How to Deal With Rising Auto Insurance Rates

You’re not the only one who recently received a higher car insurance bill.

Auto insurance premiums rise about 15 percent Year-over-year, March is significantly higher than the latest figure of 5% for overall inflation.The average annual premium is about $2,000according to personal finance website Bankrate.

Auto insurance prices are also expected to continue to rise.Insurance company chief executives this week progressive In a letter to shareholders, the company said it planned to “aggressively raise rates for the rest of the year.” Allstate said it plans to pursue additional increases in 2023 “to improve auto insurance profitability.”

Rising repair costs, such as auto parts and labor costs, and rising rental car prices due to longer repair times due to labor shortages have all led to higher bills and insurance premiums, according to industry analysts. That’s it. “Everything related to repairs is going up,” said Steven Crudson, senior director of insurance business intelligence at consumer research firm JD Power.

Robert Passmore, vice president of personal affairs at the American Property and Casualty Association, an industry group, said as the pandemic subsided, more drivers, whether traveling for work or leisure, were returning to the roads, reducing the number of accidents. He said the risks are increasing. He added that bad habits acquired during the pandemic remain, such as driving at a faster speed.

Doug Heller, director of insurance for the Consumers Federation of America, says many good drivers are charged based on factors that have little to do with driving. In most states, even if you have a clean driving record, you may pay higher premiums if you have poor credit. Insurers use variations in consumer credit scores, similar to those used by lenders to determine the risk of a borrower repaying a debt, to assess the likelihood of a driver filing a claim. Use as one of several factors.

A recent report by Consumer Federation of America A study of insurance premiums in New York found that drivers with perfect driving records and good credit paid an average of $730 a year for basic insurance, while drivers with the same driving record but poor credit paid an average of about $2,100. is a dollar. The federal government supports phasing out the use of credit scores to rate insurance, saying it will especially harm low-income customers and those living in minority areas. (At least three states—California, Hawaii, and Massachusetts—prohibit the use of credit scoring in setting these premiums, and several others restrict its use. are available.)

Insurance companies argue that it makes sense to charge higher rates to drivers with better credit because such customers are less likely to file a claim. Mr Passmore said:

Auto insurance is hard to avoid as most states require basic coverage. So what can you do to lower your bill? Chuck Bell, advocacy program director at Consumer Reports, recommends looking for three or four quotes from different insurers to see if they can offer a lower rate. increase. Many consumers have been with the same insurer for decades, but it’s wise to check prices from time to time, he said. “I think you should shop every year,” he said.

Many people “would rather have a root canal,” he said, but it’s not hard to get a quote for car insurance. You can also get a quote directly on the insurance company’s website. (Sites that aggregate information can give you a general idea, he said. It is best to deal directly with an insurance company or independent agent that represents

In fact, higher insurance premiums encourage drivers to shop for lower rates. Recent discoveries From JD Power. “They are actively looking for better deals,” Crudson said.

On average, 13% of households purchased auto insurance in the previous month. MarchThe highest since mid-2021, according to JD Power, which is based on findings based on daily online surveys of up to 1,000 consumers. The average switch rate for households that changed insurance providers in the previous month was over 4% in March, compared with an average of 3.6% for the entire 2022 and his 3.4% in 2021.

If you’re looking to buy a car, focusing on cheaper models can help keep your premiums down from the start, Bell said. A large pickup he considers a crossover vehicle, which tends to be cheaper to insure, rather than a truck or his SUV.

If your car is an older model and less valuable, reduce the Collision Compensation and Comprehensive Coverage you pay to repair or replace your car when your car is damaged in a collision with another car or an object such as a fence can reduce your insurance premiums. Covers damage caused by car theft or falling branches.

Insurance companies also offer usage-based insurance. This includes equipping vehicles with devices that monitor mileage and driving habits. Insurance companies factor that data into their premiums. If you are a safe driver and are used to sharing data with your insurance company, or if you don’t drive much, you will benefit. “For some people, it’s a way to save money,” Bell said.

Here are some questions and answers about how to get cheaper auto insurance.

A higher credit score can lower your insurance premiums.What to keep by paying bills on time and avoiding running out of credit cards credit bureau Underestimate “Usage” — Helps score higher. You should also limit the number of new credit card accounts and loans you open. You can check the accuracy of your credit report for free by visiting

Some insurers do not use credit scoring to set premiums — cure For example, auto insurance says otherwise.

yes. Choosing a higher deductible (part of the bill for claims before insurance is paid) can lower your premium. A deductible of $500 for him to $1,000 for him saves an average of about 10 percent on premiums, Bell said. If possible, save your premium savings to pay for the deductible if you need to file a claim.

State insurance departments may have information to help you compare rates and service levels from different insurers. texasfor example, there are in-depth tools for getting quotes, Massachusetts We provide a spreadsheet to help you compare. The National Association of Insurance Commissioners map state insurance departments, and maintain complaint index Consumers can use it to see if their insurer is above or below average.

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