Car Insurance Too Expensive? 4 Smarter Moves Than Skipping It

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  • Car insurance is required by law in most states.
  • Skipping it can mean incurring fines and other penalties.
  • There are other ways drivers can reduce their car insurance rates without breaking the law, including shopping around for policy rates and signing on for a higher deductible.

There's more than one way to keep car insurance costs down.

The average American auto insurance premium has risen 8.65% since 2021, and in some states the increase has been even steeper. That's not what any of us need right now when we're already struggling to keep up with all of our other rising bills. But that doesn't mean drivers should skip car insurance altogether.

Below, we'll take a look at why that could be dangerous and discuss four better strategies to help drivers save on car insurance.

What's wrong with skipping car insurance?

Nearly all states require their drivers to carry at least some liability car insurance. Required coverage levels vary by state, but $25,000 of bodily injury coverage per person and $50,000 per accident is standard in a lot of states. This pays for other people's medical bills if the policyholder injures them in an accident. Many states also require some degree of property damage liability coverage.

Drivers who skip the state minimum coverage risk hefty fines and possible driver's license and vehicle registration suspension. Some states even jail repeat offenders. And when these drivers seek out new car insurance in the future, they also pay more because they're perceived as high-risk drivers.

But the biggest reason not to skip car insurance is the massive out-of-pocket costs drivers could face without it. If a driver injures another person in an accident and doesn't have insurance, the injured party could sue them. They could wind up responsible for thousands of dollars in medical bills, in addition to the fines and fees discussed above.

4 smarter ways to save on car insurance

Skipping car insurance might save drivers a few hundred to a few thousand dollars per year, but the risks are too great. It's possible to find similar savings using one of the four methods discussed below.

1. Shop around

All car insurance companies measure risk a little differently, which is why they all give drivers slightly different quotes. Some might penalize drivers more for an accident while others care more about the driver's age and location. The only way to find out which offers the best rate for a given driver is to get quotes from several companies and compare them.

Many companies have online quote tools these days, so getting a quote only takes a few minutes. Drivers will need to know their vehicle's make and model and the dates of any accidents or tickets in the last three to five years to get an accurate quote.

2. Check for discounts

When drivers apply for a new car insurance policy, insurers apply most discounts automatically. But there may be some that they need to opt into. For example, an increasing number of insurers offer discounts to drivers who enroll in their optional driver monitoring programs. This can be an easy way for safe drivers to shave a little off their bills.

In addition, rates typically drop when drivers get married or reach age 25, assuming they don't have any accidents on their records. So drivers should think about calling their insurance provider once they reach these milestones to see if they qualify for additional savings.

3. Consider a higher deductible

Deductibles are the out-of-pocket costs a driver pays when they file a claim while premiums are the monthly costs they pay to keep the policy in effect. Usually, drivers have a choice of several deductible options, and going with a higher deductible reduces premium costs. This could lead to considerable savings on monthly costs if the driver doesn't have to file a claim.

Drivers who do this should consider setting aside money in an emergency fund to help them cover the cost of their auto insurance deductible.

4. Reduce coverage

This option isn't ideal, but it can be useful in a pinch. Drivers who currently have more than state minimum car insurance can reduce their coverage to obtain a lower premium. But doing so also reduces coverage. This could be problematic in severe accidents. Once the insurance company has paid up to the policy limit, they're off the hook. If there's any bills left over, the driver must pay for them on their own.

Still, maintaining at least the state minimum coverage will keep drivers from running into trouble with state law. But whenever possible, try one or more of the other methods above to save on car insurance before resorting to this last one.

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