Our auto insurance rate jumped 400% when we added a new car — is there any way to cut that down?

Chris Clark
4-min read
Our auto insurance rate jumped 400% when we added a new car — is there any way to cut that down?
Our auto insurance rate jumped 400% when we added a new car — is there any way to cut that down?

A brand new car might be a stylish addition to your household. But the promise of the open road can hit the brakes hard when you see the renewed auto insurance bill: it costs how much?

That’s the shocking reality for a Reddit user who posted on July 17 that their family’s insurance premium jumped nearly 400% from around $1,000 to $4,800 after adding a 2024 Subaru Impreza Sport to the family’s two existing vehicles.

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“Is it normal for auto insurance to increase by this much?” the user asked.

This isn’t an isolated complaint on a bulletin board. The Associated Press reported in April that insurance rates in March had surged 22% over the previous year. Insurers are trying to recoup the costs of covering more expensive and technologically complex cars, whose prices spiked during the pandemic. And when you consider traffic — and the potential for more accidents — has climbed since the pandemic, it’s no wonder insurers are hiking premiums.

While a 400% increase in insurance costs is likely an uncommon case — the Reddit user admits to being a new driver and was only just added to the plan — there are some strategies you can employ to help you save money on your policy.

Understanding the spike

Here are some potential reasons behind insurance price hikes for drivers:

Risk profile of the new car: Insurance companies assess risk based on various factors, including a car's make, model, safety features and potential repair costs. A high-performance car, a car with a high theft rate or a car with expensive parts to replace will typically result in higher insurance premiums compared to more basic and reliable vehicles.

Driver experience: In addition to battling today’s automotive economic trends, the Reddit complainer is facing the cost of being a new driver. At the time of the post, the driver was just 25 and had only received their license a month earlier. Age and driving history heavily influence insurance costs, as teens and young adults with limited driving experience are deemed more likely to get into accidents.

Increased coverage needs: Adding a new car often means adding additional coverage. For example, if the car is brand new, you might want comprehensive coverage to protect against theft or vandalism. This additional coverage comes at an additional cost.

Changes in overall usage: With another car in the household, there's a chance the total mileage driven will increase. Insurance companies consider annual mileage when calculating premiums, with higher mileage typically leading to higher costs.

It's important to remember that insurance companies are in the business of managing risk. By adding a new car, you're essentially introducing new variables that could potentially lead to a claim, and the premium reflects that increased risk.

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Strategies to cut your insurance bill

Fortunately, there are steps you can take to cut your auto insurance premium costs.

First, don’t settle for the first quote you get. Collect quotes from multiple insurance companies to see if you can find a better deal. You can also raise your deductible (the amount you pay out of pocket before your insurance kicks in) to lower your premium.

And don’t be afraid to ask for discounts: Some insurance companies offer cost breaks for things like good driving records, taking defensive driving courses and having safety features in your car.

Additional tips:

Bundle your policies: Bundling your auto insurance with other policies like homeowners or renters insurance can sometimes lead to significant discounts.

Negotiate: Don't be afraid to negotiate your rate with your current insurer. Remind them of your loyalty as a customer and your good driving record. Highlighting the fact that you haven't filed any claims can strengthen your bargaining position.

Consider usage-based insurance: This type of insurance uses telematics technology to track your driving habits, and safe drivers can potentially qualify for lower premiums.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.