The Bureau of Labor Statistics released an analysis last year of how car insurance rates have trended since 2020, finding that rates across the country had gone up by 55% in five years.
“Parts and labor have become more expensive,” said Michael Delong, research and advocacy associate for the Consumer Federation of America. “Second, there was a period of big inflation, which caused premiums to go up, but auto insurance companies also overcharge people in a lot of ways.”
According to Delong, being overcharged can be determined by several socioeconomic factors, with people likely paying more if they have a lower-wage job, didn’t graduate college, rent versus owning a home, or are single or divorced.
In addition to all that, there’s this.
“We looked at premiums from Utah, and we found that if a driver with excellent credit pays an average annual premium of $564, which is not bad, but if the driver has only fair credit, their average premium jumps to $813, and if that driver has poor credit, their average premium jumps even more to $1,167,” said Delong. “That’s 107% more, so basically you’re paying twice as much for auto insurance just based on your credit score.”
If you want to save a penny or two, have you asked for a discount?
“Make sure you’re getting any discounts that you qualify for. Sometimes people leave discounts on the table,” shared Laura Longero, editor-in-chief for CarInsurance.com. “There are so many different things you can have discounts for. Check to see if you can bundle your homeowner’s insurance with your auto insurance policy. That can add a good discount. Same with renter’s.”
Anyone in the market for a more affordable rate, the Consumer Federation of America suggests:
SHOP AROUND – auto insurance companies calculate premiums differently on a variety of factors; getting quotes from multiple companies can help you choose a better deal.
CHECK YOUR CREDIT SCORE – The Consumer Federation of America is trying to ban companies from using this as a factor, but until then, if you can improve your credit score, that can help lower your rate.
UPDATE YOUR DRIVING HABITS – If those habits have changed and you now drive less, let your insurance company know; lower mileage usually means a better rate.
TAKE A DEFENSIVE DRIVING COURSE – Many companies offer discounts if you take one.
PAY IN FULL – It may not always be possible, but if you can, it’s cheaper to do so.
