How to Budget for Car Insurance: 2022 Guide


Getting your first car is truly a life-changing experience, but it also involves responsibilities, such as insurance. Insurance is mandatory in 49 of the 50 U.S. states, with New Hampshire being the only exception. However, residents of NH have to show proof of their financial stability in lieu of insurance.

But this leaves millions of residents in the U.S. still needing car insurance. One of the first questions that pop up during this process is “How much is car insurance?” As we’ll find out, the answer largely depends on your state and factors like the type of car you own or want to own.

Here are some ways you can budget for car insurance in 2022:

Check Insurance Options Before Getting the Car

The best way to avoid any shocks when budgeting for car insurance is to go through all the available insurance options before buying the automobile. Insurance premiums for a hatchback are different from those of an SUV. Meanwhile, luxury cars naturally demand higher premiums considering the high cost of replacement parts.

So have a closer look at the policies of some of the top insurance providers in the U.S., and compare rates to get a better picture of what you could end up paying. Car owners will have to choose between comprehensive plans or more specific options like liability coverage, collision insurance, or uninsured and underinsured motorist coverage. Depending on where you live, some of these options could be compulsory, so be sure to check with your dealer regarding the state requirements.

Reevaluate Your Policy

If you’ve already had insurance for roughly a year and are looking for a renewal, it can help to consider other options. Since car insurance companies are incentivized to add as many policies to a consumer as possible, you may have some coverages on your policy that you don’t really need. So when your policy is up for renewal, take a closer look at the document to leave out things you wouldn’t want.

When you’ve identified the coverages you want to remove from your policy, get in touch with the company or the agent that sold you the insurance and ask them to make the changes. This could potentially save a substantial amount on your premiums in the long run.

 Combine Car Insurance With Other Insurance Plans

In most cases, your car insurance provider also offers other types of insurance, such as property or auto insurance. By combining multiple insurance plans with the same provider, customers can save significant money, especially when purchasing insurance from different providers. But only some insurance companies provide this facility. So we recommend doing your due diligence before looking to combine car and other insurance plans from the same provider.

Improve or Keep a Good Credit Score

Credit scores are a key factor in determining your car insurance premiums. Keeping a healthy credit score makes you increasingly likely to get reasonably priced premiums. In stark contrast, a poor credit score translates to high monthly premiums.

Improving your credit score may seem tricky at first, but all it takes is timely payments on your bills or, if possible, paying before the bill is due. Late payments can reflect poorly on your overall credit score. Additionally, having a respectable credit score also helps individuals in the long run, particularly if they want to get a mortgage in the future.

Ask Your Provider About Low Mileage Discounts

Another easy way to save money on car insurance is to seek a low mileage discount on your policy. As you’ve probably guessed already, this only applies to owners who don’t use their cars too much. Since the car isn’t being used too much, it is less likely to get into an accident. Hence, some insurers can reward such customers with discounts on their premiums. Each insurance provider will have a cap on the maximum mileage to be eligible for a discount. So contact your insurance provider or agent to learn if your vehicle fits the criteria.

The Bottom Line

Car insurance comes in multiple shapes and sizes, though they can be classified into comprehensive car insurance and other individual coverages. If you’re unsure about which insurance is best for you, it always helps to browse online for the types of car insurance available in your state.

Dealerships also offer insurance coverage for cars, but it’s not always the case. Contact your nearest car dealership to know if they offer insurance, and be sure to compare the cost with other providers. Insurance experts suggest getting at least three to four quotes from different insurance companies. Going through customer reviews for the insurance companies also goes a long way in helping you make the decision.


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