Between rising gas prices and auto repairs, it’s an expensive time to be a driver. And auto insurance is no exception. But while you can’t control issues like labor shortages and supply chain issues, there are steps you can take to lower your insurance bill.
Here’s what to do if your auto insurance costs have gotten out of hand, plus tips on how to lower your premium.
Don’t cancel your policy
Although you may be tempted to give up insurance altogether, this decision can have long-term consequences. Since all states except New Hampshire and Virginia require drivers to carry a certain amount of car insurance, getting caught driving without insurance can cause the insurance to lapse on your record. and may impact your future insurance costs. “Starting a new policy is usually more expensive than staying permanently insured,” Janet Ruiz, director of strategic communications at the Insurance Information Institute, wrote in an email.
An insurance lapse could also cause your state to require you to file an SR-22 form, which is legal proof that you have purchased the minimum amount of auto insurance required by your state. An SR-22 can remain on your file for several years and some insurers will not cover a driver with one.
Driving without insurance can also have other repercussions, including:
Having to pay out of your own pocket all costs resulting from an accident you cause.
Get your license suspended.
Losing your car through repossession if you have a car loan or lease.
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Try these options
Dropping your insurance shouldn’t be an option, but you have other options to spend less on car insurance. Here are some of the most effective.
Contact your insurance company
Contact your insurance agent or insurance company as soon as possible if you know you cannot pay an upcoming bill. You may be allowed to delay it or combine it into future payments, wrote Ethan Warren, chief executive of Goosehead Insurance Agency, in an email. “It’s always better to be proactive than reactive,” Warren said.
If you’ve missed a payment, insurers usually offer a grace period during which you’re still able to pay without risking a cancellation of the policy. Grace periods can vary by state and company, so contact your insurer quickly to find out how much time you have.
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Ask for discounts
Ask your insurance company about the discounts they offer. Although they vary from insurer to insurer, you can save money for a variety of reasons, including having a student with good grades, bundling your car insurance with another policy, or signing up for automatic payments and billing. without paper.
Increase your deductible
Raising your deductible is a guaranteed way to reduce car insurance costs. If you’re an ever-safe driver who has never filed a claim in the past, or just doesn’t drive often, you might be more comfortable accepting a higher deductible than those who drive more or have a history of traffic violations. Only consider this option if you can afford the higher deductible in the event of a claim.
Change your coverage
If you’re driving an older car and your policy includes comprehensive coverage and collision coverage, you can probably ditch both as they only pay up to the market value of your car minus your deductible. For example, if you drive a car worth $1,000 and your deductible is also $1,000, you will not receive a cash payment for a comprehensive or collision claim.
To get the cheapest car insurance possible, carry only the minimum amount required by your state. Good drivers with minimal coverage pay an average of $561 per year, compared to $1,630 for full coverage, according to a recent analysis by NerdWallet. It’s important to note, however, that in many states, minimum coverage only includes liability insurance, which pays for medical bills and expenses for others after an accident you cause, up to limits of your font. You will be responsible for any damage caused to your car.
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Consider per-mile insurance
Pay-per-kilometre insurance is priced by combining a monthly basis and a mileage rate, which takes into account the number of kilometers driven. Mileage is usually tracked through a smartphone app or device you plug into your car’s diagnostic port. If you drive infrequently, use public transport, or need to insure a second infrequently used vehicle, kilometer insurance may be a cheaper option than a standard policy. Keep in mind that your driving behavior can be tracked and bad driving habits like hard braking and late night driving can increase your premium.
Buy a new font
Shopping around for new insurance is usually the best way to get the cheapest rates. Sometimes you can even get a discount as a new customer. Compare quotes from at least three different insurance companies at least once a year to make sure you’re getting the best possible rate.
Work on your credit
Most states — with the exception of California, Hawaii, Massachusetts and Michigan — use credit to calculate car insurance premiums, and drivers with poor credit typically pay higher rates. While improving credit can’t happen overnight, it can have a big impact on reducing your insurance costs over time.
To work on your credit, focus on paying bills when they are due and keeping credit card balances well below the card limit.
Temporarily use alternative transport
If you try the options above and still can’t get your bill down to an affordable amount, consider transportation alternatives. Many cities offer low-cost public transportation, ride-sharing and ride-sharing services that you can use until you have room in your budget for a monthly premium. If you are able, you can also walk or cycle to cover short distances.
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And if you have access to someone else’s vehicle, consider purchasing a non-owner auto insurance policy, which is usually less expensive than a standard policy. It will pay for any injuries or damages you cause in an accident, as well as prevent an insurance lapse, which can help you save on your premium once you switch back to a standard policy.
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Ben Moore writes for NerdWallet. Email: [email protected]
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