After nearly two years of rising car insurance premiums and few discounts, drivers may finally see relief. Industry experts report that insurance prices are stabilizing, giving shoppers a better chance to save money by switching policies.
For a long time, drivers were told to compare quotes to save on insurance. But during recent inflation spikes, the savings were often too small to make switching worthwhile. That is changing now as rate increases slow down.
Recent data from the Bureau of Labor Statistics shows motor-vehicle insurance costs rose 0.7% from April to May and are up 7% compared to last year. While still higher than average inflation, these increases are far less severe than the over 20% jumps seen last year.
Stephen Crewdson, managing director of insurance intelligence at J.D. Power, calls this a “buyer’s market.” Rate hikes are less steep, so more insurers are offering discounts and deals to attract customers. Companies are also spending more on advertising, which helps drivers find lower premiums. “More consumers can find better rates now than a year ago,” he said.
Switching activity backs this up. In May, just over 4% of drivers said they changed insurers within the past 30 days, close to last October’s record of 4.7%. The number of people switching has stayed above 4% for several months.
Joshua Damico, vice president at Jerry Services Inc., which runs an insurance shopping app, says drivers in states like Florida and Texas may find the best deals. Insurers in these regions have faced challenges from extreme weather but are now lowering prices and offering more flexible payment options.
However, Damico warns that uncertainty around tariffs on auto parts could limit how much rates drop. Repair costs affect premiums, so insurers remain cautious about cutting prices too quickly.
Despite improvements, car insurance remains a major expense. On average, drivers pay about $2,680 per year for full coverage and over $800 for minimum coverage, according to Bankrate data from June. These amounts have risen from $2,311 and $640 last year, respectively.
Will lower prices last? Crewdson says it depends on tariffs, but if conditions stay steady, the buyer’s market could continue for many months.
“It’s worth shopping around basically once a year,” said Chuck Bell, program director at Consumer Reports. His group found that drivers who switched insurers in the past five years saved a median of $461 annually. When premiums rise sharply, it’s even more important to look for deals.
How to Shop Smart and Save on Car Insurance
Insurance premiums are based on many factors. Bell explains insurers consider the car’s make and model, how often it’s driven, and driver details like driving record and credit history. Some consumer advocates argue credit scores shouldn’t affect rates, and several states ban the practice.
Drivers can check their credit scores for free through sites like AnnualCreditReport.com from Equifax, Experian, and TransUnion.
Bell advises caution when using online insurance aggregators that provide only one quote. These may be sales leads rather than the best offers. Instead, drivers should get quotes directly from insurers, use independent agents, or find websites that compare multiple companies side by side.
J.D. Power research shows that gathering about three quotes often reveals savings. If a driver gets six or seven quotes without seeing large differences, it might not be the best time to switch.
Extra Ways to Cut Costs
Drivers can save money beyond switching companies. Taking a defensive-driving course can lower rates. Some insurers offer “telematics” programs that track safe driving in exchange for discounts. While some find the tracking intrusive, it is often fairer than using credit scores.
Cutting collision or comprehensive coverage might reduce premiums, but drivers should be careful. Collision covers crash damage, and comprehensive covers other damages like storms or vandalism. Liability coverage, which covers damage to others, should always be kept.
As a car ages and loses value, paying for full coverage may not make financial sense. If the insurance premium exceeds 10% of the car’s market value, Bell says it might be time to reduce coverage. Drivers with outstanding car loans should consider their loan balance before cutting coverage.
Increasing deductibles is another way to save. A recent poll found 30% of drivers have raised their deductibles to lower costs. But Bell warns this means drivers pay more out of pocket after an accident, which is like self-insuring. Those who dislike risk should think carefully before increasing deductibles.
In summary, car insurance prices are easing after years of hikes. This shift creates more opportunities to find better deals. Drivers should compare quotes regularly and consider coverage options carefully to save money.
