Is Your Car Insurance Becoming Too Expensive? Here's What to Do

No, it's not just you. Car insurance has gotten more expensive.

The average price of car insurance has increased 19.2% since last November, according to the latest Consumer Price Index (CPI). Under that rate, you would be paying an extra $19.20 for every $100 you spend on car insurance each year, which is about $552 more if you, like the average driver, spend about $2,875 on car insurance annually.

It's frustrating to see your car insurance rate increase every year, especially if you're a good driver or have had only one or zero recent incidents. Fortunately, there are some ways to proactively reduce your rate. Here are my top three tips.

1. Switch insurance companies

Loyalty to one insurance company rarely pays off. Though some insurers have "loyalty discounts," which purportedly save you money on your annual premium if you remain locked into your insurance policy, you're almost always better off shopping around for insurance when your policy expires.

Most people save hundreds, if not more, just by switching insurance companies regularly. Insurance pricing isn't intuitive, and though one company may have offered you the lowest rate in the past, its current rate may be higher than other providers. For example, your insurance company may have been the main insurer in an area affected by a natural disaster. Even if you don't live near that area, your rate could be affected, since the insurance company offsets costs from the claims by charging you slightly more.

It won't cost you to request quotes from other insurance companies. But if shopping around for insurance sounds boring, you could hire an independent insurance agent to do the work for you. These agents check rates from multiple insurance companies to provide you with the best price for your coverage. Since they get paid a commission, you won't pay for their service. But they usually only work with big insurance companies, like Geico and Allstate, and may not check rates for smaller insurers.

2. Pay by the mile

If you don't drive frequently, you could pay pennies for your car insurance -- literally.

Pay-per-mile car insurance is a type of coverage that charges you a flat rate for every mile you drive. The pay-per-mile rate is usually a couple of pennies per mile. You'll also pay a base rate, which is a fixed monthly cost. All in all, it's an affordable option for those whose cars remain parked for days or weeks at a time.

I've had a pay-per-mile policy before, and it helped me save about $480 annually. The only downside was that my insurance company was understaffed and took about three months to process my one and only claim -- an incident in which my car was hit by a drunk driver.

3. Get rewarded for good driving

If you think you're a good driver -- and your spouse or close friends generally agree with you -- you might be a good candidate for usage-based car insurance, otherwise known as telematics.

Usage-based insurance typically involves downloading an app (or installing a device in your car's OBD-II port) and allowing an insurance company to track your driving. Your insurer will pay close attention to your driving habits, like how fast you brake and how frequently you use your phone. It will then use this information to decide if you deserve a discount on your car insurance for good driving.

I've used telematics twice, once with Progressive and now with my current car insurance company, Lemonade. Both times I've saved money, though I've noticed some flaws with how my driving was tracked. For example, Progressive penalized me whenever I would brake too quickly, even if it was unavoidable, such as when I was avoiding things in the road or responding to a car braking quickly in front of me. In short, you won't get a perfect score, but even a passing score would result in some savings.

All in all, saving money on car insurance comes down to checking what's on the market and switching when you find a cheaper policy. You can do other things -- like improve your credit score, reduce your coverage, or ensure you're getting all your discounts -- but for substantial savings, you'll likely need to break up with car insurance companies frequently. Make a note of when your car insurance expires -- don't enroll in auto-renewal -- and use our list of best car insurance companies to get a jumpstart on your insurance shopping.