You’ve been paying way too much for car insurance and you feel it’s ridiculous. Maybe your premium spiked hundreds of dollars since your last renewal or your location changed and now you can no longer afford the rate hike.
There are many reasons drivers get annoyed with their car insurance rates and typically, they have valid points. Auto insurance doesn’t always feel tangible and sometimes, the amount of money you toss away each month may feel wasted, especially if you have a record free of violations and feel that you're a safe driver.
Of course, we want to remind you that car insurance is necessary and can be a real lifesaver after an accident. Before you opt out due to frustration, let us help you find the solution to your money woes.
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Reasons why your insurance premium may be too high (and what to do about it!):
- You bought a new car
Did you just buy a brand new vehicle? You might love the new wheels, but they could be the reason behind your higher premium. If your new car is much more expensive than your previous vehicle, it makes sense that your insurance may rise. Just be sure to mention all the high-end safety features the vehicle has to your insurer in order to save money.
- You were recently in an accident
If you recently were involved in a car accident and were deemed at-fault, then your car insurance will likely jump up in price at your policy renewal. Your best solution is to try and keep a clean driving record from now on so that you won’t be considered high-risk. You may also decide to look around for alternative car insurance options.
- You haven’t shopped around
It’s important to compare rates as your policy price may vary hundreds of dollars from one auto insurer to the next. If your car insurance is too high, this may be why. Compare a few quotes today to see who offers the best insurance for you.
- You haven’t asked about discounts
Another possible reason for your elevated rate may be that you aren’t taking advantage of premium discounts. Be sure to ask your agent about all possible markdowns. Does your insurer know that you're married or that you own a home? What about your involvement with affiliate or alumni groups? It may seem like extra, unnecessary information but it can lead to rate decreases. There are so many types of discounts out there. Don’t lose out on free money.
- You forgot to renew your policy
Have you ever forgotten to renew your car insurance policy? If you’ve ever driven without car insurance or have had a gap in coverage, then your eventual renewal or new policy purchase may cost more. Remember to never go without coverage. Set reminders or plan to switch in advance.
- You have too much coverage
Do you know what types of car insurance you're paying for? How much coverage do you really need? If you have an older car and you're unhappy with your rates, consider only purchasing the mandatory liability coverage in your state. You may not need all the extra coverage for an older car as it may less costly to purchase a newer vehicle than to repair the old one in the case of an accident.
- You have recent violations
Any violations can result in major premium upsurges. Speeding tickets, reckless driving, repeated accidents, or similar offenses can all be costly in more ways than one. This is also especially true for DUI/DWI offenses that often result in suspended licenses or hefty fines. Certain violations will stay on your record for lengthy periods of time, and will result in extra high premiums.
- You moved
A change of location is all it takes for your insurer to bump up your rate. The main factor that carriers use to determine your pricing is risk. Moving to a new location can cause your risk assessment to change based on the driving statistics in that area.
- You still pay the traditional way
How are you paying for your premium? If you're still paying month-to-month and are unhappy with the high rate of your car insurance, consider changing the way you pay. If you pay your policy upfront (usually by 6 months) or you use EFT (Electronic Funds Transfer) for bill pay, you can typically get a discount through your carrier.
- You have different providers for all of your insurance needs
Do you have multiple insurance policies? If you have purchased auto insurance as well as home, life, or renter’s insurance, consider bundling up to save money. Insurers will usually offer price reductions if you're purchasing multiple forms of coverage from them.
- You haven’t communicated to your insurer
Be sure to tell your insurer a bit about yourself. Do they know your car is parked securely in a garage? How far do they think you drive? You may qualify for a low-mileage discount if you’re driving less than 10,000 miles a year. Make sure your agent or provider knows as much information about you as they need to so that you can get the most affordable rate.
- You’re an inexperienced driver
Motorists just starting out on the roads are likely to see higher premium rates than their more experienced peers. Don’t be surprised if your rate is high to start out with. Focus on showing that you are a safe and focused driver by keeping your record incident-free. Your rate will go down in time, and a defensive driving or driver’s education class will help.
- Your credit score flopped
You probably don’t want to hear this again, but your credit score matters. It matters a lot for many different reasons, from obtaining loans to purchasing a car to buying a house. It also has an effect on your premium. Keep your score in the healthy range to keep your auto insurance low. If your score recently flopped, that might be the source of the rate increase unless you're in one of the three states that prohibit such use of credit card information (Massachusetts, California or Hawaii).
- Your deductible is low
Do you know what your deductible is? It may be worth changing, depending on your personal situation. Car insurance companies charge you more for a low deductible because that means they have to pay more on your behalf in the event of an accident. By raising your deductible, you can pay less for your premium. Just be sure that you have the cash savings on hand to pay the higher deductible if you are involved in an accident.
- Your license was suspended
If your license was suspended because of a serious traffic violation or after racking up too many points in a points system state, you can expect your car insurance to go up. A suspended license is seen as an indicator of a high-risk driver, and insurers know risky drivers can be costly. Typically, your best bet is to wait out the rate increase. Be sure you have car insurance during or at the end of your suspension period that you don't end up with a gap in coverage.
- You’re too loyal
I know what you’re thinking: “Hey, I thought loyalty was a good thing!” And you’re right; it is, in normal circumstances. But if you’ve been loyal to the same car insurance carrier for years, it’s time for a change. If you haven’t heard the latest buzz around price optimization, consider yourself forewarned because the practice doesn’t seem to be going anywhere. If you saw a big rate increase in your premium without any other changing factors, that can be a warning sign that your provider is taking advantage of your loyalty. Adjust for this by shopping around frequently for new quotes, and don’t assume that just because your premium increased, the entire industry’s prices have.
Car insurance can be affordable and you should feel like your money is going to a policy that’s worthwhile. Find a provider that adequately fits your needs and offers you coverage at the price you deserve. Still looking to save more? Check out these 5 Unexpected Ways to Save on Car Insurance.
Photo Credit (top image): Matthew Rutledge