Suze Orman Warns a Fancy Car Will Cost $500 More Per Year in Insurance
Although gas prices have eased significantly since the recorded highs of June 2022, car insurance is expected to increase in 2023 due to an anticipated increase in accidents and the lofty costs of cars, their maintenance and fuel.
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If that weren’t enough, what you pay in insurance premiums will be dependent upon your credit-based insurance score and what sort of car you drive, according to financial guru Suze Orman.
Writing on her website, Orman maintains that improving your credit is crucial to saving on insurance. Most companies in most states — excluding California, Hawaii, Massachusetts and Michigan, which prohibit the use of credit scores in calculating premiums — use a credit score variation to set premiums. If your credit score is in the top “excellent” tier, you could be paying $250 less per year than drivers with lower credit-based insurance scores.
Likewise, choosing to drive an exotic or high-performance sports car may end up costing you $500 more in insurance annually. Aside from having expensive and scarcer parts, luxury vehicles and ultra-powerful cars are greater risks for theft and damage. As Progressive Insurance stated, “More horsepower means more risk for your insurer.”
The average driver should expect to pay $1,895 — over $150 a month — per vehicle in car insurance this year, per Insurify’s “2022 in Review and What’s Ahead for 2023” two-part report. That’s a 7% increase over 2022 and a 29.5% rise since 2020.
The study analyzed more than 69 million insurance quotes and surveyed more than 1,800 total participants to track state-by-state insurance price trends, forecast costs for 2023 and find out how drivers will save money as their rates increase.
Projected rate increases will force American drivers to look for ways to cut down on their vehicle-related spending, but according to Insurify, drivers have already tried the following five vehicle cost-saving techniques when asked in July and November 2022.
1. Driving Less (65% in July vs. 50% in November)
Those concerned with climate change have been decreasing their direct emissions for years by driving less. Now, those fighting insurance and gas price hikes are making the same change. Saving money on fuel is the primary bonus, but those with usage-based insurance plans can also save in this manner.
2. Switching to a Different Insurance Provider (30% in July vs. 35% in November)
Those looking to buy car insurance (or switch to another provider) should be treating it like shopping for a car. Car insurance is a necessity, but many drivers stick by their insurer even if they are overpaying. As Forbes reported, the Insurance Information Institute (III) recommended getting quotes from at least three insurers when you are deciding on a new provider. Using a site like EverQuote will provide you with a vast array of insurance options — and can potentially save you hundreds of dollars a year. It might be wise to look into pay-as-you-go insurance, too.
3. Buying an Electric or Hybrid Vehicle (30% in July vs. 16% in November)
As gas prices started to dip during the second half of 2022, so did drivers’ interest in buying a hybrid or electric vehicle, the study found. But 30% and 16% of July and November survey participants, respectively, were still considering switching over to an EV or hybrid car model as a cost-cutting measure.
4. Moving to a Cheaper Location (16% in July vs. 10% in November)
A somewhat significant 16% of those surveyed by Insurify in July claimed they would consider moving to a different location with better public transportation and walking routes in an effort to save money on car insurance. The average American saw their insurance rate increase by 9% in 2022, with the biggest increases found in Oregon, Maryland, Virginia and Idaho, where drivers experienced rate jumps of over 25% between 2021 and 2022. Michigan drivers saw their rates increase only 1% in 2022, but it is still the most expensive state to purchase car insurance in the country.
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5. Dropping Their Insurance Coverage Altogether (10% in July vs. 12% in November)
One of the bonuses about working from home was not having to endure the daily commute. As more workers return to the workplace, many are rethinking their car usage.
If ditching driving altogether isn’t an option, car owners can look into tweaking their coverage. If you rarely drive, have an old, high-mileage car, a vehicle that is worth less than your insurance policy provides — or would prefer to pay for any accidental car repairs yourself — it might be a smart idea to drop your “full” coverage insurance policy, per Car and Driver.
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