How to get the cheapest auto insurance in 2023

The Johns Family Agency Blog -

If you feel like you are good driver and your auto insurance rates increased an unjustifiably high amount this year, you are not alone.  While rates tend to go up about 5% per year, some drivers are seeing higher increases to to an increase in overall claims.

“But I haven’t had an accident!  Shouldn’t my rates go down?

In a perfect world, your insurance rates  go down if you are a good driver.

(But this isn’t a perfect world.)  Now sometimes your rates will go down if you are a good driver.  But often, even though you have not had an accident, other people have.

And its your premium that pays for their accidents.  It sounds unfair, but this is how insurance works!

Increases to your auto insurance rates can be due to factors that may be beyond your control….

Even if you have no recent changes or new violations or accidents, your premium change may be due to a general rate increase in your town, city or state. These may include the following:

  • Increase in costs due to rising accident frequency. The auto industry has seen a dramatic increase in the number of claims over the last year. This increase is driven by factors such as:
  • Population growth
  • Lower gas prices
  • Distracted driving (driving while engaged in other activities such as texting, talking on the phone or to a passenger, watching videos, eating, or reading)
  • Increase in the number of registered vehicles

More cars on the road often result in more accidents.

Increasing costs of  auto repairs. Auto insurance claims costs include vehicle repair costs, which are increasing.

Even though every car sales guy claims that the vehicles are ‘newer and safer’ (and this means insurance should be lower), new vehicles with their fancy technology and designs that absorb impact (crunch easily) are costly to fix.

  • Increasing costs of injury payments- medical costs and lawsuit liability payouts all factor into the cost of insurance. all of those fancy law firm advertisements on TV are paid for buy you, the policyholder!  All of the large settlements they talk about are pushing the rates for other drivers up and up.
  • General inflation and increased cost of living Since insurance can cover services from other industries, as costs fluctuate over time in other industries, auto insurance rates are adjusted to reflect those costs.

The cost of everything is only going up each year, so the idea that insurance will go down is not in line with overall inflation.

Changes you make to your policy will affect your insurance rates!

Some of these may increase or decrease your rate:

  • Adding or removing a car
  • Changing your address
  • Adding or removing a driver
  • Changing your coverage
  • Your price may also increase due to a new ticket(s) or a new accident(s).

But my accident was a ‘no fault’, I was not at fault.

Another misconception is that if you accident is not caused by your driving, that it is ‘not counted’ or weighted against you when your auto insurance rate is set.  This is simply untrue!  The only time an accident is considered completely not at fault is when your insurance company is able to recoup the full amount of the claim from another drivers insurance company. (This is called subrogation).

Subrogation is a term describing a legal right held by most insurance carriers to legally pursue a third party that caused an insurance loss to the insured. This is done in order to recover the amount of the claim paid by the insurance carrier to the insured for the loss.

So if your car was hit in a parking lot or on the street and your insurance company paid for the repair, this is a claim and is counted as a claim (although its weighted a little less than- say if you hit another vehicle.)

Why Are Auto Insurance Rates Continuing to Climb?

Like any business, companies need to sustain higher revenue than expenses in order to stay viable. Auto insurance is no different; companies make money off of the premiums customers pay, but lose money when they fulfill their obligation to pay for their customer’s damages. They also have a host of operating expenses to pay, including agent compensation and advertising.

The proportion of expenses to revenue is called the “combined loss ratio,” and whenever it is above 100%, the company loses more money than it is earning. In 2016, only two of the top 10 auto insurance companies in the country had combined ratios below 100%–and just barely.

So- how do you get the best rate on auto insurance? 

Well- there are a few things YOU can control.
And well, a few you really can’t….

Insurance companies are looking at your accident history.

So drive with caution, be alert and try not to have an accident.  An insurance company is like your mom- they are thinking that your history is a good indicator of what will happen in the future.  So- seriously, after you have a $20,000 total loss auto accident because you ran a stop sign you didn’t see- this would not be the time to shop around for new auto insurance.  That’s a pretty big claim and most companies will be worried about another one.

I know… you haven’t had an accident in 10 years.  Or ever.  And now they hold this against you.  It’s a bummer.  But- most companies only look back 3 years, so you can easily get back on track.   Just watch those stop signs- they tend to jump out of no where!  LOL

Insurance companies are looking at your Motor vehicle history

For things like (but not limited to)- speeding tickets, red light tickets, license suspensions, DUIs.  So again- drive with caution, be alert and obey the traffic laws.  Obviously, some infractions are weighted more seriously than others (DUIs for instance come up even after 10 years. So when in doubt- take an UBER.)  However even red-light camera tickets show up on license reports and can increase your rates.

Ugh, I know I hate those cameras too!

(A little more surprising) insurance companies are looking at your credit score.

A large part of your rate is determined by your credit.  So if you have excellent credit- you will have the most preferred rates.  I have some clients and I almost feel like we are paying them to get insurance every month their rates are so good.  So- pay your bills on time.  Establish good financial habits.  Watch how much credit you are utilizing.  And if you are buying a home, shop for a home and auto insurance bundle before you close.  Don’t wait until you own the home to look at auto insurance, because the mortgage debt affects your score and typically increases your rates.

And if you need help with credit repair – there are lots of companies who can help!

(A little less surprising) Insurance companies are looking at where you live and the frequency and severity of accidents in your neighborhood. 

That’s why rates in NYC are so high, Brooklyn has some of the highest auto insurance rates in the nation.  Lucky for you live in Westchester (or Putman, Dutchess, Rockland) and the rates here are not nearly as high.

And some other good ideas to help you lower your rates:

Take accident prevention- this 6 hour course can save you up to 10% on your auto insurance and is good for 3 years!  Here is a list of a few places where you can take this course.

Bundle, bundle, bundle!  Bundling is not just for newborns (oh wait that’s swaddling)

Anyway, you can save up to 35% by combining home and auto insurance (or condo/ coop/ renters and auto insurance)!

Take advantage of pay in full or automatic payment discounts.  With some insurance companies you will save 7-10% just for paying 6 or 12 months in full or having the payment taken automatically each month.  This is a no brainer!

You may save on premium with a newer or larger vehicle.  Thinking of selling your Smart Car for 2?  You may find that a newer full size sedan or SUV will have lower rates since the safety features are more advanced.  And larger cars tend have a lower rates than smaller vehicles since they are safer in front crash tests.

So- all those TV ads are going to your head yet?

‘Save 15% in 15 minutes’, ‘Flo with Name Your Price’, ‘Like a good neighbor Jake from (you know where) is there with the discount double check.’ And who is that football player with that catchy insurance jingle- oh yeah Peyton Manning?  I mean his contract must be big bucks!

So I don’t really watch a lot of regular TV, but when I do I will tell you insurance companies spend a ton of money advertising that you can get the cheapest rate with them.  A ton!  Between them and food commercials (Hello Mickey D’s) I want to eat and save on insurance. (Ok, it could be just me!)

But realty- who doesn’t want to pay less?  I mean, lets be real.  No one wants to pay more for less.  For anything.  But then you should really be concerned that you may be paying less and getting less.  And, unless you really understand insurance coverage or have a claim- you may not even know if how much less coverage you have.  I mean you don’t get filet migion at Mickey D’s, right?  You just get a hamburger.

Unsure if you have good coverage at a great price or if you just have cheap insurance?

Contact our office and we can review it for you!

Next Steps: Want to discuss your insurance needs to make sure you are properly covered?  Please give us a shout, we are happy to help!

So…. if you are still confused (or maybe even more confused!), and want to talk with an expert who can walk you through your options…. lets set a time to chat!

Or shoot me an email if that’s more your style-

I speak insurance, so you don’t have to!