Suze Orman: 5 Ways To Safely Minimize Car Insurance Costs
Written by
Adam Palasciano
Edited by
Daria Uhlig
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In most areas of the U.S., having a car is a necessity to get around. But the cost of insuring a car has increased significantly in the past few years. In the past year alone, premiums have climbed 19.5%, according to the Bureau of Labor Statistics’ Consumer Price Index Summary for June.
“The reality is that car insurance is now so expensive it has shifted from one of those costs you just swallow hard as a necessary household expense, to a big budget hit that deserves your strategic attention on how to (safely) minimize your costs,” personal finance expert Suze Orman wrote in a recent post on her namesake blog.
If you’re hemorrhaging money on your car insurance premiums these days and are struggling to make ends meet, Orman has some advice that can help you get the cost under control without compromising your coverage.
Research Insurance Rates Before You Buy a Car
You might have a reasonable premium on your current vehicle, but you can’t assume that your premium will cost the same for a different car. Factors such as the price of a particular make and model, the number of insurance claims involving it and repair costs all affect the insurance rate, according to Progressive.
Once you’ve narrowed your choices to a few makes and models, call your insurance company for quotes, and consider the long-term costs before you make a final decision.
Think About Getting Rid of a Car
You might want to ask yourself: Do I really need my car? Perhaps you work from home full-time and only use your car a couple of times per week. Or, maybe you have multiple cars in your household that can be shared. Cutting back on just one vehicle could mean thousands of dollars of savings annually.
Consider Usage-Based Insurance
These days, many insurance companies offer usage-based insurance coverage. With these policies, your premium has a base monthly rate, and you’re charged a fee per mile that you drive. So, if you don’t drive much, or your car is mainly used for quick errands around town, switching to this type of policy could save you a lot.
Compare Quotes
There are many auto insurance companies on the market, and they’re all competing for your business. If you’ve stuck with your existing insurer for years because you think you’re getting the best price, you could save money by shopping around. Be sure to compare quotes from multiple companies before making a switch.
Opt for a Higher Deductible
The deductible is the amount you’re responsible for paying out-of-pocket on your insurance claims. Electing a higher deductible can save you money by reducing your monthly premiums. However, you’ll need to have extra cash saved to cover the cost of your deductible should you need to file a claim.
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