How to prepare for post-pandemic auto insurance hikes

For the first time in a decade, car insurance rates fell nationwide in 2020.

According to the Insurance Information Institute, the drop is a result of the considerable decline in driving amidst lockdowns and an estimated $14 billion of car insurance discounts related to the pandemic. As more people began to work and study from home and insurance companies sought to help struggling policyholders, many drivers have enjoyed some respite from their usual rates.

However, this insurance industry trend isn’t expected to last. While auto insurance rates dipped last year, they are still significantly higher than they were a decade ago, with the price of new cars and the frequency of severe car insurance claims on the rise. And as the vaccine rollout continues and the economy proceeds to reopen, more people will be hitting the road and filing claims, meaning car insurance rates are likely to rebound.

3 ways to prepare for car insurance hikes after the pandemic

Here are three ways you can prepare for impending auto insurance hikes while cutting the cost of coverage.

1. Shop around for better premiums
2. Increase your deductibles
3. Review your coverage

1. Shop around for better premiums

Car insurance rates can vary drastically from one carrier to the next. That’s because each car insurance company has its own standards for evaluating risk and setting rates, looking at factors like your credit score and driving history differently.

The best way to guarantee you’re getting the lowest rates is by shopping around. While one carrier might offer the lowest rates possible for a friend in a different state, they could be the most expensive option for you.

2. Increase your deductibles

When you buy car insurance, you usually get to set your deductible, the amount of money you’ll have to pay before your policy kicks in after an accident or other covered event.

While you may be tempted to choose the lowest deductible possible, which is often around $250, it comes with a catch. The lower the deductible you choose, the higher your monthly premiums will probably be, and vice versa. You should be able to lower your rate by bumping up your deductible.

3. Review your coverage

While the coverage you purchased may have made sense at the time, your car insurance probably needs to change. It’s important to review your policy to ensure you aren’t paying for coverage you don’t really need.

For example, if you’re driving a clunker that’s worth less than your deductible and annual premiums combined, you may want to consider dropping your comprehensive and collision coverage.

You could also save money by tossing benefits like roadside assistance. Or, you could find that you’re eligible for discounts that you weren’t before, like a student driver or accident-free discount.

If you anticipate driving rarely even after the pandemic has passed, you might save money by switching to a usage-based policy that tracks your mileage and allows you to pay as you go.

Next steps

You don’t have to be caught off guard when car insurance rates bounce back, and there’s no reason to put off reevaluating your car insurance. While car insurance companies may eventually halt their pandemic-related discounts and refunds, there are plenty of other discounts and ways to reduce your insurance cost in the long run.

To start saving on car insurance now:

1. Review your policy to make sure you have the right coverage
2. Adjust your deductible and coverage
3. Compare quotes to choose the right provider