How to Save as Insurance Prices Soar

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Current Car Insurance Statistics
According to the U.S. Bureau of Labor Statistics, car insurance premiums in America are up this year by 18.6 percent compared to last year. Some studies show insurance costs up 22 percent since last year. Looking back to the beginning of the Covid pandemic in March 2020, rates have gone up an astounding 47 percent. The Insurance Information Institute tells us that much of this drastic increase was caused by the expected losses paid out to policyholders. In other words, when insurance companies have to pay out more in losses, you pay more to make up for it. Let's look into some of the causes for these rate hikes. 

Causes for Car Insurance Rates to Go Up

There are a number of reasons that car insurance rates continue to rise. The first is more severe claims and losses, often due to more frequent negative weather conditions. According to the Department of Transportation, radical storms such as hurricanes, tornadoes and blizzards cause a tremendous number of car accidents and auto damage across the country as well as destruction from fallen trees, hail damage, flooding, and other weather-related accidents including wildfires. Vehicle replacement and repair costs have also risen substantially in the last year. 
  • According to the Consumer Price Index, car repair costs are up 20 percent over the last two years alone. Besides the fact that the cost of everything, from groceries to insurance continues to rise, car repairs are more expensive due to vehicle supply chain issues, a shortage of auto repair technicians, and the fact that new cars contain more advanced technology such as driver assist features. While these tech features improve safe driving and save lives, the repair and recalibration of driver assist cameras and sensors is expensive.
  • The National Highway Traffic Safety Administration (NHTSA) tells us that over 40,000 people died in car accidents last year. Of the over 1.2 million vehicle crashes that took place, 21 percent are caused by inclement weather such as snow, rain, fog, and crosswinds. Bodily injury rates rose 20 percent since 2020, and the severity of material damages increased by 47 percent. Al this resulted in higher rates for insurers.
Much of this increase is said to be caused by climate change and the fact that we are seeing more incidents of severe weather of all kinds across the country. America has seen greater levels of hail, flooding, and wildfires in the past five years. This sort of damage is covered by optional comprehensive insurance coverage. Around 75 percent of drivers opt for this add-on to their policy.

However, distracted driving violations due to cell phone use while driving is the big culprit. Drivers under the age of 25 have increased 66 percent since 2019 and the NHTSA says that of the 804,928 total accidents that were the result of distracted driving in 2021, 64,901 were due to cell phone use while driving. Between 2017 and 2021, 7- to 9-percent of car crashes resulting in an injury involved the use of a cell phone.

Also, keep in mind that your car insurance rates may vary by the state you live in. Labor shortages, natural disasters, litigation costs, and the local economy all feed into increases of car insurance rates. Western states have seen more wildfires in recent years and the southern states have recently been impacted by hurricanes and severe storms. Keep in mind that higher density urban areas have more traffic congestion and have higher accident rates.
Ways to Save on Car Insurance
Current auto insurance rates for a minimal liability policy is estimated to range between $80 and $150 per month. You may pay more based on:
  • Driving record
  • Vehicle value
  • The state you live in
  • Coverage package 
Luckily, there are still ways to lower your insurance premium. If you have had any life changes such as moving or getting married, you should renew your policy anyway, but it is always a good idea to compare car insurance rates with several companies every year.
Be sure to:
  • Compare rates
  • Assess your insurance needs
  • Keep a clean driving record
  • Consider driving a less expensive car
  • Consider used-based insurance
  • Raise your deductible amount
  • Check for discounts
  • Bundle for more savings
  • Raise your credit score
All of these things will help save you money on car insurance. Let's look at each one on a bit more detail:
 
Compare Rates
There are lots of ways to get less expensive car insurance and an annual insurance rate comparison can help. Remember that what you pay is influenced by personal factors such as your credit score and credit history, your age, gender, marital status, and where you live. Plus, your insurance needs change. This all means, you may be paying too much. Compare rates on national brands and see which insurance company can save you the most money

Assess Insurance Needs
Your insurance needs change as your life evolves and changes. You might get married or get divorced. You may have children and eventually they will start to drive. You may own more vehicles than you used to. The coverage types of your insurance changes over time. Consider your net worth, how much you have in savings, and your risk tolerance. It is also important to research the minimum amount of car insurance required by the state you live in.

Keep a Clean Driving Record
A clean driving record with no traffic stops or tickets help keep your insurance rate low. Did you know that one speeding ticket can increase your car insurance by 28 percent? One DUI arrest can cause your car insurance to cost $100 to $200 dollars more per month! A single car accident can make your rate jump up 58 percent!

Get a Cheaper Car
Some car makes and models are less expensive to insure than others. Before you buy a car, find out what the premium will be. Some of the cheapest cars to insure today include the Subaru Outback, the Honda CR-V, the Jeep Wrangler, and the Toyota RAV4.
User-based Insurance
Many insurance companies offer what is called "user-based insurance" wherein the driver installs a plug-in device in the car or downloads an app that monitors your mileage, driving style, speed, and other driving habits. Usage of such devices went up 33 percent in 2022 when drivers were looking for ways to discount their car insurance.

Look for Discounts
Most major car insurance companies offer an array of discounts to drivers, many of which you may be eligible for. For instance, there are discounts for safe driving, for enrolling in a defensive driving course, for being a student or a senior, or a member of the military or a veteran. Ask your insurance agent what discounts you may be able to get.

Bundle and Save
Another popular way to save on insurance today is through a "bundle" program in which you add all your insured items to one insurance policy. You can add all your vehicles including cars, trucks, motorcycles, ATVs, personal watercraft, boats, your home or rental apartment, basically anything you insure. Bundle home and auto to save.

Raise your Credit Score
Insurance companies determine your car insurance rate in part by looking at your credit-based insurance score. Companies want to know if you are a good risk. That means you will get a lower car insurance rate if you pay your bills on time and use credit cards responsibly. Raising your credit score will result in car insurance savings.