Unfortunately, car insurance rates are continually on the rise, from factors as diverse as weather catastrophes, economic swings, or even just human error. However, car insurance rates are exploding in 2023 due to economic conditions. Let’s take a look at some things you can do to combat the rising cost.
Why are Rates Exploding in 2023?
Inflation is the largest reason for the increases we’re seeing this year. There’s much debate over what the actual inflation rate is but one thing we know for sure is that it’s having a significant impact.
The longer an insurance company tries to avoid rate increases the more severe the increase when they finally do. However, at the time of writing, you’ve probably already seen your rates take some nasty increases.
Shortages in parts and labor have also had a big impact. This has been an ongoing issue for a few years and automakers have had a difficult time catching back up.
2023 extreme weather events have been particularly bad. This has caused losses to be very high for insurance companies and most of them aren’t even coming close to breaking even.
How do I save on car insurance?
There are many different ways to save. From adjusting deductibles, coverages and options on your current policy to shopping with other insurance companies. We’ll take you through what to look for and where to start.
Decide who you want to work with.
There’s so much insurance marketing out there from big companies like State Farm and GEICO that it can be hard to sift through all the noise. Here’s a quick breakdown of the 3 channels you have to choose from:
Captive agents
These agents work for an insurance company and it’s their job to sell you policies from that company. This can make some skeptical that they’re getting unbiased advice.
Examples are State Farm, Allstate and Farmers……..you know, all the annoying commercials and ads that follow you around the internet you can’t get away from!
Direct to consumer
These are typically 1-800 numbers with call centers and online chat bots. They can be convenient but lack the knowledge and advice of a dedicated insurance agent. They tout lower rates because they’re cutting costs with this model.
Unfortunately, the math doesn’t play out and most of the time they’re not the cheapest. On top of that, they tend to have low quality insurance policies. Examples are GEICO and The General. Buyer beware.
Independent agents
These agents don’t work for any insurance company and can shop many insurance companies to find the best fit for you. They work out of local insurance agencies operated by small business owners. America!
They’re also sometimes referred to as “Insurance Brokers”. This is what we are, and yes, we think there is no better way to buy insurance. It’s truly a perfect model. We work with Safeco, Travelers, Nationwide and 24 other insurance companies.
Remove roadside assistance
How often have you required roadside assistance the last 5 years? If you have two vehicles, you’re probably paying around $120/yr to add this coverage to your policy. A tow may only cost you $50 – 75.
So, unless you’re requiring roadside assistance or a tow twice per year you’re better off just paying out-of-pocket.
If you just don’t like the idea of not being insured for roadside consider a AAA membership. They start around $60/year and are the most reputable name in the game. Bonus, this will keep those claims off your insurance policy and prevent your rates from going up.
Sign up for telematics
Telematics is just a fancy word they use for tracking your driving. Depending on the insurance carrier, you can earn up to a 40% discount. There aren’t any other discounts with that much of a potential savings.
These programs vary widely by carrier. Timelines for tracking your driving can range from 3 months to forever. The biggest factors are going to be excessive acceleration and hard braking. For more see, Car Insurance Tracking Devices. Should I?
Bundle your insurance policies
By combining multiple insurance policies with one company (for example, auto and home insurance), you can often receive a bundled policy discount. This can save you 15 – 20%. We don’t need to beat a dead horse on this one because Flo has already done that.
Shop around
Call your independent agent and have them look for you. They can help you navigate different quotes and coverages to make sure you’re getting a policy that is the best fit for you.
Maintain a good credit score
Your credit score can greatly impact your car insurance rate. Insurance companies use credit scores to help determine driving risk, and those with a higher score will have lower insurance rates. Make sure to keep your credit score in check and work to improve it if necessary.
What not to do
So, other than running into things and speeding, what should you not do to lower your car insurance rates?
- Do not lower your Bodily Injury Liability limit to less than $100,000 / $300,000.
- Do not lower your Property Damage limit to less than $100,000.
- Do not remove Rental Reimbursement coverage unless you have other reliable means of transportation.
- Do not buy your car insurance from a company where you can’t talk to a real person. There’s a reason they’re cheap.
Final thoughts
Use these tips and you can be sure to maximize your savings. Just beware of lowering important coverages that were designed to protect you against large financial loss.
In other words, it may not be a bad idea to pay out-of-pocket for small losses like towing. But always adequately insure against large losses such as Bodily Injury and Property Damage.
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