Why the Average Car Insurance Price Is Rising—and What You Can Do About It
Discover actions you can take to help counter the rising costs of car insurance premiums.
Nathan Hackett
Beef. Eggs. Meals out. Used cars. These days, it feels like every aspect of life has been affected by pervasive inflation. You probably see it in the bill when you go to the grocery store, when you shop for clothes or when you take that much-needed vacation. And your car insurance premiums could be rising, too.
As of May 2023, average car Insurance costs have risen a whopping 17% year over year according to the U.S. Bureau of Labor Statistics.
While inflation certainly plays a role, every aspect of the auto insurance business has become more expensive. Rising costs in relation to the price of gas, parts procurement and repairs (including labor) are all driving the average car insurance price upward.
AAA is here to help you find the best value and keep many of these costs down. Here are eight tips for lowering your car insurance premiums.
Nathan Hackett
1. Conduct a car insurance comparison.
Look at your own insurance first.
As car insurance premiums rise, your best bet is to look closely at your current policy. Do you have any coverage that you no longer need? Many Americans are driving less now, even though the U.S. government’s COVID-19 public health emergency declaration has ended. The number of vehicle miles traveled was 3% lower in 2022 than in 2019, according to the State Smart Transportation Initiative. If you are driving a lot less than you used to, let your insurer know this. You may qualify as a low-mileage driver.
Check out your options.
Explore your possibilities with a AAA Triple Check. This analysis will determine whether you have enough coverage without paying for protections you don’t need, even helping you to identify discounts you qualify for with AAA Insurance. Or, if you prefer, you can call and speak to an agent to get a full account of what you personally would be required to pay, as each driver is different.
2. Bundle your car insurance and homeowners insurance.
One way to lower your car insurance cost is to bundle your auto and homeowners insurance together with the same insurer. Let’s say you already have a homeowners policy with one insurer; you can call an agent and inquire about adding an auto policy to see how much you might save in comparison to other insurers. Or you can look around to see which insurers have the best insurance bundling offers.
By consolidating these two types of insurance with the same company, you can save money—sometimes up to 20%. Payments and communications are easier and more convenient when you only have to deal with one company, too. Bundling is a win-win, as long as you’re getting the coverage that you want and need from both your auto and homeowners policies.
3. Increase your deductible to lower your car insurance premium.
You can lower your car insurance premium by increasing your deductible. Your deductible is the amount you’ll have to pay out of pocket should you file a claim. If you’re willing to take on more risk, you can save some money on your premium.
Let’s say you know you’re a great driver, drive what’s considered a safe car and haven’t been in a crash for many years. It may be a reasonable to raise your deductible. But, you can’t predict things that are out of your control of course, such as other drivers’ behavior and the weather. You want to strike a balance and be comfortable with your own level of risk tolerance.
4. Improve your credit score to save on car insurance.
It may seem surprising, but you might be able to lower your insurance premium by improving your credit score and paying your insurance bill on time. Your credit score is part of the algorithm that some insurance companies use to calculate your premium, and the higher your score, the more of a break you’ll get on your premium.
In addition, signing up for online autopay so your bill is always paid on time is a good way to ensure that your account never gets flagged for late payment.
- Pay down any credit card debt you have.
- Pay your credit card bills in full every month.
- Avoid opening and closing credit cards frequently.
Thinking of Buying a Car?
AAA Can Help >>5. Save on car insurance by buying the right car.
Some cars cost more to insure than others. It’s not just sedans versus muscle cars. A newer car costs less to insure, as do models with lots of safety features and high safety ratings. A high-end model that costs a lot to purchase or lease will also likely have a high insurance premium.
In 2023, the least-expensive cars to insure included many small and midsize SUVs such as those made by Honda and Subaru. Some of the most-expensive vehicles to insure included models by Lexus, Dodge, Tesla and BMW.
So, whether you are in the market for a new car or a used car, you may want to take these factors into consideration in order to save money over the long term.
6. Consider usage-based insurance.
Many insurance companies offer usage-based policies by recording driving habits in real time through a smartphone app, such as AAADrive.* (AAA Members—even those who use a different insurer—can access AAADrive in the AAA Mobile app and use it for improving their driving skills, monitoring teens’ driving habits, gamifying safe driving on a long trip and other uses.)
Some companies award discounts on insurance premiums to customers who show a pattern of safe driving habits.
7. Avoid filing small insurance claims.
Filing lots of claims with your insurance company can drive up your premium. Sometimes it’s hard to know whether you should file a claim. Is it worth it? One easy way to figure that out: If you get in a fender-bender or a crash, simply use AAA’s Estimate Car Repair Costs tool.
Simply enter a few facts about your car and what parts are damaged, and the tool will give you an estimate of what it would cost to have your car fixed at a nearby a AAA Car Care center or AAA Approved Auto Repair facility—with a cost breakdown of parts, labor and member discount.
With this knowledge in hand, you can make an educated decision about whether it’s worth it to file a claim with your insurance company.
It’s also worth noting that responsible drivers are always less likely to have claims or violations that would likely raise their cost of insurance.
Nathan Hackett
8. Know where to go.
If you are in a crash, a tow truck will come and take your car to the nearest mechanic. However, if you want to make sure you’re headed to a trusted and vetted mechanic, go to AAA.com/ApprovedShops to find the AAA Car Care center or AAA Approved Auto Repair facility closest to you.
Eventually, inflation will subside, and things will come back into balance, but these tips for lowering the cost of car insurance will never go out of style.
*Not available in South Carolina, North Carolina or Colorado.