Money Management

Nationally, the average auto insurance policy runs $3,017. However, these 15 states have managed to retain much lower rates. Read on to learn the details. 

Nationwide, insuring a vehicle costs an average of $3,017 annually. That works out to $251 per month. While some states average much higher rates (we’re looking at you, Michigan, Louisiana, and Florida), these 15 states have managed to keep the lid on auto insurance rates.

Why are rates more (or less) expensive in some states?

Auto insurance is regulated at the state level, meaning state legislators play a role. Once regulations are in place, insurance companies set prices based on ZIP code. ZIP code matters because some areas are more prone to events like flooding and car theft than others.

To illustrate, here’s a look at three states where rates are highest.

Michigan

The average cost to insure a car in Michigan is $5,766 annually, a number sure to put a dent in anyone’s checking account. There are three major reasons:

Michigan drivers are required to carry no-fault insurance with unlimited Personal Injury Protection (PIP). Additional coverage inflates policy costs.Issues like insurance fraud, lawyer fees, and healthcare bills further drive up auto insurance costs in the Great Lake State.Claims are expensive, and if they want to turn a profit, insurers in Michigan must charge higher rates.

Louisiana

Louisiana has a high rate of natural disasters like hurricanes and flooding. As a result, car insurance rates in Louisiana average $4,280 annually.

Florida

Like in Louisiana, insurance companies know to expect natural disasters in the Sunshine State. And like Michigan, Florida requires drivers to carry no-fault coverage. In addition, auto insurance companies pay out losses on a regular enough basis to hike rates to an average of $3,766 per year.

Factors that determine your personal rate

If you’re paying much more or much less than a friend, it’s likely due to one of the following factors:

The type of car you drive: Certain types of cars are more expensive to insure because they’re more expensive to repair or replace. On the other hand, certain cars are less expensive to insure.Your driving habits: If you’ve been in an accident or have speeding tickets, your rate is likely to reflect an increased level of risk.How much you drive: All things being equal, a person with a long commute to work may pay higher auto insurance premiums than someone who works closer to home.Where you park your car: This is where ZIP code comes into play. Where you live and park your vehicle overnight may impact your premium. If theft and vandalism are common in your neighborhood, you’re likely to pay a higher rate.Your age: Statistically, younger, less experienced drivers are more likely to get into accidents and make claims. According to the Centers for Disease Control (CDC), the risk of motor vehicle accidents among 16- to 19-year-olds is almost three times higher than any other age groupYour coverage: As demonstrated by Michigan and Florida, adding more coverage increases policy costs.Your deductible: Generally, the lower your deductible (the amount you must pay out of pocket toward a claim), the more expensive your premium.

You may not be able to control the insurance decisions made by legislators in your state, but you can control how carefully you drive, the kind of vehicle you purchase, and how large a deductible you’re able to pay.

If you’re interested in learning more about how to keep your auto insurance rates low, here are 13 solid tips.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
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Can’t keep up with inflation? Read on for some alternatives that don’t involve whittling your savings all the way down. 

In 2022, inflation levels were sky-high, and a lot of people had a hard time coping with elevated bills. Thankfully, though, inflation has cooled quite a bit this year.

In November, for example, the Consumer Price Index (CPI) measured annual inflation at 3.1%. By contrast, in June 2022, inflation was measured at 9.1%.

While it’s clear that living costs aren’t quite as inflated these days as they were a year or so ago, many people are still having a difficult time making ends meet. Data from the Financial Health Network finds that Americans are using different strategies to cope with continuing price increases. And 26% of Americans are hitting up their savings accounts for everyday expenses due to lingering inflation. That, however, is a strategy that might sorely backfire on you.

You don’t want to whittle your savings down

If your paycheck isn’t large enough to cover your expenses, then you might assume there’s nothing wrong with dipping into your personal cash reserves to cover the difference. But if you continuously raid your emergency savings to pay your regular bills, you might end up in a situation where you don’t have ample cash reserves for a major unplanned expense, like a home repair.

Plus, you might have non-emergency savings you’re tapping to keep up with higher costs that you’ve earmarked for a big goal, like buying a home. If you raid your savings month after month to pay the grocery bill, you’ll only make it harder to bring your goal to life.

A better way to cope with inflation

It’s one thing to occasionally dip into your savings to cover regular expenses that are higher than usual. But it’s another thing to be taking a withdrawal from savings every month to manage your costs. If that’s the situation you’re in, it may be time to rethink your spending.

Start with your larger expenses. Is there a way to reduce them? Maybe there isn’t. But if your lease is coming to an end and there’s a less expensive apartment building a few blocks over that leaves with you an equally comfortable living space for $200 less per month, then it could be worth it to make a move — even if you have to shell out $500 to pay for a service to haul your stuff to your new abode.

If you can’t slash a larger expense, look at your smaller bills. Perhaps you’re withdrawing $120 a month from savings to make up for what your paycheck can’t cover. Can you cut back your spending by $120 a month by canceling a streaming service and ordering one fewer takeout meals per week? That may be possible.

Otherwise, consider taking on a side hustle on top of your main job to boost your income and make it possible to cover your monthly expenses without using your savings. Certain gigs, like driving for a ride-hailing service, are very flexible. You may find that working only a few hours a week allows you to cover your expenses without having to tap your savings each month.

Persistent inflation may be with us for quite some time. And you definitely don’t want to keep raiding your savings. If you do, you’ll risk whittling your balance down to nothing, or leaving yourself short in the event of an unplanned expense. So instead of continuing to tap your banked cash, figure out if adjusting your spending is doable. And if not, a boost to your income may be a good solution that doesn’t wreak too much havoc on your free time.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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The average Florida homeowner pays three times the national average for homeowners insurance. Read on for a few reasons why. 

Florida has long been considered a highly desirable place to live, and for a few reasons. It has warm weather, no state income tax, and there are several metropolitan areas where the cost of living is well below the national average.

However, there is one expense that has been rising rapidly that has started to make many people think twice about moving to the Sunshine State — homeowners insurance. While we don’t have finalized 2023 figures, early projections found that insurance rates could increase by as much as 40% in 2023 alone, and that would be on top of a 33% increase in 2022. The average homeowner in Florida is paying nearly $6,000 for their property insurance, more than three times the U.S. average.

Why is Florida homeowners insurance so expensive?

To be sure, Florida isn’t the only place where homeowners insurance rates have been increasing. The first key reason for the higher insurance prices that have affected homeowners throughout the United States: inflation. Think of it this way. If a tree falls on your house, it costs the insurance company more to pay for the repairs than it would have just a couple years ago. In order for the insurer to remain profitable, the additional costs of providing coverage are passed on to the consumer (you).

The second major reason why Florida’s homeowners insurance premiums are so high is the state’s vulnerability to severe weather events, particularly hurricanes. There have been several major storms in recent years, which have proven to be very costly to insurers. Hurricane Ian in September 2022 caused an estimated $60 billion in insurance losses alone.

One thing non-Floridians don’t realize is that in disaster-prone areas, you might need more than one type of property insurance. If you live in a coastal area, you’ll likely need a separate windstorm policy. And if you’re in a low-lying area, you’ll also need a flood insurance policy. My first home was located in South Florida just a few blocks from the water and only five feet above sea level. My property insurance costs were nearly $1,000 per month. And this was almost 15 years ago. That’s a big reason why I didn’t keep that house for long.

Finally, and this is tied into the second reason, many insurers have left Florida in recent years due to rising costs and the uncertainty involved with natural disasters. This has created fewer options for homeowners, and less competition is typically not conducive to falling prices.

How to save money on Florida homeowners insurance

While you’re not likely to find homeowners insurance in Florida that costs less than the national average, there are some things you can do to make sure you aren’t paying more than you need to.

One simple thing that far too many homeowners don’t do is shop around with home insurers. Sure, shopping around for insurance and changing your coverage (especially if it’s paid through your mortgage company) can be a hassle, but it doesn’t take long to get some quotes and you might be surprised at what you can save. Make sure you aren’t sacrificing coverage, and that your limits and deductible are appropriate for the home.

Some insurers offer unique discounts, such as for being a graduate of a certain university, so it is definitely worth comparison shopping every few years. Another strategy is to see if an insurance company you already do business with also offers homeowners insurance, as some will offer bundling discounts.

Alternatively, if you could handle a higher deductible, it could be worth comparing what your current policy costs with a few higher-deductible options.

The bottom line is that Florida’s homeowners insurance rates have spiked higher in recent years, and as of this writing, there is little relief in sight. But by shopping around, looking for discounts, and considering higher-deductible policies, you might be able to save significant money.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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It’s important to save for a variety of financial emergencies. Read on to see why this writer has a separate account for home repairs on top of her general emergency fund. 

A good 63% of Americans don’t have enough savings to cover an unplanned $500 expense, says SecureSave based on recent findings. As a homeowner, I find that alarming.

When you own a home, you never know when you might be faced with a sudden repair. In my experience, home repairs have run the gamut from a few hundred dollars to, more recently, having to spend roughly $12,000 to replace my heater.

That’s why I always make a point to keep money on hand for home repairs. But I like to keep that money separate from my primary emergency fund. Here’s why.

I want protection on all fronts

When building an emergency fund, you’ll often hear that it’s smart to put enough money into your savings account to cover at least three months’ worth of essential bills. The logic is that if you were to lose your job, it might take you a good three months to find a new one. And with that much money in savings, you’re less likely to have to resort to costly debt to cover your basic expenses.

Now, I like to keep more like a year’s worth of essential bills in savings for one big reason — self-employment. As a freelance contractor, I’m not entitled to unemployment benefits should my work go away. I’m also not entitled to severance or any other compensation. Since it’s conceivable that my income could go from what it is today to $0 with pretty much no warning, I need to have that protection in the form of added savings.

At the same time, I need to make sure I have the ability to pay for home repairs. And I can’t discount the possibility of having a major home repair arise at the very moment I suddenly find myself out of work.

So that’s really why I keep my home repair savings separate. I want to know that I have enough money to go a year without an income in the event of an extreme situation, like a recession or personal issue that renders me unable to work. I don’t like to let my primary emergency fund dip below 12 months’ worth of bills.

At the same time, when home repairs arise, I generally can’t put them off. I keep a separate account so I don’t have to stress out immensely about my main emergency fund getting too low.

To put it another way, it bugs me when I have to withdraw funds from my home repair emergency fund, but it’s also something I expect to have to do from time to time. I don’t lose sleep over those withdrawals. I probably would lose sleep if I had to tap my main emergency fund for a home repair, however.

Make sure you’re prepared at all times

It’s important to have emergency savings no matter your situation. But if you own a home, it’s especially important that you have cash in the bank for repairs.

A good 78% of homeowners had to deal with unexpected repairs in 2023, according to a recent report by Hippo. So even if you own a newer home, there’s a risk of having a repair pop up.

You don’t necessarily have to maintain a separate emergency fund for home repairs like I do. There’s nothing wrong with keeping all of your emergency savings in a single account. But make sure you have a decent chunk of savings in case something goes wrong with your home at the same time you find yourself out of work.

These savings accounts are FDIC insured and could earn you 11x your bank

Many people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you 11x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2023.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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