Auto premiums are climbing, but these shopping strategies can help minimize what you pay
Many American drivers are paying more for car insurance—in some cases, a lot more—but there are steps you can take to keep your own costs down.
The average annual premium hit a record $1,548 in 2019, according to a new study by The Zebra, an insurance comparison site. That’s up 30 percent from the average rate in 2011.
That doesn’t mean everyone paid that much, however. The rate increases varied widely by state and city, the study found, and the average rate actually fell in several states. Even so, 63 percent of American drivers have seen a rate increase in the past year.
There are a number of reasons for the increase. One factor is that insurers have more data about you and how you drive, says Nicole Beck, director of communications at The Zebra and a licensed insurance agent. Another is an increase in extreme weather events, she says.
The study analyzed 73 million car insurance rates from 418 insurers across the U.S. The rates were based on premiums for a single 30-year-old male driver with a good driving record.
Those increases make it all the more important to understand how your rates are calculated and how to minimize your premium costs, Beck says.
A Divergence in Rates
The cost you pay for insurance is driven by a number of factors, including the region where you live, weather events (such as wildfires and hurricanes), local crime rates, and the percentage of uninsured drivers.
Those variables have led to a wide divergence in rates. Last year, for example, premiums rose in 33 states by an average of 1.8 percent. But in some states, such as South Dakota, premiums jumped more than 20 percent. By contrast, rates fell in 18 states, including Washington, D.C., with Texas posting the largest decrease, 20 percent.
Michigan ranked as the most expensive state for coverage in 2019, with an average premium of $3,096, followed by Louisiana ($2,379) and Florida ($2,309). Maine was the least expensive state, with an annual rate of $935.
Your personal finances, including your job and credit score, also affect your rates, along with your driving history. With more Americans distracted by phones and other devices, insurers are penalizing drivers caught texting or using a phone behind the wheel. (Get more insights into car insurance pricing.)
The type of car you drive and its age also affects your rates. Expensive models will generally cost the most to insure. Hybrid or electric vehicles will also push up premiums due to the cost of repairs or replacement.
Repair costs also mean that new safety technology, such as lane departure warning and automatic emergency braking, haven’t led to to significant discounts in premiums.
“Repair jobs that would have once been below a deductible are now in excess of deductibles,” Jon Cardi, senior vice president of strategic client sales and support at Safelite Solutions, an insurance claims processing leader, said in an email statement.
Controlling Your Costs
Despite these escalating premiums, many people tend to stick with their current insurer instead of shopping around for a better deal.
As a recent Consumer Report survey found, 54 percent of our members had remained with their current company for 15 years or longer. But it’s essential to compare rates annually. Follow these guidelines for a better deal:
1. Shop strategically. Start by contacting the direct-writer insurers, those that have their own agents and offer competitive prices, such as Amica and USAA. Then go to an independent agent to see if he or she can find a better rate.
2. Choose top-rated insurer. A low premium isn’t the only key factor; you also want an insurer that provides fair and fast claims settlements, good customer service, and help and advice. You can see how carriers stack up on these measures in our ratings.
3. Don’t skimp on essential coverage. Make sure you carry enough liability coverage, which pays for bodily injury and property damage that you cause to someone else in a crash. Get more than the legal minimum even if you don’t have much in assets to protect. Depending on your state, a portion of your wages could be garnished in a judgment against you.
You can get more details on this and other coverage to consider in our car insurance buying guide.
4. Look for cost-cutting options. Opting for a $1,000 comprehensive and collision deductible instead of $500 can reduce your costs by 11 percent, according to The Zebra. If your car is older, consider canceling your collision and comprehensive altogether, because you could end up paying more than you would get back in repair or replacement costs.
5. Be a careful driver. Driving violations or claims can push your rates up sharply. Texting or using a cell phone while driving can hike your premium by more than 20 percent, according to the study, and an at-fault accident can result in a 41 percent increase. Get a citation for reckless driving? Expect your rates to soar by 67 percent.