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How to Find Affordable Auto Insurance Amid Rising Rates

Motley Fool - Sat Mar 16, 11:00AM CDT

Driver sitting in driver's seat of vehicle and usince cellphone.

Image source: Getty Images

Auto insurance rates increased by 36% between January 2020 and January 2024, according to ABC News. There are several reasons for this, including pandemic-related shortages, skyrocketing vehicle prices, and the increased cost of making car repairs. Ultimately, the reason doesn't matter much, especially if you're having trouble paying for coverage. If that's the case, now is the time to find more affordable coverage. Here's how.

Play the field

You don't owe your fidelity to any insurance company. Gone are the days when you buy a policy from a particular insurer and then stick with that company until you die. Shopping around is the only way to find out if you're overpaying for coverage.

One of the easiest ways to shop around is to compare auto insurance companies online. Many insurers offer rate quotes in a matter of seconds, making it easy to quickly move on to another company if you don't like what you find.

Consider bundling insurance policies

One thing to keep in mind is the power of bundling policies. If you find a better rate on your auto policy but it's not enough to blow your hair back, give the company a call to learn how much more you can save by bundling auto insurance with another type of coverage. You may be able to bundle your vehicle coverage with:

  • Homeowners insurance
  • Renters insurance
  • Condo insurance
  • Motorcycle insurance
  • Boat insurance
  • Life insurance
  • ATV insurance
  • RV insurance
  • Mobile home insurance
  • Snowmobile insurance

Make sure your coverage is appropriate

Let's say you have an older, paid-off car that's not worth much money. If you're still carrying comprehensive and collision coverage on the vehicle, it may be overkill. Check the car's book value and weigh that value against the annual cost of carrying full coverage.

Once you know how much your vehicle is worth, speak with an insurance agent about whether liability coverage makes more sense in your case. Liability insurance will pay to repair the other driver's car if you cause an accident, but it will not pay to repair your vehicle. Switching to a liability policy also means you won't be covered if your vehicle is stolen, damaged due to a natural disaster, or hit by an animal.

Still, if you're paying for coverage you don't need, it may be worth it to learn more about your options.

Revisit your deductible

Your deductible is the amount of money you must pay out of pocket when you make a claim. Let's say you have a $1,000 deductible. That means if you're in an accident or your vehicle is damaged in some other way, you'll have to pay $1,000 toward repair costs. For example, if the cost of making repairs is $5,000, you'll pay the first $1,000 and the insurance company will pick up the remaining $4,000.

You have a say in how much your deductible will be. Typically, the lower the deductible, the higher your policy premium. The higher the deductible, the lower your premium. Ask your insurance company about how much you can save by ratcheting your deductible up a bit. And if you do raise your deductible, remember to keep that money in an easy-to-access emergency savings account so it will be available if you need it.

Take advantage of all discounts

Almost all insurance companies offer a menu of potential discounts. Here's a sample of some of the most common discounts available:

  • Good driver discount (free of accidents and speeding tickets for a set number of years)
  • Defensive driving course discount
  • Driver's education course discount
  • Military discount
  • Bundling discount
  • Autopay discount
  • Early-pay discount (paying your entire premium upfront)
  • Multi-vehicle discount
  • Full-time student with good grades discount

Look into usage-based coverage

Usage-based insurance (UBI) is a type of coverage that tracks your driving behavior to determine your premium price. Using a self-installed plug-in or smartphone app, insurance companies collect data on factors like speed, braking, cornering, phone use, and mileage driven.

According to Insurance Business, safe drivers can save between 10% and 30% on their annual premiums.

Over the past four years, drivers across the board have been hit with higher rates. Fortunately, though, we each have some control over how much we pay for coverage.

Our best car insurance companies for 2024

Ready to shop for car insurance? Whether you’re focused on price, claims handling, or customer service, we've researched insurers nationwide to provide our best-in-class picks for car insurance coverage. Read our free expert review today to get started.

We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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