3 Tips to Combat Rising Car Insurance Costs

Near the end of 2023, I got a renewal notice from my car insurance company. Since I was on a pay-per-mile plan, which had previously saved me about $480 a year, I was shocked to find my per-mile rate had increased from $0.047 to $0.055 per mile. Not only that but my base rate, which I pay every month in addition to the miles I drive, also increased by about $15 a month. All in all, my premium was going to be significantly higher, thus erasing a lot of the savings I had enjoyed during my first year.

For many Americans, this story is all too familiar. Car insurance rates have increased over 19% since 2023, which puts the average annual premium in the U.S. at over $2,500, according to research by Bankrate. Meanwhile, car insurance companies, whose premiums are influenced by the rising costs of repairing cars and the increased frequency of car accidents, seem unlikely to lower insurance rates anytime soon.

That puts Americans in a tight spot. How much are we willing to pay to protect ourselves from the unexpected? Sometimes, even the minimum coverage mandated in most states can be more expensive than what you can afford.

If you've been struggling to pay your car insurance premiums, let's look at some strategies to cut your rate in 2024.

1. Raise your deductible

In general, the higher your deductible, the lower your car insurance premium.

Recall that your deductible is the amount you pay for an insurance claim. If you have a $500 deductible, for instance, you would pay $500 when you have an accident, even if the total claim is $5,000.

Since a lower deductible means your insurance company is responsible for more of the total costs, you pay a higher monthly premium as compensation. Likewise, a higher deductible would mean you're sharing more of the costs, thus resulting in a lower car insurance rate.

Of course, sometimes a lower deductible is necessary, such as when you don't have enough savings to cover a high deductible, like $1,000. That said, for those who can cover a high deductible, doing so can result in more savings for you, especially if you don't get into accidents frequently.

2. Make sure you're getting all your discounts

Car insurance companies offer discounts to policyholders to reward them for safety, loyalty, or actions associated with safer driving, like getting good grades or driving less often.

While most car insurance companies apply these discounts automatically, some may fall between the cracks, thus robbing you of savings. Similarly, some companies may not offer the same discounts as others, which can be a missed opportunity if you're eligible for them.

To give you an idea of what's out there, here are the most common car insurance discounts:

• Accident-free driving
• Driver training and education courses
• Defensive driving course
• Low-mileage
• Clean record
• Good student
• Loyalty
• Bundled insurance policies
• Multi-car policy
• Continuous coverage
• Vehicle safety
• Driver affiliation
• Military
• Pay-in-full
• Paperless statement

3. Work with an independent insurance agent

Independent insurance agents take the hassle out of shopping for car insurance. They don't work for one company (hence "independent"), but rather act as a go-between for numerous car insurance companies and drivers. Working with an agent can help you save money, as they can take your information and match it with the company that offers you the lowest premium.

Working with an independent insurance agent is free, but there is one caveat: They don't work with every insurance company. So, while they can point you to the cheapest policy of companies within their network, they might exclude smaller, lesser-known companies that are a better fit for you.

It's worth connecting with an agent, however, if it means saving money on car insurance this year. With premiums skyrocketing, you need all the help you can get. Reach out to some insurance agents in your area (a Google search is sufficient to find them) and see how much they could help you save on insurance in 2024.