4 reasons why you’re paying too much for auto insurance

4 reasons why you're paying too much for auto insurance

Driving is an essential aspect of millions of Americans' daily lives. Whether you are commuting to work or driving your kids to daycare, you will need to have auto insurance, which can be costly in certain situations. Searching online for cheap car insurance quotes can help you find an affordable policy, which could be beneficial as premiums continue to rise. 

In fact, insurance premiums increased 35 percent in 2013, accounting for an average bump of $153, according to the J.D. Power 2013 U.S. Auto Insurance Study. As a result, satisfaction among consumers with auto insurance companies decreased 10 points, to 794 out of 1000 points. 

"In 2013, there is a sharp rise in the number of customers who have experienced premium increases," said Jeremy Bowler, senior director of the global insurance practice at J.D. Power. "The dollar amount of those increases is also larger, averaging $153 in 2013, compared with an average rate increase of $113 reported in the 2012 study."

Whether you are well-off or struggling financially, seeing a higher auto insurance premium can bust your budget. The following are four reasons why you're paying too much for coverage:

1. Your low deductible affects your rate

When you purchase an auto insurance policy there are two costs you need to know – the premium and the deductible. If you feel as though your monthly premium is getting out of control, TODAY recommended calling your insurance provider and asking for a higher deductible – the amount you will need to pay before coverage kicks in. Therefore, increasing your deductible could mean a lower premium, but you should consider your budget before committing to a higher deductible and be comfortable with having a large out-of-pocket expense.

2. Your coverage doesn't fit your needs

Depending on what type of car you own – and how old it is – there might be coverage you are paying for that you don't need. For example, if your car is 15 years old and a low fair market value, you might consider if your current coverage options are right for your specific needs. You can visit Kelley Blue Book or Edmunds to find out the value of your vehicle. Remember, inadequate coverage could cost you in the long run should you need to file a claim. Therefore, it is important to get the right coverage.

3. You have a poor driving record

When determining your premium, insurance companies will consider numerous factors, including your driving record, according to Mint.com. So, if you drive poorly, piling up speeding tickets, you might be charged more for auto insurance than your peers. If you want to reduce your premium, it would be smart to obey traffic laws and speed limits. Mint.com said insurance companies consider your record for up to five years, so it may take some time for this reduction to come into play if you have a poor record.

4. You drive too much

In some cases, a more affordable auto insurance premium is as simple as reducing the amount of time you spend on the road. The fewer miles you drive, the lower risk that you will be in an accident, which means insurance companies can generally offer a lower premium. This may be difficult for people who commute to work Monday through Friday but, even then, there are ways to decrease your miles. For example, find someone in your area that is going the same direction and carpool. Not only could you cut down on your car insurance premium, but also the amount you spend on gas each month.