Latest Trends in Car Insurance: How to Secure Bigger Discounts

For many Americans, car insurance is a must-have item in their monthly budget -- since it's mandatory in nearly all states, you have to pay for it whether you want to or not. But during 2022-2023, many people have noticed a rapidly-accelerating increase in the price of car insurance.

The good news is: the car insurance industry is highly competitive. There are many car insurance companies on the market, frequently seen on TV commercials featuring pro football players, comical spokespersons, and friendly Australian-accented lizards. Because there are so many options for car insurance, you don't have to be stuck with a hard-to-pay premium. Discounts on auto insurance are still possible, even in times of rising prices.

If your premiums are going through the roof and you want to save money on auto insurance, read on for smart tips, trends, and insurance expert insights.

Why car insurance is so expensive

American life has gotten more expensive in the past few years, with rising inflation on big-ticket purchases like homes and cars, as well as rising prices for everyday items. Car insurance is part of that overall trend of rising prices, but there are also some car-industry-specific problems that have caused car insurance prices to skyrocket.

Car insurance companies are in the business of helping people recover from car crashes. That means paying for the costs of car repairs, medical bills, and other expenses after a car collision or natural disaster. All of those costs have gone up, and so the companies have had to raise their prices so they can stay profitable.

Samuel Greenes is a professional insurance broker and founder of BLUE Insurance. He says that car insurance rates have risen sharply in 2023 because of several converging factors.

"The soaring inflation rate, supply chain issues increasing auto repair costs, more distracted driving accidents after pandemic lockdowns, and higher medical care expenses have driven escalating costs of car insurance," Samuel said. "Insurance companies are passing these costs onto consumers through premium hikes."

If you own a newer car with advanced safety features, that can help you stay safer on the road -- but newer, better, more expensive cars are also more expensive to fix in case of an accident. "Another factor is that more expensive car safety technology in new vehicles leads to pricier collision repairs," Samuel said.

Samuel Greenes predicts that expensive auto insurance rates are likely here to stay for the foreseeable future, based on overall industry trends. However, there are many things that people can do to help save money on car insurance.

How to save on car insurance: change your coverage

One of the first moves you can make to save money on car insurance is to change your insurance policy. Here are a few possible changes that you might want to consider:

• Raise your deductible: Many car insurance policies have a $500 deductible. This means that if you get in a crash, and it costs $5,000 to fix your car, you have to pay the first $500 and then your insurance covers the remaining $4,500. If you raise your deductible to $1,000 or more, this can often reduce your premium significantly. But be careful. Be sure you have savings to cover the higher out-of-pocket cost if an accident occurs.
• Remove unnecessary coverages: Dig into the fine print of your insurance policy. You might be paying for certain optional coverages like rental car reimbursement, towing coverage, or gap insurance, that are "nice to have" but not "must-have." If you cut some of these extra coverages, you can get a cheaper monthly premium by dropping them.
• Get liability-only coverage for older vehicles: If your car is older, it might not be worth fixing, or worth insuring with comprehensive coverage in case it gets "totaled" in an accident. If you change your policy to remove comprehensive and collision coverage, you can save money on premiums. A rule of thumb that Samuel Greenes recommends is that if your car is worth less than 10 years' premiums, it might be worth removing comprehensive and collision coverage from your policy.
• Bundle multiple policies (home and auto): Insurance companies can often give you a better deal on car insurance if you have multiple cars insured with them, or if you have homeowners insurance and auto insurance. The bigger customer relationship you have with an insurer, the bigger discounts.

If you consider changing your auto insurance policy, just remember that there are trade-offs. If you want cheaper car insurance, you might have to accept the risk of higher out-of-pocket costs.

"I strongly recommend you contact your insurance company directly to discuss policy changes to reduce your premium," Samuel Greenes said. "But remember, everyone wants sufficient liability limits with deductibles affordable if the worst happens. Review changes carefully as you balance cost savings against risks."

How to save on car insurance: change your insurance company

If you're not satisfied with your current car insurance, you can often save money by switching to a new insurance company. Car insurance companies sometimes offer new customer discounts, and can offer you a fresh perspective on which coverages you really need.

Some of our picks for the best car insurance companies include:

• Auto-Owners: Best for bundling policies
• Farm Bureau: Best for claims handling
• Geico: Best for price-conscious consumers
• State Farm: Best for bundling coverage
• USAA: Best for military members and their families

Your exact price of car insurance will depend on where you live, what vehicle you drive, your driving record and accident history, and other factors. Switching car insurance companies is not an option for every driver or every situation. But if you're feeling the pain of higher car insurance rates, remember that you have choices. There are many ways to get the right level of car insurance coverage to have peace of mind and protection in case of an accident, while keeping more cash in your bank account.