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How to Beat Rising Auto Insurance Premiums

February 02, 2017 at 5:00 AM

Low gas prices coupled with a continuing-to-improve economy is not necessarily good news for your auto insurance. As the number of miles driven rises—it is up more than 6% over the past two years-so too do accidents. And then there is the very scary fact that distracted driving is also causing more accidents.

That explains why auto insurance premiums have been rising. If you are hit with a 5% to 10% hike when your next bill arrives, consider these steps to save money without skimping on coverage.

Shop Around. You’re probably like most people: The renewal comes and you see it’s up but you just shrug and pay it. Realize that if you’ve been doing that for a few years you are likely paying more than you need to. As you should guess from all the television ads, auto insurance is a very competitive business. It pays to shop around. If you haven’t shopped around for five or more years, I wouldn’t be surprised if you could cut your costs by 10% or more.

Even if you’ve bundled your homeowners and auto coverage with the same insurer I still recommend shopping around. You may find that the savings from moving your auto insurance are bigger than the value of the discount you get for having bundled coverage.

Raise Your Deductible. A $250 or $500 deductible is too low. I want you to have at least a $1,000 deductible. For two reasons. First, when you have a low deductible, it can tempt you to make claims for small issues. That can end up backfiring on you because the more claims you make, the more likely it is that your premium will be increased at your next renewal, or you could be denied coverage completely. The other reason is that when you have a higher deductible you might be able to save 5% to 10% on your premium cost. Of course, you are to only do this if you have enough money in your emergency savings fund to cover repairs of $1,000 or so.

Grab a Low Mileage Discount. If you don’t have long commutes, or your family has one car that is mostly for carpools and local runs, your insurer may give you a discount for annual mileage below 10,000 miles.

Keep Your Credit Score High. In most states a version of your credit score can be used to determine your premium. That’s just one more reason to take the steps to build a great credit score.

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