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What to do when your auto insurance is too expensive

September 30, 2015

Having a car can be expensive. From regular maintenance and rising gas prices to taxes and inspections, there always seems to be some car-related expense. In fact, a study from AAA estimated that the average annual cost to own and operate a vehicle is $8,698.

Paying too much for auto insurance? Here's how to lower your rates.

According to AAA, insurance accounts for nearly 13 percent of that yearly expense. The average low-risk driver with an excellent driving record will spend $1,115 on auto insurance each year, the study found. Of course, accidents happen and not all of us have perfect records. In reality, those annual premiums can be much higher.

If you've found that your auto insurance is prohibitively expensive, here are a few actions you can take to lower your rates:

Drive a car you can afford

"Leasing a car requires carrying pricey full coverage insurance.”

If you're leasing your car or purchased one through a bank loan you're still paying off, you're likely carrying pricey full coverage insurance. Most dealers or banks will require collision and comprehensive coverage in addition to the minimum insurance that is mandatory in your state.

If you're treating yourself to a car you can't buy outright or quickly pay off, you probably can't afford the heightened premiums that come with it. High-end cars are more costly to repair because they require specialized parts and mechanics. Insurers know this, so rates on pricey cars are going to be higher.

Raise your credit score

Your personal finances are a big consideration for insurers. Statistically speaking, people with lower credit scores are more likely to file claims, meaning insurance companies are going to charge them higher premiums. In fact, a study from Consumer Reports found a low credit score can boost your rates more than a DWI conviction in some states.

Lower your annual mileage

"The less you're on the road, the lower the odds of an accident.”

Insurance companies look at how much you drive when determining your premium rates. Since these rates are based on risk, the less often you're on the road, the lower the odds are that you'll get in an accident. Many carriers will offer low-mileage discounts, which gives you an incentive to carpool, take public transit or ride your bike.

Compare your options

A study from J.D. Power and Associates found that shoppers who switched insurers lowered their average yearly premiums by $388 in 2015. However, that same study found that only 39 percent of the consumers surveyed were even looking. You might be eligible for a better deal, but you won't know until you compare auto insurance rates.