In today’s complicated world of skyrocketing insurance rates, drivers might feel as if it takes a math professor to understand how to get cheaper car insurance. Well, good news: We talked to Rick Gorvett, Professor of Math and Actuarial Science at Bryant University, to get his insider tips.
Here are a few of the best ways, backed by the power of math, to get cheaper car insurance in 2024.
1. Shop around for auto insurance
It’s surprising how many drivers don’t do this. The Motley Fool Ascent’s research recently found that 20% of drivers have never shopped for cheaper car insurance, and only 26% shop for price quotes every year.
Professor Rick Gorvett recommends rate shopping to compare prices among car insurance companies. “Different insurers have different rates for the various characteristics of cars and drivers, and there is no surefire way to determine which company will have the most competitive price without having them develop a full premium quote for you,” he said.
Drivers who aren’t happy with the price they’re paying for their current car insurance should really consider making the effort to get price quotes from other insurers. Some other car insurance companies might offer a better deal or rate the driver as a lower risk. There are often a wider range of options for car insurance prices, beyond what a driver’s current insurance company can provide.
Professor Gorvett says it’s important to understand the diversity and complexity of the insurance marketplace. America has a competitive auto insurance market, full of companies trying to win new customers (and hold on to their current ones).
“There are many insurance organizations, of many different types, from big national insurers, to smaller regional insurers, to online-based insurtech firms,” Professor Rick Gorvett said. “Insurer prices and market shares can differ significantly across different states, territories, coverages, and driver classifications. So the ‘best insurer’ for a particular policyholder and location may not be the same as for another policyholder and location.”
The takeaway: All drivers have the power to take initiative and shop around for cheaper car insurance. Especially for drivers who have been with the same car insurance company for a few years, there might be better options available.
2. Try telematics car insurance
Another intriguing type of car insurance that many drivers might not have tried is called telematics car insurance. Also known as usage-based insurance, these plans reward safer driving behaviors based on actual driving data.
Professor Rick Gorvett recommends telematics car insurance as an option for drivers who feel that they haven’t gotten a fair shake or accurate risk ratings from insurance companies.
“What if your driving record or driver characteristics are not as favorable as you’d like? One possibility is to consider a telematics option,” said Gorvett. “Many insurers offer an option to install a device in your car which monitors driving behavior and adjusts premiums accordingly. For a driver who believes their past experience is not indicative of the current quality of their driving, this may be an option to consider.”
The takeaway: Telematics car insurance might make sense for drivers who have an accident history on their driving record, don’t drive many miles per day, or like the idea of getting more control over their premiums. Many of the best car insurance companies offer this kind of special car insurance that rewards safer driving — but drivers must agree to share some of their driving data, often via mobile app or other device.
3. Bundling auto with a personal umbrella policy
Insurance companies always want to get more business from their existing customers. So when drivers agree to bundle multiple cars, or multiple policies (like bundling home and auto insurance) with the same insurance company, they can often save big money.
Along with bundling home and auto, Professor Gorvett recommends one more unique strategy to save money when bundling auto insurance with other insurance policies. It’s called a personal umbrella insurance policy.
“It might even be worth asking about also purchasing a personal umbrella insurance policy, to provide additional liability coverage,” said Gorvett. “Such a policy can sometimes be more cost-effective than trying to buy higher limits in your primary auto policy. You would want to discuss the specifics with your insurer or agent, to make sure your coverages line up appropriately and that you are optimizing your premium dollar.”
Personal umbrella coverage can also be more generous and lower-cost than a similar amount of auto insurance. For example, I pay about $20 per month for a $1 million personal umbrella policy. A similar amount of auto insurance liability coverage might cost more than that (or might not even be offered by the car insurance company).
The takeaway: Bundle home and auto insurance, and add a personal umbrella policy if possible. Getting a personal umbrella insurance policy can be a great financial move, because it protects drivers and their families from some of life’s worst-case scenarios, like being held liable for a million-dollar lawsuit.
Bottom line
The math doesn’t lie: Car insurance doesn’t have to stay so expensive. There are a few things drivers can do to reduce car insurance costs. For example, anyone who’s tired of paying high prices for car insurance can shop around for cheaper car insurance rates. Don’t forget savvy strategies like telematics car insurance or adding a personal umbrella policy.
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