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Two ways to put high car insurance costs in the rearview mirror

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Two ways to put high car insurance costs in the rearview mirror.png

Our blog recently examined some ways in which consumers may be overpaying for insurance. In particular, we addressed how owners of older vehicles might be paying in excess for collision coverage.

Unfortunately, consumers sometimes overpay for particular auto insurance policies. As disillusioning as this is, individuals can level the playing field. Below are two simple steps to securing affordable yet comprehensive auto insurance.

Be willing to shop around

Statistics show that just four conglomerates control close to half of the car insurance industry. Armed with big budgets, these billion dollar corporations constantly that each one has the lowest car insurance rates.

No matter how memorable their jingles are, not one insurance company can really claim to be the most affordable. That's because coverage prices vary considerably, as every insurer takes different factors into account. This is why it's so important to shop around. Rate browsing, however, shouldn't be limited to the big four. Local and regional insurers frequently offer lower rates, better discounts, and higher customer satisfaction scores.

In case further incentive to shop is needed, consider that some insurers use a practice known as "price optimization." Outlawed in 16 states, price optimization involves creating predictive models showing which customers are unlikely to leave. As a reward for this loyalty, these consumers are sadly charged higher premiums.

Be willing to change your approach  

Individuals who are in need of both comprehensive and collision coverage can consider raising their deductible. One study found that Florida and California drivers who increased their deductibles realized the following savings:

  • Raising a deductible from $500 to $1,000 translated into a savings of $200 per year on premiums
  • Raising a deductible from $500 to $2,000 translated into a savings of $362 per year on premiums

Consumers with concerns about making a higher out of pocket payment could consider a usage-based plan. These options enable safe and low-mileage motorists to secure cheaper rates. This is accomplished via electronic tracking by the insurer, which records mileage, driving behaviors, distance, etc.

Source: The Atlanta Journal-Constitution, "8 ways to get the cheapest car insurance possible," Aubrey Cohen, May 7, 2017

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