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The economy may be in the tank, yet inflation continues to drive the cost of living. According to the market experts, the recession has already given way to a recovery period. These experts seem to be more focused on stock prices than the unemployment rate, however. Workers are constantly looking for ways to save on regular expenses, so it is worth asking whether the rates of auto insurance have gone down or up and what can be done to minimize this necessary expense. The cost of state-run auto insurance programs, such as the California Low Cost Automobile Insurance Program, have decreased while income caps on eligibility have increased. Most states, however, do not have a similar program. According to the National Association of Insurance Commissioners, private insurance rates did not change significantly from 2007-2009. The NAIC further reported a 6.75 percent decrease in the 2009-2010 period. The American Automobile Association, on the other hand, found a 5.7 percent increase over the same period.
Conflicting Numbers Not the Point Nothing can be done by consumers to change the average insurance rates or the rate of inflation, just as they can’t do anything to change the nation’s economic state. But, plenty can be done to change the costs of premiums paid by your household. NAIC has found and assessed some of the most common tactics drivers are using to lower the insurance burden on their monthly budgets during this weak economic time.
Dangers of Policy Cancellation
Reducing monthly expenses is the only way for many families to save their homes and other assets from repossession. From 2010-2011 about 20 percent of drivers reduced or cancelled their policies. While reducing the policy may be a good idea in some cases, you need to check with the state commissioner to stay in compliance with state laws. Financed vehicles, for instance, require a state-specified level of insurance. Policy cancellation is never a good idea unless you intend to stop driving altogether. Lapses in coverage can cause future policies to be more expensive. Any accidents during the policy lapse can be financially devastating. Police in many states have been instructed to immediately impound vehicles without coverage, and those charges will be added to already hefty fines. There are better ways to lower the cost of insurance.
Early Action to Lower Expense
Several factors are considered by insurance providers in setting your premiums, and these may differ by state. About 20 percent of drivers have traded in newer cars for older ones, or dropped a second car entirely. This is a good strategy in any state. Another 40 percent of drivers reported using more public transportation to reduce the miles they drive. Some providers base their rates in part on mileage. Other changes to address early include:
– Select a higher deductible – Repair or strengthen your credit score (some states allow insurance providers to use your credit report)
– Take a defensive driver education class
There is no getting around the auto insurance requirement, and premiums are not responding to wage stagnation or unemployment numbers. There are still options for reducing the cost of insurance without canceling your policy.
Author bio: Michael Goodall is a freelance blogger who investigates cheap car insurance policies. Michael recommends www.carinsurance.org.uk as an affordable car insurance option during the recession.