What to Do When Your Car Insurance Becomes Unaffordable

Tips to Use When You Can't Afford Car InsuranceAccidents happen, but some accidents are more expensive than others. When it comes to multi-thousand dollar vehicles and the physical safety of other people, accidents can be downright unaffordable, even with decent auto insurance. If you were recently at fault for a car accident – even if you have years of clean driving records to prove it was a one-time incident – you will likely experience an increase in your premiums if the person you collided with decides to file a claim.

As the DMV points out, there are many different factors that influence auto insurance rates, including your car’s year/make/model, your age, and your credit history. Gender also plays a surprisingly significant role in determining car insurance rates, as statistics typically show that women drive fewer miles annually and get into fewer accidents compared to their male counterparts (which leads insurance companies to charge lower rates for women as a result).

What to Do When You Can’t Afford Car Insurance

If your car insurance is already borderline cost-prohibitive based on these factors without accounting for your driving record and you get in an accident that pushes your rates higher, then here are some ways to either save money on auto insurance or find cheaper alternatives to car insurance altogether:

Pay-Per-Mile Car Insurance

Do you drive less than 7,000 miles per year on average? Is your commute relatively short? If so, then special “low mile” insurance or pay-per-mile insurance could be an option for your situation. You could save around 2% on your insurance rates (or more in high-traffic states like California), though you need to verify your odometer reading each year (via photos, usually) to ensure you qualify for the discount.

Pay-per-mile insurance is currently offered through Metromile and Esurance in select states, and this type of policy offers the greatest savings for folks who drive less than 5,000 miles per year. You’re charged on a monthly basis for pay-per-mile policies, and the program relies on a telematics device that can track your mileage to determine your payments each month.

Reduce Your Liability Coverage

As long as you are still at or above your state’s minimum requirements for liability coverage, you could save money on your liability policy by decreasing your coverage amounts. Most states require at least $15,000 to 20,000 for bodily injury and $30,000 to $50,000 minimum for property damage liability.

If you are already well over your state’s minimum requirements for liability coverage, then decreasing your coverage could result in greater savings on your car insurance premiums. It’s not the ideal option, but it’s certainly preferable to attempting to drive without insurance!

Or, look to combine your policies. Members who insure their car and home with USAA save an average of $172 a year.

Uninsured Motorist Fee

Some states, such as Virginia and South Carolina, allow drivers to drive uninsured as long as they pay their respective DMVs an annual uninsured motorist fee of approximately $500-550. These states note that the uninsured motorist fee is not an insurance policy, but it allows you to legally drive without an insurance policy. You’re still on the hook for any damages you could cause in an accident deemed your fault, so this option is not recommended if you have a number of assets that could be at risk if you’re taken to court after an accident.

Take Out Co-Op Insurance 

A growing trend among drivers who are tired of dealing with traditional car insurance companies is the use of member-based, auto insurance co-ops. Some benefits of co-op auto insurance may include: better rates, discounts for safety equipment and training (e.g., safe driving course completion), and sometimes even first-accident forgiveness.

The issue with co-op insurance is that many groups require a clean driving record going into the co-op, so it’s best used as a preventative measure for drivers who want to save money on auto insurance before an accident ever occurs (though there may be exceptions to this rule, so it’s worth looking into).

Increase Your Income  

If the above car insurance options and alternatives are out of the question, then don’t give up. Instead, you could try to increase your income to expenses ratio to lower the percentage of your budget eaten up by car insurance premiums by taking on side gigs through Fiverr, selling old or up-cycled items on eBay, start driving for Uber, or offering services such as gardening or pet-sitting locally.

Even if you only make an additional $100-200 per month, it will still help you stay within your budget while dealing with temporarily high car insurance rates (just be sure to drive as carefully as possible for the next 1-3 years and watch your rates drop if you maintain a clean driving record).

Car insurance can become terribly expensive for anyone deemed at-fault for an accident (especially for young men who might have a traffic violation or accident on their record). However, it’s not the end of the world if your car insurance rates go up as a result.

Selling your car and canceling your insurance altogether won’t solve the issue if you still plan on returning behind the wheel in the future. You would then have a big gap in driving history to explain to your future insurers, but public transportation or riding a bike could be a viable alternative if you live in an area where everything you could want/need is pretty close by. Otherwise, try out the ideas above to save money on car insurance and remind yourself that rate increases are not permanent if you commit to driving as safe as possible in the future.

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