How to Handle Rising Car Insurance Rates

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When Are Policyholders Notified of a Rate Change?

State laws regulate how car insurance companies inform policyholders about rate changes. For example:

• In Texas, if an insurance premium is going up by more than $10 or 10% of the previous month’s amount, the insurer must send a 30-day notice before the increase takes effect.
• In California, if a policy has been in effect for more than 60 days, the insurer must send a written notice to a policyholder at least 30 days before a rate hike kicks in.

Most often, insurers alert policyholders to rate changes shortly before it’s time for a policy to be renewed. Your rate might increase in your next term if, for example, you filed a claim during the policy period, received a speeding ticket, or got into a car crash.

What to Do About Rising Insurance Rates

So, what can you do if you’ve been told your car insurance rate is going up? You may be able to help soften the financial blow by:

• Shopping for a better rate: It’s generally recommended that you seek car insurance quotes from at least three companies when you’re searching for a better rate.
• Dropping coverage: If you’re driving an older car that’s paid off, consider getting rid of comprehensive and collision coverage.
• Increasing your deductible: If you raise your deductible from, say, $500 to $1,000, your premium might go down. Just remember that if you bump up your deductible, you’ll be on the hook for higher out-of-pocket costs when you file a claim.
• Switching to pay-per-mile coverage: Don’t get behind the wheel of your car all that often? If so, you might look into pay-per-mile coverage, which may be cheaper than traditional coverage.
• Contacting your insurer: Reach out to your insurance company or insurance agent to find out what they suggest to help ease the effect of a rate hike.
• Exploring discounts: Make sure you’re receiving all the car insurance discounts you qualify for, such as good driver and safe car discounts.

Find Ways To Save on Car Insurance

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The Bottom Line

A change in your car insurance rate, whether it comes during the policy term or at renewal time, can be good news or bad news. If the news is bad, consider shopping around for new coverage or adjusting your existing coverage, such as raising your deductible, to lower your premium. If you’re hunting for new coverage, consider using Experian’s free tool for comparing car insurance quotes.

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