors are based on the car itself, including the price of the car, repair costs, and general safety record.
“That’s the thing that people forget: you can buy a Honda or a Kia, and it’s cheaper, or you can buy a Mercedes or a Tesla – it’s going to be more expensive,” said Janet Ruiz, a charter property. property and casualty underwriter and director of strategic communications at the Insurance Information Institute.
And the difference in the cost of insurance for a Mercedes versus a Honda is stark: the average cost to insure a 2019 Mercedes-Benz is around $4,201 per year, compared to an average of $2,151 per year for a Honda. That means you’ll pay an average of $179 a month for the Honda versus $350 for the Mercedes.
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