Three states saw car insurance prices spike by 25% in 2022 and experts say US drivers should prepare for even more sticker shock in 2023 — here are 5 ways to drive your costs down now

States with the highest insurance rate increases

For some drivers, it was less of a creep and more of a giant leap. In three states — Oregon, Maryland and Virginia — drivers were slammed with a 25% hike on their insurance bills.

Drivers in Utah, South Dakota, Minnesota, Wisconsin, Ohio and Tennessee fared little better, experiencing average price increases of 20-25% — and experts predict that insurance companies are not yet ready to hit the brakes on further increases across the country.

The good news is even if inflation continues to drive rates up, there are ways you can lessen the impact on your monthly budget.

Stop overpaying for home insurance

Home insurance is an essential expense – one that can often be pricey. You can lower your monthly recurring expenses by finding a more economical alternative for home insurance.

SmartFinancial can help you do just that. SmartFinancial’s online marketplace of vetted home insurance providers allows you to quickly shop around for rates from the country’s top insurance companies, and ensure you’re paying the lowest price possible for your home insurance.

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Cost of car insurance in 2023

The average annual cost of car insurance in the U.S. jumped by 9% to $1,777 in 2022, based on Insurify’s review of more than 69 million car insurance quotes.

“There are two main ‘drivers’ for the spike in insurance rates: consumers are driving more, and cars are more expensive than ever to repair,” says Dan Roccato, a professor of finance at the University of San Diego School of Business, in Insurify’s report. “It’s hard to see how this changes until we fix our inflation problem.”

The company predicts the average annual car insurance rate will rise by another 7% to $1,895 this year — and they may not stop there.

“The general consensus is that it will be eight to 12 months before rate increases begin to slow down, and some think it could be several years before prices fully stabilize,” says Betsy Stella, Vice President of Insurance Partnerships at Insurify, as part of the 2022 report.

Ways to lower your car insurance premium

If spiraling car insurance prices are already grinding your gears, here are five ways to rein in your insurance expenses.

1. Shop around and compare coverage

It can pay to shop around. If your policy is about to renew and the cost has jumped significantly, you should consider getting at least three quotes from other insurance companies — just in case you can get a lower rate.

Drivers can shop online or get the help of a local insurance agent to find the best deals where you live — but remember, cheap doesn’t always mean good when it comes to car insurance.

Ensure that you’re not cutting corners with coverage that will leave you paying substantially more out of pocket when you need to make a claim.

Getting a vehicle appraisal to understand what your car is worth and how much it would cost to repair or replace it is important when thinking about how much insurance coverage you need to buy.

If your car is old and worth less than 10 times the cost of your insurance, the Insurance Information Institute suggests dropping collision or comprehensive coverages to save money.

2. Low-risk, high-reward driving behavior

Safe driving protects you, other people on the road, and your wallet.

According to Insurify, having just one offense on your driving record can increase the price of your car insurance by an average of 34%. If you have a more serious violation on your record, like a DUI, you might have to pay twice as much as someone with a clean driving record.

Many insurance companies will give you a discount if you have a claims-free or violation-free history and do not pose a big risk to others on the road. If you’ve had a past mishap, you can regain the trust of your insurer (and your chance of a discount) by participating in an accredited vehicle safety or defensive driving course.

3. Budget for a larger deductible

When you buy car insurance, you will commit to a deductible, which is the amount of money you’ll have to pay out of pocket before your insurance company will pay any expenses associated with a claim.

If you increase your deductible, you can lower your monthly bill substantially. But this means you’ll need to make sure you have enough cash set aside to pay the deductible in full should you need to file a claim.

4. Consider a pay-as-you-go option

With usage-based insurance or pay-as-you-go insurance, you pay for the driving you actually do — not the driving your insurance company thinks you do.

As part of the process for this type of coverage, the insurance company will have a plug-in device or a mobile app which you would use to monitor your driving habits including how often and how far you drive, when you typically drive, and how safely you drive.

If the data gathered works in your favor — for example, you take infrequent, short trips and always obey the speed limit — you could receive a discount from your insurance company.

But it works in both ways. If you’re regularly driving long distances and you’re heavy-footed on the brakes, your insurance company could penalize you.

5. Research all the ways you can save

There are many discounts drivers can access to lower the cost of car insurance.

Long-time, loyal customers are often rewarded with special pricing, as are those who insure more than one driver or car and those who combine (or bundle) their home and auto insurance policies with the same insurance company.

Certain groups like students with good grades, and active, retired or reserve members of the military can also get discounts from many insurers – but the qualification rules vary by company.

Buying your insurance policy online, or using a payment method that is preferred by the insurance companies — like paying in one lump sum — can also result in savings.

Insurance companies like to understand your payment history and money management skills. Having a good credit score can help to limit your car insurance costs because it indicates that you are a risk-averse individual.

You can also invest in advanced safety and anti-theft features such as car alarms and LoJacks, which can bring down insurance costs over the long term.