Car insurance rates have been increasing, overall, for the past few years, and that trend is expected to continue in 2019.
The number of customers receiving an annual rate increase of more than $200 per vehicle has more than doubled during the past four years, according to J.D. Power’s 2018 U.S. Auto Insurance Study.
Why is Car Insurance in Southern California so Expensive?
Year over year rates are continuing to trend up due to a variety of factors. In addition to insurers having to recoup losses from fires and natural disasters, there are more people and they are driving more, which is causing more accidents, and that means higher costs for insurance companies, which is then passed on to you in the form or rate hikes. Also, repair and medical costs are increasing, making accidents generally more expensive. Consider the following factors:
Rising repair costs: High-tech headlights and safety features, such as lane-departure alerts and parking sensors are now standard fare on most new-model vehicles. They may help save lives and prevent injuries, but these modern devices are more expensive to repair when accidents do happen. Since 2007, the cost of body work has risen nearly 40 percent more than overall inflation, and the size of collision claims increased 10 percent from 2015 to 2018, according to State Farm. Again, that means, in general, 2019 will see higher insurance costs.
More car accidents, more claims: The percent of car accidents classified as “one vehicle colliding with another” climbed to 73 percent in 2015, a 20-year high, according to the National Safety Council’s annual report. So, more collisions means more claims. According to Nielsen, 23.7 percent of households filed at least one auto insurance claim in 2017, an increase from 20.5 percent in 2014. It predicts that the percentage will further rise to 24.5 percent by 2022. More accident claims means costs go up for insurers, who then pass some of that expense back to you in the form of overall higher premiums.
5 tips on how to save money on car insurance in 2019
Despite the negative trends, the road ahead in 2019 won’t be without savings if you take advantage of some of these insurance hacks.
1. Have your broker evaluate your insurance needs annually
Life happens! Yes, each year life changes for each and every one of us. Kids, marriage, new home or car purchases, retirement, etc are all life changes that can effect your insurance needs. It’s important to speak with your insurance broker about these changes and let them work their magic. Insurance companies are always changing their discounts, your insurance advisor is working with these companies everyday and they can typically shop the market for the best rates based on your specific needs.
2. Bundle your car insurance with home insurance
Married drivers and homeowners get better rates because insurance companies consider them as lower risk, meaning they file fewer claims, but you can save even more by purchasing your home insurance and auto insurance policies from the same provider, this is called bundling.
According to the latest insurance data, the statewide average car insurance discount given for bundling home and auto insurance is 8 percent. By bundling renters and car insurance a discount also applies, with the statewide average being around 5 percent. The statewide average homeowners insurance discount given for bundling is 20 percent.
3. Discounts for paying premiums in full
If you pay your car insurance policy premium up front and in full, before the policy effective date you can usually get a 5 percent to 10 percent discount. That could be $300 to $400 a year for most families.
4. Drop comprehensive and collision if you don’t need it
Collision and comprehensive coverages are optional. While collision pays to fix your car if you have an accident, and comprehensive pays out for damage due to fire, flooding, animal strikes, hail, you may not need the protection if you don’t own a newer car. If your vehicle is more than 10 years old or worth less than $3,000, you might not really need these coverages. Collision costs an average of $398 a year, comprehensive costs $100 annually, on average, according to the Insurance Information Institute. Speak with your advisor to see if this is a good option for you.
5. Maximize your car insurance discounts
Car insurance discounts vary by insurance company, but typically the standard ones are for safety features, low-mileage, having more than one car insured with the same company and remaining with the same insurance company over a period of years.
Low mileage: If you drive less than 7,500 miles per year, you may qualify for a low-mileage discount on your auto insurance, typically 5 to 15 percent. And, some car insurance companies offer a commuter discount if you use public transportation during the week.
Multi-car: If you insure more than one car on your policy, you get a multi-car discount. Expect 10 to 25 percent savings off your collision, comprehensive and liability premiums.
Good driver/claim-free – Drivers with a safe driving history free of accident claims will have a great chance of obtaining discounted rates (3 consecutive years).
Good student – Many car insurance companies offer discounts for:
- Being a good student (typically, this means having a B average or higher).
- Recently graduating.
Professional organization – Being a member of certain professional groups may save you money on car insurance.
Discounts will vary widely among insurance companies, and the terms of these discounts will vary as well. Remember to do careful comparison-shopping when purchasing car insurance, and ask about any discounts that might apply to you.