Auto insurance is up more than 15% this year in some states
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As with many items in your household budget, your car insurance is likely to cost more this year than it will in 2022.
How much more?
It depends on various factors, including where you live. Nationally, the average for comprehensive coverage — broadly defined as liability, collision and comprehensive — is $2,014 in 2023, up about 2.6% from 2022, according to new research from Bankrate.
But in some states, the jump is more than 15%. That includes 16.7% in Illinois – up $258 to $1,806 – as well as 15.4% in Alaska (up $260 to $1,946) and 15.2% in Florida, up from $421 to $3,183.
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The Sunshine State is also one of two places where average premiums have crossed the $3,000 mark — the other is New York, at $3,139.
There are two states where the average has fallen this year: New Jersey, down 7.2% to $1,754, and Massachusetts, where it fell 2.6% to $1,262.
Of course, the exact amount you pay is also based on things like your car’s make and model, your specific coverage choices, and your age and driving record.
Although car insurance tends to eat up a small portion of a person’s income — around 3% for the average person, according to the Bankrate study — you might be able to cut it even further.
Here are some expert tips for cutting costs.
Try to improve your credit score
If your state allows it — and most do — insurers can use your credit information to price policies, said Insurance Information Institute spokesman Mark Friedlander. Industry research shows that drivers who manage their credit well have fewer complaints, he said.
The average annual premium for someone with very good or excellent credit — typically above 740, on a scale of 300 to 850 — is $1,764, according to the Bankrate study. In contrast, a bad credit score — below 580 — earns an average annual premium of $3,479. That’s $1,715 more.
Ask about all discounts
Some insurers offer discounts for a variety of things, from your car having an anti-theft device to having more than one car on the policy or “bundling” – getting both auto insurance and home (or renters) insurance from from the same supplier.
Bundling can save you 8% per year, according to Insurify. Or, if you’re military, you could save 2.2%. And if you take a driver safety training course as an older American, you could save up to 15.2%.
In addition, low mileage can lead to a reduction. Some insurers offer discounts for driving less than the average number of miles per year.
“If you’re working from home now, I would definitely let your insurance company know you’re not going to work,” said Brian Moody, editor of Kelley Blue Book.
Consider increasing your deductible
A deductible is the amount you pay out of pocket when you file a claim. The higher the deductible, the lower the premium.
If you were to increase your deductible to $500 from $250, it could lower the cost of your coverage by 15% to 30%, Friedlander said.
However, he said, “make sure you have enough cash on hand to pay the cost differential out of pocket if you file a claim.”
Compare the prices
Preferably once a year, compare your costs to other insurance options.
While cost isn’t the only consideration – you also want a company with sold finances and good service – it’s worth checking to see if there’s a cheaper policy available from another insurer.
“Auto insurance is fiercely competitive and businesses want your business to increase market share,” Friedlander said. “Prices can vary widely from company to company, so it pays to shop around.”
Explore usage-based insurance
Many insurance companies offer usage-based insurance policies.
These programs can generate premium discounts by “allowing the insurer to monitor how you drive and your driving habits – speed, acceleration patterns, braking patterns – via a mobile app or plug-in device in your vehicle. “, said Friedlander.
Consider less coverage on older cars
Although states require you to have a minimum amount of car insurance, which differs from place to place, you may be able to drop your comprehensive or collision coverage if your car is reimbursed and, perhaps, not not worth much.
Collision covers what you would expect – crashes with another car or an object like a telephone pole – and covers non-collision events such as theft or a tree falling on your car.
“If your car is worth less than 10 times the premium, purchasing these optional coverages may not be cost effective,” Friedlander said.