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Publish Date - November 01, 2022

Author: Moses Mwangi

Categories:   Tips & Insights For Car Buying   

What To Do If You Can't Afford Car Insurance

Car insurance can be a huge expense for many vehicle owners, even when your car is paid off or you don't drive much. Moreover, accidents, traffic rule violations, and DUI charges on your driving record can worsen the situation.

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Car insurance can be a huge expense for many vehicle owners, even when your car is paid off or you don't drive much. Moreover, accidents, traffic rule violations, and DUI charges on your driving record can worsen the situation. An insurance lapse might also result in your state requiring you to file an SR-22 form.

Fortunately, you can take some steps to reduce your insurance bill if you can't afford your auto insurance premiums. Here is what to do if your car insurance costs have gotten out of hand.

1. Contact your insurance agency

Reach out to your insurance agent or company immediately if you know you can't afford the next insurance bill. Your insurance company may allow you to delay payment or combine your bills into future payments.

If you have missed a payment, insurers usually give a grace period in which you can still pay without risking your policy cancellation. Grace periods may vary depending on the state or company, so contact your insurer as soon as possible to learn how much time you have.

2. Minimize your coverage levels

It's a good idea to have full car insurance coverage, but it isn't legally required in most states. If you can't afford your insurance bill, you can adjust your coverage to as low as the state minimum requirement. Furthermore, you may consider dropping this coverage if you have comprehensive or collision coverage, but your fairly old vehicle is paid off and not worth much. However, make sure you can afford to repair or replace your car after an accident.

You should also eliminate any custom coverage or riders from your policy. For instance, you don't need rental car insurance when you don't tend to travel often.

3. Increase your deductibles

Raising your deductible is a great way to reduce car insurance costs. For instance, increasing your deductible from $200 to $500 could lower comprehensive, and collision coverage costs by 15%-30%. Raising your deductible to a $1000 comprehensive or collision deductible could save you up to 40% or even more.

However, other aspects may contribute to the premium savings you get or lose by adjusting your car insurance deductible. For instance, a more expensive car might result in a higher premium that could not significantly be lowered by raising your deductible. Only opt for this option if you can afford the huge deductible in case of a claim.

4. Shop for a new policy

Shop around and get insurance quotes from at least three providers to find the lowest premium before making your final decision. You will likely come across auto insurance that meets your needs and doesn't drain your pocket. Sometimes you can even secure a discount for being a new customer.

The best way to shop for new car insurance is to use online insurance comparison tools, such as PolicyGenius. These tools allow you to evaluate several providers' costs to help you determine which option works best for your needs and budget.

5. Look for available discounts

Almost every insurer offers various discount programs that serve different drivers. Ask your provider which discounts they offer and see whether you are eligible. Although they vary by insurer, you might get savings for various reasons, such as being a student with good grades, going accident-free for three years, or signing up for automatic payments and digital billing.

Sometimes, you can lower what you pay by taking a safe-drive course or bundling your insurance with another policy. If you can't afford car insurance since you are a new driver with less experience, consider sharing a policy with a parent or another responsible adult if possible.

6. Improve your credit score

Most states use a credit score to calculate car insurance premiums and drivers with bad credit often pay higher rates. Although you can't improve your credit score overnight, it can have a huge impact on reducing your insurance costs over time.

Fortunately, you can do several quick things to improve your credit score. Here are a few simple steps you can take:

  • Build your credit file
  • Make regular payments on time
  • Keep your credit utilization low
  • Limit how often you apply for new accounts
  • Check for incorrect information and report any errors in your report
  • Consider getting a credit builder card
  • See whether you could get an instant score boost

7. Consider pay-per-mile insurance

Pay-per-mile insurance, also known as pay-as-you-go insurance, is a new kind of cover that allows you to pay for the miles you drive and save when you don't. This type of insurance is created to reduce bills for individuals who don't drive much. It's a perfect cover if you drive less than 110 miles a week or 6,000 miles a year. Therefore, if you often use your vehicle for short trips or just on weekends, you could save by using pay-per-mile insurance.

Mileage is usually tracked through a smartphone application or device you plug into your vehicle's diagnostic port. Remember, your driving habit can be tracked, and poor driving behavior, such as driving late at night or hard braking, may increase your premium.

8. Trade in your car

Some cars cost more to insure than others. To reduce your premium, consider whether it makes financial sense to trade your vehicle for one that costs less to insure. Here is the average annual cost to insure common vehicle models:

  • Small sedan - $1315
  • Medium sedan - $1232
  • Large sedan - $1209
  • Electric car - $1215
  • Hybrid vehicle - $1200
  • Small SUV - $1074
  • Medium SUV - $1102

9. Use alternative transportation temporarily

If you have tried all these options but still can't get your bill down to an affordable amount, consider alternative transportation. Most cities offer cost-effective public transport, carpooling, and rideshare services you can use until you get a room in your budget for a monthly premium. If possible, you can also cycle or walk to cover short distances.

Final thoughts

The cost of car insurance is likely to continue to rise in the future. Luckily, there are many things you can do if you can't afford car insurance to help you reduce the sting. These options and tips can help you reduce your car insurance premium and get you driving in the right direction.