Don't get taken for a ride by your car insurer

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0:14Camila Domonoske:You're listening to Life Kit from NPR. Hey, it's Mariel. When I was in high school, my dad wouldn't let me get a driver's license. Yep. Dad, if you're listening, I'm telling everybody. Nah, I mean, he was concerned about safety. Thought that I and my brother were too young to take on the responsibility of driving. Of course, I just ended up getting rides from friends. LOL. But I digress. Want to know another reason to not let your teenager drive? Well, it makes your insurance go up a significant amount. And have you seen car insurance prices these days? Between the start of 2022 and the start of 2025, rates jumped by more than 50%, according to the Bureau of Labor Statistics.

0:59Camila Domonoske:There are a whole bunch of reasons for that, but it boils down to lots of things are expensive right now, including the cost of car repairs. Now, car insurance prices have been leveling off, but they're still uncomfortably high for a lot of people. So on this episode of Life Kit, we're taking a look at this big, not exactly optional expense and what you can do about it. I'll talk to NPR's cars and energy correspondent, Camila Domenoski, about how to shop around, how your credit score and zip code can affect your car insurance, and what to do about that and why, when you're buying a car, you should price out the insurance for that particular make and model first.

1:36Camila Domonoske:That's coming up after the break.

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2:20Camila Domonoske:All right, Camila, you've been reporting on this. Car insurance rates have gone up a lot. What are people supposed to do about this? So what are your options? The number one recommendation that experts make is to shop around, like actually compare what you can get from different companies. I don't want to sound like an ad here, but it is literally true that you could save hundreds or in some cases thousands by switching providers. You know, companies assume that you won't do that because it's kind of a pain to get quotes and shop around. So you can really miss out on savings if you follow the path of least resistance.

2:59Camila Domonoske:By the way, can you negotiate with a car insurance provider and say, hey, could you lower my rates or could you offer me something a little more competitive? It's not really negotiable in the way that some things that we buy you can haggle. But what you can do while you're comparing policies is make sure you look for all the possible discounts. All the companies have discounts that you can stack on top of each other, and you should make sure that you're looking at everything that you might possibly qualify for. And again, compare between different companies. I use an insurance broker who looks at a lot of different companies.

3:36Lots of people get quotes themselves online and look at different companies, and that's really important. The couple other things that we have to talk about that are really important for keeping your insurance costs down, One is obviously drive safely. If you have no accidents on your record, your insurance is going to be cheaper. And then we also need to talk about credit ratings. How does your credit score affect your car insurance? Enormously. And I should note that insurance is regulated on a state-by-state basis, so it will depend on where you are. There are a few states that prohibit companies from factoring credit scores into insurance, but most states allow it.

4:20And so this means that even drivers who have a perfect driving score, great history of being a really safe driver, but have bad credit, they can wind up with really high insurance premiums. And this is a really big issue. You know, our colleagues on NPR's investigations team, they actually did a project about this last year that people can find on NPR's website where you can plug in your zip code and see how big of a difference your credit score makes in what you'll pay for car insurance. And it can be thousands and thousands of dollars. And there's a big question of whether this is fair, right?

5:01Yeah. Part of the argument for why companies factor this in is that drivers who have poor credit, lower incomes, lower savings, if they get in a crash, they are more likely to actually use their insurance.

5:14Camila Domonoske:Well, we should all be able to use it if we're paying for it and get in a crash. I mean, yes, you are paying for it. That is the whole deal that if you get in a crash, they will pay you. But richer people are more likely to pay out of pocket to keep their premiums low, right? I was listening to the Chicago Federal Reserve's auto symposium last month, and Doug Heller spoke. He's an insurance expert at the Consumer Federation of America, and he pointed out that it's actually not just credit scores. There are actually a lot of other quote-unquote non-driving factors that companies consider when they're setting rates.

5:48Blue-collar workers might pay more than people with white-collar jobs. People without college degrees can pay more. It varies by insurance company. Here's what he said. Each and every one of those, low credit, blue collar, high school educated, all of those accumulate on lower and moderate income folks, which means that the real pain of the higher cost of repair, of trade issues, tariffs, all of those, those get foisted more directly on those who are already most vulnerable in terms of being able to afford life in the insurance market. All right.

6:21Camila Domonoske:So if you are in this situation where you may be charged more for car insurance because you have a lower credit score or because you have a blue-collar job or you live in a certain zip code, is there anything you can do about that? Yes, there is. First off, it is really important to shop around, right? Because different companies weight these factors differently. So your credit score, your job, some companies might weight them more or less than others. So it is just super important to compare. Also, it's not a quick fix, obviously, but bring up that credit score if you can. It will really save money in the long run.

6:59And then if you're married and one of you has better credit or factors that might weigh in your favor, you might use that person's name on the policy. Shannon Martin, who is an insurance expert with Bankrate, she said that that can sometimes help.

7:16Camila Domonoske:You mentioned that there are people who aren't using the insurance that they pay for because they don't want their premiums to go up after a car crash. So they just pay out of pocket for any damage. Well, how might you figure out whether it's worth filing a claim after you do have an incident? Yeah, I mean, obviously, this is going to vary case by case based on what happened and state by state because state rules vary. If you have an insurance broker, somebody who works for you and not for your insurance company specifically, great person to call for advice. General principles here, if you're in a crash with someone else, you are almost certainly going to want to get your insurance involved.

7:56There might be more liability than you think at first glance, or they might file a claim against you. Shannon with Bankrate, she said, if you don't report that kind of crash to your insurer, it really increases the risk of disputes in that situation. So collision with someone else, you really wanna call your insurance. If it's just you though, it's a single car crash, you're gonna look at how much damage is involved and you wanna compare it to the cost of your deductible, the amount that you'll have to pay anyway, even if you file a claim. And then how much money are you actually going to get from insurance after your deductible?

8:31And if you can afford to pay it out of pocket, then it might be worth paying that rather than having your premiums go up for several years. Or maybe if the damage is just cosmetic, I have a dent in the door of my car right now that, you know, it's just a dent in the door. It drives just fine. Certainly not going to pay to get that fixed.

8:50Camila Domonoske:I mean, I do feel like people have unrealistic expectations for how their cars are supposed to look. Like you're driving this thing around in the world, parking next to other people. It is going to see some wear and tear. I say embrace the dents. We're pro-dent in my household also. You know, they don't need to look perfect. A car is forgetting you a place. We'll have more Life Kit after the break.

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9:52Camila Domonoske:All right, well, any other tips for people who are buying car insurance? Yeah, I would actually recommend that people start thinking about car insurance even before they purchase a car, if possible. So price it out. Look at what car insurance for that vehicle would run you because it can be a huge difference in what you're paying based on what you buy. This used to be not very common. People would buy a vehicle and then get car insurance for whatever they got. But with the price of insurance increasing so much, it's really a lot more common now for people to think about this on the front end. I will also note, you know, it's worth considering whether you can actually get by with fewer cars than you think.

10:33That's obviously a bigger question, but something to think about. The other thing, Shannon Martin at Bankrate really emphasized making sure that you're looking at what you get for the cost of your premium because buying insurance is a cost-benefit analysis of how much coverage do you want to have in a worst-case scenario where you get in a collision. How high of a deductible are you comfortable with? If you have a higher deductible, then you'll have lower premiums, right? So keep in mind when you're comparing policies to each other that you are comparing apples to apples.

11:07Camila Domonoske:Okay, now did I hear this right? That in this moment, in this era, you have been telling people to actually consider paying more for their car insurance? Yes, you're hearing that right. you might actually want to pay more for insurance by adding uninsured and underinsured coverage. So that's coverage that kicks in if you get into a collision and the other party doesn't have coverage or doesn't have enough coverage and more people are driving uninsured right now because costs are so high. And Shannon Martin also says you might want to look into paying more to raise the limits on your insurance because costs have been going up for insurance companies.

11:51So higher medical bills, higher repair bills, all those things also have gone up for you and your vehicle if you get into a collision right now. And the thing is your premiums have gone up, but that doesn't mean that your policy has increased what they're willing to pay out to you in that kind of a crash. So if you established coverage a few years ago, it might not be enough. People are getting into crashes right now, thinking they'll be covered, and then finding their policy won't cover everything. Here's what Shannon had to say about that. With car insurance in particular, there's a feeling that you're paying more and you're getting less, and that's because you honestly are.

12:31So it costs you more to buy your policy, but they don't increase the limits for you on your policy. It's not fun advice, but you might want to look into voluntarily increasing the limits on your policy. It will increase your premiums by a small amount, but it would then mean that if you actually get into a collision, you would be more likely to be able to cover all of the costs.

12:52Camila Domonoske:Okay. Here's a common question. What about if you have a teenager in the house and they drive your car? Well, it makes your insurance go up a significant amount. So certainly one option is maybe they don't get to drive your car, at least not right away, right? I spoke to one mom who had been weighing this, her name is Brandy Levine, and she lives in Yakima, Washington with her 17-year-old son, Josiah. She looked into what it would take to add her son. I went through the process to see what it would cost to add him, and they told me it would be$350 a month. And I'm like, I can't do this. That's so much money.

13:32More than double her costs right now. So Josiah is not on insurance. I asked Josiah how he felt about it, and he was like, he would love to have access to a car. Just to go somewhere outside of Yakima, like, you know, just not being in this cycle where I'm just stuck in this town, stuck with the same life, stuck in the same living situation. And he's going to be in that spot until he can find a job and pay the cost of getting that insurance coverage himself. I will also note one more thing here. Shannon Martin recommends that you not let teenagers get driver's licenses at all until you've run the numbers and talked with them and made the decision about insurance.

14:12Because some insurance companies will see that you have a teenage driver with a license in your house and assume that that person is driving, whether or not you give them the keys. Oh, no.

14:22Camila Domonoske:Okay. Well, what do you do if you are at the point where you really can't afford your car insurance? Yeah. I will note that even though it is legally required, we do know that when car insurance rates go up, the number of people who drive without car insurance also goes up. And we have seen that in the last few years. The stats we have show that that number has increased. Obviously, here on LifeKit, we're not going to recommend that anybody do that. It's very risky on multiple levels. And even if you don't get into a collision while you're driving on lapsed insurance, you face higher costs when you get your insurance back.

15:04If you let your insurance lapse. Exactly. If you let it lapse, you have to pay extra to then restart it. I asked Shannon about this, and she said that if it's a matter of covering the bills immediately, that you should call your agent and ask about something called a storage plan option or something similar where you're going to park the vehicle. I did that with my car during COVID because I wasn't going anywhere, where you take all the liability coverage off. You keep comprehensive for things like fire, theft, and vandalism because that still happens, but your car is still on an insurance policy and the rate is usually a few dollars a month.

15:41It's nothing. And to be clear, this does mean you will have to stop driving the vehicle. You might have to turn in your license plate even. But what it means is when you have the money and you can turn that policy back on, you're not going to be paying those fees for having a lapse in coverage. So it'll save you money there. And again, I just want to emphasize, you know, look for other plans, shop around, get quotes, see if you can find more manageable coverage somewhere else. Doing this whole episode has reminded me that this is on my to-do list for the spring and I haven't done it yet.

16:17Camila Domonoske:All right, Camila, thank you so much for this. Thank you. Happy to be here. okay time for a recap takeaway one is to shop around for car insurance you really can save big bucks by switching providers also if you're in a group that gets charged more for car insurance because you have a low credit score or you work a blue-collar job for instance if you're married and one of you has factors that might work in your favor put that person's name on the policy Sometimes that can help. Takeaway two, drive cautiously. If you have no car crashes on your record, your insurance will be cheaper. Takeaway three, sometimes after a small car crash or a fender bender, drivers won't tell their insurance provider because they'd rather pay out of pocket than pay higher premiums.

17:02Camila Domonoske:The experts told Camila that if a crash involves somebody else, you'll almost always want to report it. But if not, look at the damage. Is this something you need to repair or can you live with a scratch on the side door? Also, how much is your deductible? How much would your insurance pay out? Compare that to the cost of just paying out of pocket. Takeaway four, before you buy a set of wheels, look at what the insurance will cost for that particular make and model. Also ask yourself if you can get by with fewer cars. And if you have a teenager in the house, sorry teenagers, maybe don't let them drive your car or get a license yet.

17:40Camila Domonoske:Or you could have them drive your oldest, most reliable car and look for an insurance policy that'll give you cheaper rates for doing that. Takeaway five, because the cost of repairs has jumped, you might want to look into increasing the coverage limits on your policy. I know this is counterintuitive and it will mean paying a little more in premiums, but then if you do get into a crash, you won't have to pay as much out of pocket. Lastly, if you're struggling to afford car insurance right now and you decide to stop driving, think about a storage plan option. That'll cover you for things like theft and vandalism and should cost about$10 to$20 a month.

18:18Camila Domonoske:And that's our show. Hey, one last thing. Would you consider rating and reviewing LifeKit in your podcast app? It helps grow the show and spread the word. Here's a review I liked from a listener called Frank Lee. Sometimes I think y 'all are reading my mind or filming me for ideas Every damn Life Kit is like everything I'm thinking recently. LOL, I love y 'all. Love you too, Frank. And yeah, maybe I am reading your mind. Who's to say? Be like Frank. Help us spread the word about Life Kit. Leave us a review in your podcast app right now. This episode of Life Kit was produced by Margaret Serino.

18:54Camila Domonoske:Our digital editor is Malika Garib. Megan Cain is our senior supervising editor, and Beth Donovan is our executive producer. Our production team also includes Andy Tegel, Claire Marie Schneider, Sylvie Douglas, and Nika Ellison. Engineering support comes from Tiffany Vera Castro. I'm Mariel Segarra. Thanks for listening.

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