Car
09.11.2024 By Michael DeLong, Douglas Heller, Amelia Simons

How to Save Money on Rising Auto Insurance Premiums

Auto insurance premiums are climbing, with a staggering 18.6% increase over the last year.

 

Auto insurance premiums are climbing, with a staggering 18.6% increase over the last year. As a vehicle owner, you’re required to have auto insurance, and with rates soaring, it’s essential to find ways to save.  

Here’s how you can lower your premium and what changes we’re advocating for at Consumer Federation of America and America Saves to make insurance more affordable for everyone. 

Understand Your Coverage 

At its minimum, auto insurance covers damage or injury you cause to others (liability coverage). Depending on your policy, it can also cover medical bills, damage to your vehicle, and protection against uninsured drivers or natural disasters. Every state except New Hampshire requires some level of coverage, and driving without it could lead to fines, license suspension, or even jail time. 

7 Tips to Save on Auto Insurance 

  1. Shop Around: Auto insurers calculate premiums differently, often using factors like your job, credit score, and ZIP code. Compare quotes from multiple insurers to find the best rate. Online tools can help, but don’t rely solely on them—reach out to agents for a more complete picture. 
  2. Evaluate Comprehensive and Collision Coverage: If you own your car outright, consider whether it’s worth keeping these coverages, especially if your vehicle is older. If your car’s value is less than 10 times what you pay annually for these policies, it might be time to drop them. 
  3. Check Your Credit Score: Unfortunately, insurers often use credit scores to set premiums. If your score is low, it can drastically increase your costs. Check your credit report for errors— mistakes happen more often than you'd think! You can request a free copy of your report online, and if you spot any errors, reach out to your auto insurer and ask them to recalculate your premium. Over time, focus on improving your credit score to lower costs and secure better rates. You can also check out the many credit-score-focused resources available on the America Saves website. 
  4. Update Your Driving Habits: If you’re driving less due to remote work or retirement, let your insurer know. Lower mileage could qualify you for a reduced premium. 
  5. Take a Defensive Driving Course: Many insurers offer discounts for completing a defensive driving course, even if you’ve had a clean driving record. These courses can often be taken online and might lead to significant savings. 
  6. Pay in Full: If possible, pay your premium upfront rather than in installments. Many insurers offer discounts for paying in full, which can save you 5-12% over the course of your policy. 
  7. Look for Discounts: You may qualify for discounts based on factors like being a student, having an anti-theft device in your car, having a paperless policy, or setting up automatic payments. Don’t forget to ask if you qualify for savings based on your occupation or military status. 

The Need for Systemic Reform 

While these tips can help you save, long-term change is needed to make auto insurance more affordable. Here’s what the Consumer Federation of America is advocating for in auto insurance: 

  1. End the Use of Socioeconomic Factors: Your insurance premium should be based on how you drive, not your credit score, job, marital status, gender, or education level. 
  2. Stricter Rate Regulations: States should require insurance departments to approve rate increases, ensuring that consumers are protected from arbitrary hikes. 
  3. Low-Cost Auto Insurance Programs: Programs like California’s offer affordable, basic coverage for good drivers, helping ensure everyone can stay insured. For example, in the summer of 2024, around 40,000 Californians were enrolled, paying about $400 a year for insurance. 

Auto insurance is essential for both financial security and staying on the road. By being a smart shopper and informed consumer, you can save money and protect yourself from overpaying for coverage. 

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For more tips on how to save money, reduce debt, and build wealth, visit the America Saves Resource Center here.

To see how the Consumer Federation of America is advancing the consumer interest through research, advocacy, and education, click here.  

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