Owning a car is a necessity, not a convenience, for millions of Americans. Whether commuting to work, running errands, or taking kids to school, reliable transportation is something most people can’t do without. But these past few years, one unavoidable car ownership expense dug deeper into their wallets: car insurance.
As premiums soar to record highs, drivers are confronted with a tough budgeting dilemma: how to stay protected without breaking the bank. Some are cutting back on essentials like groceries, clothes, and family trips to offset high car insurance costs, while others are making changes to their coverage levels to save money.
While these actions provide at least some immediate relief, none are true long-term solutions, car insurance savings app Jerry explains. Keep reading to gain a clearer understanding of the current market and learn smarter ways to save without sacrificing your protection or lifestyle.
The Affordability Crisis
More drivers are shopping for car insurance than in previous years, rising from 38% in 2023 to 55% in 2024, according to this year’s State of the American Driver Report.
Why is that? The monthly U.S. Consumer Price Index shows car insurance rates rose at the fastest pace in decades, climbing by over 20% or more year-over-year. Insurers are still trying to find ways to pause rate increases, and in some cases roll them back, to provide some relief, but underlying cost-drivers are making it more difficult to reverse the upward trend. Rising repair costs, medical expenses, and inflation affecting car-related services continue to push rates higher, leaving industry experts predicting that this will persist throughout 2025.
Eight in 10 drivers already found car insurance unaffordable at the time of the Jerry survey, which also found that the majority of drivers were forced to cut spending elsewhere to offset higher car insurance costs. Nearly a third said they spent less money on family vacations (32%) and clothing (30%) due to insurance costs, while more than a quarter (26%) spent less on groceries. Only 37% of respondents said they didn’t cut other spending at all.
The Risky Trade-Off
To make car insurance expenses more sustainable, many drivers are making changes to their coverage. More than a quarter (27%) of insured drivers chose a higher deductible in exchange for a lower rate. Another 26% of drivers bought less coverage than they previously had—and nearly two thirds of them (63%) said they bought less than they might need.
Even the highest-earning American households haven’t escaped the pain of years of rate hikes. Among households earning more than $129,000 annually before taxes, more than 1 in 5 chose a higher deductible and 14% said they bought less coverage. Of those who bought less coverage, 53% said they got less than they thought they might need.
For some, the high cost of protection meant going uninsured for a time. Nearly 10% (9.7%) of American drivers admitted they went without insurance for at least some period in the past year because they couldn’t afford the premiums.
But imagine getting into an accident and discovering that the cheaper policy you switched to doesn’t cover the full cost of repairs. Or worse, being uninsured or hit by an uninsured driver with no safety net in place. Without sufficient coverage, a single accident could result in thousands of dollars in out-of-pocket expenses. That’s money most households simply don’t have.
Smarter Ways To Save on Car Insurance
These short-term moves can have serious, more expensive long-term consequences. Luckily, there are smarter, safer ways to lower your premiums while still maintaining the coverage you need. Many drivers don’t realize that small changes can lead to significant savings, so here are five effective strategies for reducing insurance costs without taking unnecessary risks:
- Shop around for the best rate: Never settle for the first policy you find. Take a few minutes to compare quotes from different insurers; doing so could lead to significant savings without compromising coverage. To make the process even easier, you can use an online tool to compare car insurance quotes in minutes.
- Consider telematics: If you’re a safe or infrequent driver, opting into telematics programs lets insurers track your driving habits in exchange for discounts. If you’re a safe driver, this could significantly lower your premium. Programs like these reward you for things like smooth braking and steady speeds.
- Bundle policies: Many insurers offer discounts for bundling car insurance with homeowners, renters, or life insurance policies. This can add up to substantial savings over time.
- Ask about discounts: From good driver and good student discounts to savings for military members and senior citizens, insurers offer various ways to reduce your rate. Always ask about your eligibility.
- Improve your credit score: In most states, insurance companies use credit scores to help determine premiums. A better credit score can lead to lower car insurance rates, not to mention better loan terms, lower interest rates, and improved financial opportunities overall.
Bottom Line
Car insurance is a necessary expense but it doesn’t have to become a financial burden if you know where to look for savings. By shopping smart, taking advantage of discounts, and adjusting policy details wisely, it’s still possible to save and make car ownership more affordable and accessible.
