Car insurance is a must have if you want to drive your vehicle, but with the rising costs of driving, what can you do if you can’t afford car insurance? Here we’ll explore your options in more detail.
Don’t Jump to Policy Cancelation:
Although you may be tempted to cancel your policy, this could have long term, serious consequences. Most states require drivers to have at least a minimum level of car insurance, so if you’re caught driving uninsured, you could face penalties including fines and higher future insurance costs.
Additionally, you need to bear in mind that starting a new policy is typically more expensive than remaining continuously insured.
A lapse in car insurance may also result in a requirement to file an SR-22. This is legal proof that you have purchased the minimum amount of auto insurance in your state. It is possible for an SR-22 to stay on your driving record for several years and some insurers will immediately refuse coverage.
Fortunately, there are some other steps you can try before you go to the last resort of canceling your policy.
Speak to Your Insurer:
If you are struggling to afford an upcoming bill, you should speak to your insurer as soon as possible. Some insurers have provisions that allow you to delay the bill or combine it into your future payments. If your financial issues are temporary, restructuring your payment schedule could be the easiest way to afford your insurance.
If you have already missed a payment, you may still be within the grace period that allows you to catch up without risking policy cancellation. The grace periods can vary by company and state, so it is important to speak to your insurer so you know what time you have to correct the problem.
Check for Discounts:
If you want to make your car insurance more affordable, it is well worth assessing the available discounts to see if you can qualify for any to be added to your policy. The discounts can vary greatly from insurer to insurer, but it is well worth checking. From getting good grades to signing up for paperless billing or auto pay, these discounts can make a significant difference to your premium costs. For example, Geico offers up to 15% discount for students who maintain a good academic record.
Adjust Your Deductible:
If you have your deductible at the lowest amount, you are likely to be paying more for your insurance. So, opting for a higher deductible is usually a sure way to reduce your premiums. Having a higher deductible indicates to the insurer that you have more financial stake in your insurance, and this is rewarded with a discount on your insurance costs.
If you’re consistently a safe driver and you’ve not filed a claim in the past, or you don’t drive that often, you may feel comfortable with a higher deductible. However, you do still need to consider how you will afford a large deductible if you do need to make a claim. You’ll need to find the balance between the level of deductible and how it impacts your insurance costs.
Adjust Your Coverage:
You should also make a full assessment of your coverage and if there are areas that you no longer need on your policy. If you drive an older vehicle and you are paying for collision and comprehensive coverage, this could be a good place to make some savings. Bear in mind that these coverages will only pay out the market value of your car less your deductible. So, if your vehicle is only worth $1000 and you have a $1000 deductible, you won’t receive anything if you need to make a claim under your collision or comprehensive cover.
You will need to make sure that you have at least the minimum requirement in your state, but if you have finance on your vehicle, your lender may stipulate certain levels of cover that you need to have in place.
Look at your existing policy coverages and see if there are areas where you can drop cover without compromising on your policy value.
Evaluate Pay Per Mile Cover:
Many insurers offer pay per mile insurance. This is priced with a combination of a monthly base and a mileage rate. This takes into consideration how many miles you drive. Typically the mileage is tracked using a smartphone app or a device that you plug into your diagnostic port.
If you rarely drive, pay per mile cover could work out cheaper than a standard policy. However, your driving behavior may be tracked, so if you demonstrate poor driving habits, it may increase your premiums.
Shop Around for Another Policy:
If you are not able to bring down the cost of your existing car insurance policy, it may be worth shopping around for a new policy. Some insurers offer a discount, simply for being a new customer. So, get a quote from three or four insurance companies to see if you can get a better deal.
If you have other car drivers in your household or you have other insurances, consider bundling your policies to bring down your premium costs. Many insurers offer a significant discount when you have multiple policies. So, if your homeowner’s insurance is due for renewal, consider getting a quote from your auto insurer and see how the bundling discount impacts the cost of both. For example, Progressive offers an average saving of 15% when you have two or more policies with the company, it’s one of the biggest savings – even compared to what Geico offers.
Work On Your Credit:
Many states use your credit as a factor when determining car insurance premiums, so drivers with poor credit often pay higher rates. Although improving your credit is not a quick fix, it will have a big impact on your insurance costs.
Try to work on your credit score by addressing your credit card balances, paying bills on time, and working to a budget.
In these challenging economic times, the cost of motoring seems to continue to increase. But, if you’re struggling to afford car insurance, there are steps you can take. The most important thing is to be proactive. The more time you have to strategize a solution, the more options you will have.