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Welcome to the Meaning of Money podcast, your weekly dose of financial education in under 10 minutes. I'm your host, Shelitha Smodic, Certified Financial Planner and Financial Educator. Today we're talking about the ever-exciting car insurance and more importantly, how to manage the increased cost of car insurance while still protecting yourself from catastrophic risk. Let's get started. If it is time to renew your car insurance, you've likely received a shock when you noticed the increase in premiums this year. In the first half of 2023 alone, car insurance premiums have increased by an average of 17%, but some states are reporting premium increases closer to 40%. Insurance companies are stating that these increases are driven by factors like increases in accidents, natural disasters, and repair costs due to inflation. Regardless of the reasoning, these rate hikes have hit American pockets when budgets are already stretched due to high inflation on other consumer goods. Let's walk through a few ways to lower your car insurance payments while still making sure your insurance functions appropriately. Number one, check that your coverage meets your needs. It may seem most logical to simply decrease your car insurance coverage to lower your premiums, especially since states only require a minimal amount of coverage. However, dropping your car insurance coverage may expose you to risk if you get into an accident that requires significant medical expense payouts or a lawsuit on behalf of the injured party. Situations like this never seem like they will happen to you. However, accidents do happen. You purchase your car insurance to manage these risks. So make sure your policy will function appropriately if the time comes by ensuring that your coverage is higher than your assets. If you find that you do have more insurance than you need, then consider lowering your coverage. Otherwise, I suggest looking for an alternative means to decrease your cost of insurance first. Number two, ask your provider about available discounts. Asking your current provider for available discounts never hurts. If you're a good driver and have never filed a claim, you could potentially obtain a discount on your insurance premium. You can also get discounts for being a long-time customer or by moving other policies like your homeowner's insurance to the same provider as your car insurance. Number three, you can always shop around and compare prices on car insurance. This may not be an activity you want to engage in every year, just out of sheer convenience. But if your rates continue to climb, I highly recommend getting quotes from other providers. This exercise may result in either finding a lower-cost option or confirming that you're getting the best price available for your insurance needs. Number four, increase your deductible. An insurance deductible is the amount of money you pay out of pocket before your insurance covers the remaining costs associated with your claim. Increasing your insurance deductible from $500 to $1,000, for example, can decrease your premiums. This will increase the amount of money that you need to pay out if you do get in an accident, but you can account for that by increasing your emergency fund to have this amount saved in case of an accident. In the meantime, your recurring premiums will be less. Number five, consider changing your payment mode. Your payment mode is the frequency of your premium payment. Companies offer various payment modes, such as annual, semi-annual, and monthly. Changing your payment mode does not actually decrease your total insurance premium, Instead, this strategy spreads the cost over a different time period, which may make the premium payments more affordable. Before changing your payment mode, check to see if there are additional fees associated with paying at a frequency other than annual. If this option does require a fee, it still may make sense to change the mode anyway if the fees are minimal, and it helps to make the insurance payments work within your budget. Paying for insurance is not a fun exercise, especially not when prices continue increasing. However, a little research can pay off and help to manage the costs while ensuring your policy is still protecting you from catastrophic financial risks. This brings us to the end of today's episode. If you find our podcast valuable to building the financial life you want, subscribe, leave us a review, or share with others who may find this information valuable. Bye for now.