How To Cut Insurance Premiums When Costs Are Rising

Read Time: 4 minutes

If you’ve bought a newer car recently – one with all the latest safety advances – you may have noticed something curious. Auto insurance costs have not fallen, they’ve actually gone up. 

Not just up a little, but up by a lot. According to the Bureau of Labor Statistics, between April 2023 and April 2024 motor vehicle insurance premiums rose 22.6% while motor vehicle maintenance and repair costs increased 7.6% during the same period.

How is it possible that fresh technologies designed to make cars safer have resulted in steeper insurance bills? Aren’t these new systems supposed to produce fewer claims?

Well, in fact, there’s evidence that the new technologies make crashes less frequent. That’s a good thing because fewer crashes mean fewer injuries and worse.

As Refi.com reported in April, data from the Insurance Institute for Highway Safety (IIHS) found that new safety systems help drivers avoid accidents, a sure way to reduce injuries and repair costs. 

For instance, park assist systems — rear auto brakes bundled with rear parking sensors and a rearview camera – lower crash rates by 75%. Blind spot monitors cut crash levels by 21% and forward collision systems knock down such events by 39%. You can also see big collision reductions with back-up monitors (16%) and rear automatic emergency braking (AEB) systems (28% fewer property damage liability claims and 10% fewer collision claims).

Reduced collision levels should make both insurance executives and drivers giddy. They represent fewer claims and reduced payouts. But, as so often happens, there’s a catch.

    • Soaring Repair Costs

New technologies can be expensive to repair. Very expensive. So yes, there are fewer crashes with modern chips and sensors, but repair bills can be higher.

A 2023 AAA study found that “advanced driver assistance systems (ADAS), like automatic emergency braking, blind spot monitoring, and lane departure warning, can add up to 37.6% to the total repair cost after a crash. This is due to the high cost of replacing and calibrating the sensors that operate these systems. Even minor damage to systems such as front radar or distance sensors can result in additional repair expenses of up to $1,540.”

Fortunately, there are ways to cut auto insurance costs.

    • How To Cut Insurance Expenses

There are a number of steps drivers can take to reduce insurance premiums.

Shop Around. According to J.D. Power, “Nearly half (49%) of auto insurance customers have actively shopped for a new policy in the past year. Of those, 29% have switched carriers.”

“After the past few years of steady auto insurance premium increases, customers are no longer passively keeping an eye out for a better deal,” said Stephen Crewdson, senior director of insurance business intelligence at J.D. Power. “Instead, they are actively seeking new carriers to offset these rising costs. However, with rising premiums across the country and fewer insurers explicitly offering usage-based insurance — or UBI plans — during the quoting process, insurance shoppers are not finding many alternatives.”

If 49% of auto insurance customers are looking for better deals, it means 51% are not. While drivers may not find something better may not find something better by shopping around, the majority who don’t search for better deals will not find lower costs or better coverage.

Accept A Bigger Deductible. When deductibles go up, insurer risk goes down. Take a look at how much you can save with a bigger deductible to see if an increase is worthwhile. If yes, stick the policy savings in a bank account. Cash in the account may grow over time to cover the entire deductible.

Be A Safe Driver. If you’ve been a safe driver for several years, you may get a discount.

Bundle. Multiple policies with one insurance company often result in a discount for each one – think of using one company to provide coverage for a home, two cars, a boat, etc. Check with insurance companies to see who can provide the best deal.

Pay-Per-Mile. If you don’t drive much – or have a backup vehicle that doesn’t get a lot of usage – consider Pay-Per-Mile plans. These programs likely have a small daily base rate plus a rate per mile and may work well with little-used vehicles.

Usage-based Insurance (UBI). Instead of looking at mileage, usage-based plans measure your driving habits and adjust rates up or down accordingly. The Progressive Casualty Insurance Company says UBI programs consider such measures as “your driving tendencies, including hard-braking, rapid acceleration, speed, distracted driving, and how quickly you take turns in the road.”

Pay-per-mile and UBI systems may not be attractive if you travel extensively by car for work or vacations.

As always, check with several insurance providers to see which options work best for you.  

Peter G. Miller

Peter G. Miller is a nationally-syndicated columnist, the author of seven books published originally by Harper & Row (including one with a co-author), and has contributed to leading online sites and major print publications. He has appeared on numerous media outlets including the Today Show, Oprah!, CNN, and NPR.

Peter has been an accredited correspondent on Capitol Hill and a member of the White House Correspondents Association. He has served with the District of Columbia National Guard and holds both BA and MS degrees from The American University in Washington, DC. View Peter on LinkedIn.