Remain Calm And Insure On: What You Need to Know About Rising Car Insurance Rates

It's a fact of life these days, but not one that should make you sweat. Here's why rates are going up, what you can do to reduce yours and still get the coverage you need.

Car Accident. Photo: Matt C Via Unsplash

A few clever tweaks and some smart planning will save you from overpaying.

If the thought of renewing your insurance or becoming a first time policy owner causing you to lose sleep at night, you’re not alone. Even though our cars depreciate in value every day, the average age of cars on the road is 12.5 years and new cars come with more safety technology than ever, the cost of car insurance continues to go up.
But, we have to have it and just hope we never have to use it. Even though it is a necessity, it can be a controllable cost once you understand why insurance prices keep going up and what you can do to keep your costs low. Read on… so you can insure on.

Related: Can the Progressive Snapshot Driving Monitor Lower Your Car Insurance Rates?

Who Doesn'T Love The Nostalgia Of A Vw Beetle?

Who doesn’t love the nostalgia of a VW Beetle? Loving the high cost of insuring it, no so much. Photo: Peter via Turo

Why Do My Insurance Rates Continue to Increase?

You haven’t purchased a new car and you’re a safe driver. And yet, the price of your insurance increased. Here are a few reasons why that may be:

  1. Inflation. According to the U.S. Bureau Labor of Statistics, the consumer price index for all urban consumers increased 6.4% from January 2022 to January 2023. The Bureau also reports that insurance premiums are on the rise as well, and are not forecasted to go down for the remainder of 2023.
  2. Increase in Car Repairs. Insurance companies are experiencing a high loss ratio. Car maintenance and repair costs have risen as well, one particular contributing factor is the shortage of a particular component when trying to order parts. Classic case of supply vs. demand.
  3. Supply Chain Slowdowns. This has affected repair shops all across the country; it’s the world we currently live in. Pre- pandemic parts were easier to find than post-pandemic.
  4. Mother Nature. If environmental events have increased in your neck of the woods, so have your premiums.
  5. Changes in your Driving Habits/Driving Profile. These include things like where you live, your age, your driving record, your credit history and even your marital status.
  6. Your Credit Score Went Down. Apply for a credit card, mortgage or take on a lot of debt? This impacts your credit score and also, your insurance rates.

Related: Help Your Child Buy a Car – Her Dream Car – with True Path’s Gift of Life Insurance Plan

Zebra Is One Of Several Insurance Comparison Sites.

Zebra is one of several insurance comparison sites.

So What Can You do to Reduce Rates? 

Time to go shopping! Comparing insurance rates is a great place to start. Keep in mind that you’ll need apples-to-apples comparisons on the cars you’re insuring, the policy features you want, deductible and more. Prices vary from one provider to the next, and don’t forget to check with your bank or credit union, too. It is recommended to compare at least three insurance companies before settling on a rate. A few more options to consider:

  • You can also ‘bundle’ your policies. If you have homeowners or renters insurance, you can often add your auto coverage to one of these to save money.
  • Raising your deductible can lower your premiums. An increase in your deductible equals a decrease in your premium. Word to the wise though, if you choose this option, be sure that you can afford the deductible if you’re involved in an accident.
  • Drop full coverage if your car is older and paid for. Experts recommend dropping comprehensive and collision on cars that are more than 10 years old. You may also want to drop extras like rental car coverage and roadside assistance if you can live without your car for a bit while it’s being repaired. As long as you don’t have a lien or loan on your car you do not have to carry full coverage.
  • Your driving record can cost you money. Insurance companies look at the past three to five years when looking at your record. If you have a history of “at fault” accidents, DUIs/DWI or traffic violations, your car insurance rates will reflect this. The good news is, you are in control of this and you can work to make the necessary improvements.
  • Work on your credit score, Sometimes insurance companies will look more closely at your credit score than your driving record. To improve your credit score, make your payments on time, keep credit card balances at a minimum, and only open new accounts when necessary (applying for too many credit cards can hurt your credit.)
  • Usage based insurance is coverage that is based on your driving behavior and your miles driven. Several companies offer an app or a small device that you can easily install in your car that will track things like mileage and driving patterns like speeding or hard-braking. While this may be a good option for some, just beware that the device will also track “unsafe” driving and that can cause an unwanted increase if the company feels its warranted.

Related: 7 Smart Ways to Save Money on Auto Insurance

2023 Toyota Corolla Cross Hybrid

New cars like the Toyota Corolla Cross Hybrid with advanced safety systems can cost less to insure. Photo: Connie Peters

Things to Look For That Can Also Cost More….

    • ‘Accident Forgiveness’ is when an insurance company will ‘forgive’ you for an “at-fault” accident, but you typically have to pay more for it. Also, most companies limit you to only one ‘forgiveness’ every three years.
    • Gap insurance. This means you pay the “gap” between what you owe on your car’s loan and its actual value in the event that your vehicle gets totaled in an accident.
    • Rental reimbursement. This is coverage that pays for a rental car if your car is being repaired due to an accident that wasn’t covered by the policy. This coverage is optional and will add a few dollars to your monthly premium if you aren’t aware.
    • Roadside assistance. This is a service that is available if your car becomes disabled due to a bad battery, a flat tire, needing locksmith services or even towing. This is also an optional service that is sometimes added on and will drive up the dollar amount that you are paying monthly.
The Mercedes-Benz Amg Sl63 With A View

Luxury cars are beautiful and fun, but they can cost more to insure. Photo: Annika Carter

Buying a New Car? This is What You Need to Know

If you are considering purchasing a new car, get a quote for car insurance rates before your purchase. Some cars are cheaper to insure than others.
Insurance companies prefer to insure cars with a high safety rating. Seems obvious, right? These cars are less likely to end with expensive claims. If a car is labeled a luxury car or performance car, you are likely to pay more for insurance. These high-end cars cost more to repair and therefore, more to insure. That being said, there are a few features that drive the cost of these cars to be more expensive, but can potentially lower your premium due to their advanced technology and/or safety features.
Do your research and see which cars are statistically proven to be stolen more. According to Kelley Blue Book, a full-size Ford pickup, a Chevy Silverado, a Honda Civic, Honda Accord or Toyota Camry round out the list of the top five stolen vehicles from 2022.

Now, Get a Good Night’s Sleep 

As long as you do your research, follow these tips, and understand the basics of auto insurance, you can go back to counting sheep at night instead of losing sleep.

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I teach 6th grade social studies, travel the world in the summer, write auto/moto news between grading papers and... More about Tabatha Chovanetz