Low Cost Auto Insurance in a World of Rising Premiums


In February 2011, the national average rate for auto insurance premiums peaked for the six-month period of December 2010 to May 2011, standing at $1,236.38. By March, however, it dipped to an encouraging $1,162.18 driven by market pressure to bring rates in line with the needs of cash-strapped Americans.

As the economic recovery continues to gain traction, however, auto insurance rates are creeping back up, reaching $1,220 by May and $1,566 by October. This is the exact direction consumers don’t want, and it does not reflect true purchasing power reality. Unemployment in the United States remained at 9 percent in October with total consumer debt in the nation at more than $2.4 trillion.

Auto Insurance is a Resented Expense

Economic analysts are in agreement that real recovery in the U.S. may take years. The bill has come due for decades of unrestrained spending, and a new cash consciousness has gripped the American people. While auto insurance is legally required in every state (with the exception of New Hampshire), it is a resented necessity.

One of the biggest advances in the quest for low cost auto insurance is the evolution of “pay as you drive” policies that are now being offered by one or more companies in 32 states. Not only do rates reflect actual miles driven, and in some cases the manner in which the car is operated, but the method dovetails with the growing emphasis on value in American culture. People want to know they’re getting what they pay for and they don’t want to pay one penny more than they have to.

Pay As You Drive Auto Insurance Does Not Compromise Comprehensive Coverage

Traditional methods of achieving low cost auto insurance have risked the comprehensive nature of the protection, for instance:

  • raising the deductible,
  • dropping collision coverage on older vehicles,
  • axing medical benefits,
  • and eliminating extras like roadside assistance.

Other strategies that work to achieve a low cost policy, but that are time consuming or involve a lot of negotiation include:

  • buying a car that is less expensive to insure,
  • making sure your car has a maximum of safety features,
  • negotiating discounts for driver’s education,
  • installing monitoring devices for teen drivers,
  • combining policies with a single insurer,
  • and ferreting out unusual discounts for things like military service or even occupation.

The one low cost auto insurance bit of behavior modification that can benefit you in multiple ways is simply driving less.

Pay As You Drive Rates Reflect Actual Driving Behavior

Carpooling and using public transportation over exclusively driving a private vehicle represents a double savings. Handing transportation needs in this way, paired with a pay-as-you-drive auto insurance policy gives you a lot of bang for your buck because you are not only lowering the number of miles you drive (and reducing wear and tear on your car), but you’re paying for less gasoline, which is a major part of the total expense of owning an automobile.

This consolidated approach to managing auto insurance costs as well as overall auto ownership and maintenance expenses make pay-as-you-drive policies one of the highest value insurance products currently on the market.

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