Tips for Managing Auto Insurance Cost

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Most of us are restrained by a budget, which may make selecting the “cheapest” auto insurance policy attractive at times.  However, this is not an advisable insurance strategy for a number of reasons.  Instead, consider the following ways to manage the cost of quality auto insurance without taking unnecessary risks or putting your financial future at stake.

Factors (Somewhat) In Your Control

1) Improve your credit score.  Seems strange, but it’s true.  All insurance companies use Insuring Scoring when developing insurance rates.  Your Insurance Score is a version of your credit score, modified for a number of factors each insurance company feels best reflect your likelihood of filing claims.  Insurance Scoring was approved by state regulators a number of years ago and has proven to be an accurate factor when rating insurance products.  Improving your Insurance Score can significantly reduce your insurance costs.  There are a number of free resources available online for improving your credit score (and consequently, your Insurance Score).

2) Keep a clean driving record.  When you are issued a ticket, insurance companies re-assess your likelihood of being involved in an accident and adjust your rates accordingly.  Statistically speaking, drivers with tickets are more frequently involved in accidents than drivers without tickets, so keeping your driving record clean will help to maintain stable insurance rates.

3) Join an industry association.  Many insurance companies have sizable discounts for members of certain professional organizations, like the Michigan Association of CPAs (MICPA), the Michigan Education Association (MEA), and a number of Engineering Societies.   

4) Choose vehicles with top safety ratings.  One ride in your Uncle’s beat up rust bucket makes it obvious why safer vehicles should be less expensive to insure.  Vehicles with top safety features better protect the driver and passengers from injury, thereby reducing medical expenses associated with an accident.   

5) Use higher deductibles.  Insurance companies reward drivers that choose higher deductibles.  Choosing a higher deductible eliminates the urge to file a small claim, which reduces claim expenses incurred by the insurance company.  Most of these claim expense savings are passed along to the client in the way of reduced premiums.     

6) Consolidate.  Insuring your auto, home, umbrella, and other insurance policies with the same insurance company often creates the best total value.  

Factors (Mostly) Out of Your Control

1) Gas prices are (relatively) low.  Sounds like a good thing, right?  It is, in terms of the cost to fill up your tank.  But lower gas prices allow more people to drive more miles, which tends to result in more car accidents.  An increase in car accidents places upward pressure on insurance rates.

2) Medical costs are on the rise.  Have you noticed the increase in your health insurance cost this year?  Your health insurance plan probably costs between 18% and 30% more than it did last year.  An auto insurance policy covers medical expenses incurred due to a car accident, so auto insurance companies are feeling this squeeze as well. 

3) Vehicle repair costs are rising.  Have you taken your car to the shop recently?  If so, you probably noticed that labor and material costs are rising.  In addition, the increasing amount of technology included in even base model vehicles can add thousands of dollars to a seemingly simple repair.  These repair costs are passed on to insurance companies, which means they need to charge more for insurance in order to cover the increased repair costs.  

4) Distracted driving is catastrophic.  Insurance companies expected driver-assist safety features to cause a decrease in car accidents, and therefore a decrease in insurance costs.  However, distracted driving has caused the reverse to occur: there are more car accidents than ever and the severity of those car accidents is unprecedented.  Claims data shows an alarming number of car accidents where the at-fault driver didn’t even tap the brakes before impact.  These types of accidents cause serious damage to vehicles and significant injuries to drivers.

This article was written by Brian Boer.  Please reach out to Brian ( or any member of our team to discuss any of these tips that interest you.