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How to mitigate rising auto and homeowners insurance costs

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Mike Spiering holds Francesca Spiering as he stands in the flood water around his home after record rains fell in the area on April 13, 2023 in Hollywood, Florida.

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The cost of insuring your most expensive assets has skyrocketed. While overall inflation has slowed, insurance costs are taking a bigger bite out of many household budgets.

The average annual rate for homeowners insurance increased by nearly 20% between 2021 and 2023 — and homeowners can expect another 6% increase in 2024, according to Insurify, a virtual insurance agent. That would bring the average policy cost to $2,522 by the end of the year.

Car insurance premiums have also shot up.

The average cost of motor vehicle insurance jumped 16.5% from August 2023 to August 2024, according to the Bureau of Labor Statistics. Bankrate estimates that in September the average cost for full coverage car insurance is $2,348 a year.

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Several factors contribute to climbing home insurance rates, including increasing costs for homebuilding supplies and repairs, a significant rise in litigation around claims, and the greater frequency of weather-related events, said Shannon Martin, a licensed insurance agent and writer for Bankrate.

Extreme weather events, higher replacement and repair costs, and increased medical expenses after accidents have boosted car insurance rates, experts say. 

Still, there are ways to mitigate rising premiums. Here are six strategies to consider:

1. Shop around for a new insurer

Consider switching to another insurance company. While most people stick with their car or home insurer from year to year, it’s wise to shop around, experts say. 

About 37% of drivers say they will or have already received a quote from a new insurer in response to rising insurance rates, and 27% have or plan to switch insurance companies, according to a new survey by Autoinsurance.com.

Shop around for car and home insurance once a year to make sure the rates you’re paying now are still competitive, experts say. You might also want to compare rates if you have a life change that could affect your rate.

“If you move, get married or buy a new car, that’s also a good time to shop around,” said Maya Afilalo, an insurance analyst at Autoinsurance.com. 

Even though extreme weather events have adversely impacted many insurers, companies are at different stages with how they have adjusted.

“So a company that you may be with now that may have a much higher rate than a company that’s kind of already in a recovery stage,” said insurance agent Mike Barrett, who owns the Barrett Insurance Agency in St. Johnsbury, Vermont. “Shopping could really save you some money.” 

A view of burnt cars and structures as the wildfire of South Fork Fire continue in Ruidoso of New Mexico, United States on June 20, 2024. 

Tayfun Coskun | Anadolu | Getty Images

Compare costs by getting quotes from a few insurers before renewing your policy. You can go online or use apps for insurance marketplaces to get quotes from several companies at once. Or you may want to talk with an independent insurance agent — doing so is typically free, because they usually get a commission from the insurer for selling you a policy. You can find an agent in your area through the Independent Insurance Agents and Brokers of America. 

Lower premiums aren’t the only factor to consider. Check out AM Best and Demotech, which rate insurers’ financial strength and reliability.

“What you’re looking for is the financial strength of the carrier, which shows their ability to pay future claims, and also understanding what their history of paying claims has been in the past,” said insurance agent David Carothers, a principal at Florida Risk Partners in Valrico, Florida.

2. Increase your deductible

Your deductible is the amount of money you will have to pay out of pocket before the insurance company steps in. Raising your deductible can lower your car and home insurance premiums. 

With car insurance, for example, “increasing your deductible from $500 to $1,000 can reduce optional collision and coverage premium costs by 15% to 20%,” said Loretta Worters, a vice president at the Insurance Information Institute.

But if you raise your deductible, you need to have enough money in an emergency fund to cover it.

3. Adjust your coverage

If you’ve been with the same insurance company for several years, you may have made changes that better protect your home from hazards — for example, a new roof, hurricane-impact windows or a security system — since taking out the policy. Updating your coverage to reflect those changes could save you money, experts say. 

Reducing coverage on certain items, like jewelry or artwork, could also lower your homeowners premium. 

Dropping collision and/or comprehensive coverage on older cars can also cut costs. You may want to consider dropping coverage if your car’s value is worth less than 10 times the premium, according to the Insurance Information Institute. But that means you’ll have to pay for any damages out of pocket if you’re in an accident or your car sustains damage due to weather, theft or another noncollision event.

“You might be responsible for paying for those damages to other property that isn’t covered by your insurance company. So you know, there’s some risk and reward there,” said Rod Griffin, a senior director at Experian.

Simpleimages | Moment | Getty Images

That said, experts say having enough insurance and the right kind of coverage may save you more money in the long run. Saving on premiums may ultimately be costly if you don’t have the type of insurance you need, such as flood insurance.

Just an inch of water can cause roughly $25,000 of damage to a property, according to the Federal Emergency Management Agency. Yet, most homeowners insurance explicitly excludes flood damage, and few people pursue that coverage. On average, about 30% of U.S. homes in the highest-risk areas for flooding have flood insurance, according to the University of Pennsylvania’s Wharton Risk Center.

Experts say you may need flood insurance even if you’re not in a high-risk zone.

“A lot of people don’t buy it because their bank doesn’t require them to and then all of a sudden, a hurricane comes. They’re not in a flood zone, according to a map, and we have a storm surge, and there’s all kinds of uncovered claims,” said Carothers of Florida Risk Partners.

4. Look for potential discounts

One of the most touted discounts is bundling coverage. You’ve likely seen many ads about purchasing home and car insurance from the same insurer to save money, but experts say that’s not always the case. You may find better rates using different companies.

“It’s really good to investigate both angles — bundling, not bundling — and always talk to your agent before you make big changes to your home or expensive changes that you think are going to save you money,” Bankrate’s Martin said.

Homeowners may get discounts for going claim-free for a certain period of time, or installing features that better protect their home from hazards.

Car insurance discounts range from safe driver and good student discounts to taking a defensive driving course. There are also discounts for older drivers and low mileage discounts for driving fewer miles than the average. 

5. Keep up your credit score

Your credit history can also impact auto and home insurance rates. The higher your credit rating, the less you may pay for insurance in states where credit is a rating factor for insurance companies, experts say.

Having poor credit can significantly increase your insurance costs. For example, drivers with poor credit for full coverage insurance pay $4,349 a year compared with drivers with excellent credit who pay $2,033, according to a Bankrate report.

6. Price out insurance costs ahead of time

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Factor insurance costs into your housing or car budget from the start. Pricing policies out early can help you avoid sticker shock at a point where it’s tougher to back out of a purchase.

Also, when you’re buying a home, consider the likelihood of extreme weather for a prospective property, which can mean you have a more limited choice of insurers and face higher prices for coverage. Some websites, like First Street and Climate Check, can give you a projection of the impact of extreme weather events on your home through 2050. 

“You’re always putting yourself in a stronger position to price out your insurance before you get emotionally and financially involved,” Martin said.

— CNBC producer Stephanie Dhue contributed to this story.

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What student loan forgiveness opportunities still remain under Trump

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Under the Biden administration, the U.S. Department of Education made regular announcements that it was forgiving student debt for thousands of people under various relief programs and repayment plans.

That’s changed under President Donald Trump.

In his first few months in office, Trump — who has long been critical of education debt cancellation — signed an executive order aimed at limiting eligibility for the popular Public Service Loan Forgiveness program, and his Education Department revised some student loan repayment plans to no longer conclude in debt erasure.

“You have the administration trying to limit PSLF credits, and clear attacks on the income-based repayment with forgiveness options,” said Malissa Giles, a consumer bankruptcy attorney in Virginia.

The White House did not respond to CNBC’s request for comment.

Here’s what to know about the current status of federal student loan forgiveness opportunities.

Forgiveness chances narrow on repayment plans

The Biden administration’s new student loan repayment plan, Saving on a Valuable Education, or SAVE, isn’t expected to survive under Trump, experts say. A U.S. appeals court already blocked the plan in February after a GOP-led challenge to the program.

SAVE came with two key provisions that lawsuits targeted: It had lower monthly payments than any other federal student loan repayment plan, and it led to quicker debt erasure for those with small balances.

“I personally think you will see SAVE dismantled through the courts or the administration,” Giles said.

But the Education Department under Trump is now arguing that the ruling by the 8th U.S. Circuit Court of Appeals required it to end the loan forgiveness under repayment plans beyond SAVE. As a result, the Pay As You Earn and Income-Contingent Repayment options no longer wipe debt away after a certain number of years.

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There’s some good news: At least one repayment plan still leads to debt erasure, said higher education expert Mark Kantrowitz. That plan is called Income-Based Repayment.

If a borrower enrolled in ICR or PAYE eventually switches to IBR, their previous payments made under the other plans will count toward loan forgiveness under IBR, as long as they meet the IBR’s other requirements, Kantrowitz said. (Some borrowers may opt to take that strategy if they have a lower monthly bill under ICR or PAYE than they would on IBR.)

Public Service Loan Forgiveness remains

Despite Trump‘s executive order in March aimed at limiting eligibility for Public Service Loan Forgiveness, the program remains intact. Any changes to the program would likely take months or longer to materialize, and may even need congressional approval, experts say.

PSLF, which President George W. Bush signed into law in 2007, allows many not-for-profit and government employees to have their federal student loans canceled after 10 years of payments.

What’s more, any changes to PSLF can’t be retroactive, consumer advocates say. That means that if you are currently working for or previously worked for an organization that the Trump administration later excludes from the program, you’ll still get credit for that time — at least up until when the changes go into effect.

For now, the language in the president’s executive order was fairly vague. As a result, it remains unclear exactly which organizations will no longer be considered a qualifying employer under PSLF, experts said.

However, in his first few months in office, Trump has targeted immigrants, transgender and nonbinary people and those who work to increase diversity across the private and public sector. Many nonprofits work in these spaces, providing legal support or doing advocacy and education work.

For now, those pursuing PSLF should print out a copy of their payment history on StudentAid.gov or request one from their loan servicer. They should keep a record of the number of qualifying payments they’ve made so far, said Jessica Thompson, senior vice president of The Institute for College Access & Success.

“We urge borrowers to save all documentation of their payments, payment counts, and employer certifications to ensure they have any information that might be useful in the future,” Thompson said.

Other loan cancellation opportunities to consider

Federal student loan borrowers also remain entitled to a number of other student loan forgiveness opportunities.

The Teacher Loan Forgiveness program offers up to $17,500 in loan cancellation to those who’ve worked full time for “complete and consecutive academic years in a low-income school or educational service agency,” among other requirements, according to the Education Department.

(One thing to note: This program can’t be combined with PSLF, and so borrowers should decide which avenue makes the most sense for them.)

Student loan matching funds

In less common circumstances, you may be eligible for a full discharge of your federal student loans under Borrower Defense if your school closed while you were enrolled or if you were misled by your school or didn’t receive a quality education.

Borrowers may qualify for a Total and Permanent Disability discharge if they suffer from a mental or physical disability that is severe and permanent and prevents them from working. Proof of the disability can come from a doctor, the Social Security Administration or the Department of Veterans Affairs.

With the federal government rolling back student loan forgiveness measures, experts also recommend that borrowers explore the many state-level relief programs available. The Institute of Student Loan Advisors has a database of student loan forgiveness programs by state.

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Many Americans are worried about running out of money in retirement

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Many Americans are worried they’ll run out of money in retirement.

In fact, a new survey from Allianz Life finds that 64% Americans worry more about running out of money than they do about dying. Among the reasons cited for those fears include high inflation, Social Security benefits not providing enough support and high taxes.

The fear of running out of money was most prominent for Gen Xers who are approaching retirement. However, a majority of millennials and baby boomers also said they worry about their money lasting, according to the online survey of 1,000 individuals conducted between January and February.

Separately, a new Employee Benefit Research Institute report finds most retirees say they are living the lifestyle they envisioned and are able to spend money within reason. Yet more than half of those surveyed agreed at least somewhat that they spend less because of worries they will run out of money, according to the survey of more than 2,700 individuals conducted between January and February.

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Meanwhile, a Northwestern Mutual survey reported that 51% of Americans think it’s “somewhat or very likely” they will outlive their savings. The survey polled 4,626 U.S. adults aged 18 and older in January.

Since those studies were conducted, new tariff policies have caused disturbance in the stock markets and prompted speculation that inflation may increase. Meanwhile, new leadership at the Social Security Administration has prompted fears about the continuity of benefits. Those headlines may negatively affect retirement confidence, experts say.

With employers now providing a 401(k) plan and other savings plans versus pensions, it is largely up to workers to manage how much they save heading into retirement and how much they spend once they reach that life stage. That responsibility can also lead to worries of running out of money in the future, experts say.

How to manage the ‘fear of outliving your resources’

Because of the unique risks every individual or couple faces when planning for retirement, the best approach is typically to transfer some of that burden to a third party, said David Blanchett, head of retirement research at PGIM DC Solutions.

Creating a guaranteed lifetime income stream that covers essential expenses can help reduce the financial impact of any events that require retirees to cut back on spending, Blanchett explained.

That should first start with delaying Social Security benefits, he said. While eligible retirees can claim benefits as early as 62, holding off up until age 70 can provide the biggest monthly benefits. Social Security is also unique in that it provides annual adjustments for inflation.

73% of Americans are financially stressed

Next, retirees may want to consider buying a lifetime income annuity that can help amplify the monthly income they can expect. Admittedly, those products can be complicated to understand. Therefore Blanchett recommends starting out by comparing very basic products like single premium immediate annuities that are easier to compare.

“Unless you do those things, you just can’t get rid of that fear of outliving your resources,” Blanchett said.

Without a guaranteed income stream, retirees bear all of the financial risk themselves, he said.

 “Retirement could last 10 years; it could last 40 years,” Blanchett said. “You just don’t know how long it’s going to be.”

Among retirees, there has been some hesitation to buy annuities, said Craig Copeland, EBRI’s director of wealth benefits research. Such a purchase requires parting with a lump sum of money in exchange for the promise of a guaranteed income stream.

“We see great increase in interest, but we aren’t seeing upticks in take up yet,” Copeland said. “I do think that’s going to start to change.”

What can help boost retirement confidence

To effectively plan for retirement, it helps to seek professional financial assistance, experts say.

Meanwhile, few people have a plan of their own for how they may live on the assets they’ve worked hard to accumulate, according to Kelly LaVigne, vice president of consumer insights at Allianz Life.

“This is something that you should not plan on doing on your own,” LaVigne said.

While the survey from Northwestern Mutual separately found individuals think they need $1.26 million to retire comfortably, the real number individuals need is based on their personal situation, said Kyle Menke, founder and wealth management advisor at Menke Financial, a Northwestern Mutual company.

In thinking about how life will look in 30 years, there are a variety of things to consider, Menke said. This includes stock market returns, taxes, inflation and medical expenses, he said.

Even people who have enough money for retirement often don’t feel confident in their ability to manage all of those factors on their own, he said. Financial advisors have the ability to run different simulations and stress test a plan, which can help give retirees and aspiring retirees the confidence they’re lacking.

“I think that’s where the biggest gap is,” said Menke, referring to the confidence Americans are lacking without a plan.

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Trump tariffs will hurt lower income Americans more than the rich: study

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Shipping containers at the Port of Seattle on April 16, 2025.

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Tariffs levied by President Donald Trump during his second term would hurt the poorest U.S. households more than the richest over the short term, according to a new analysis.

Tariffs are a tax that importers pay on foreign goods. Economists expect consumers to shoulder at least some of that tax burden in the form of higher prices, depending on how businesses pass along the costs.

In 2026, taxes for the poorest 20% of households would rise about four times more than those in the top 1%, if the current tariff policies were to stay in place. Those were findings according to an analysis published Wednesday by the Institute on Taxation and Economic Policy.

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For the bottom 20% of households — who will have incomes of less than $29,000 in 2026 — the tariffs will impose a tax increase equal to 6.2% of their income that year, on average, according to ITEP’s analysis.

Meanwhile, those in the top 1%, with an income of more than $915,000 a year, would see their taxes rise 1.7% relative to their income, on average, ITEP found.

Economists analyze the financial impact of policy relative to household income because it illustrates how their disposable income — and quality of life — are impacted.

Taxes by ‘another name’

“Tariffs are just taxes on Americans by another name,” researchers at the Heritage Foundation, a conservative think tank, wrote in 2017, during Trump’s first term.

“[They] raise the price of food and clothing, which make up a larger share of a low-income household’s budget,” they wrote, adding: “In fact, cutting tariffs could be the biggest tax cut low-income families will ever see.”

Meanwhile, there’s already evidence that some retailers are raising costs.

A recent analysis by the Yale Budget Lab also found that Trump tariffs are a “regressive” policy, meaning they hurt those at the bottom more than the top.  

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The short-term tax burden of tariffs is about 2.5 times greater for those at the bottom, the Yale analysis found. It examined tariffs and retaliatory trade measures through April 15.

“Lower income consumers are going to get pinched more by tariffs,” said Ernie Tedeschi, director of economics at the Yale Budget Lab and former chief economist at the White House Council of Economic Advisers during the Biden administration.

Treasury Secretary Scott Bessent has said tariffs may lead to a “one-time price adjustment” for consumers. But he also coupled trade policy as part of a broader White House economic agenda that includes a forthcoming legislative package of tax cuts.

“We’re also working on the tax bill and for working Americans, I believe that the reduction in taxes is going to be substantially more,” Bessent said April 2.

It’s also unclear how current tariff policy might change. The White House has signaled trade deals with certain nations and exemptions for certain products may be in the offing.

Trump has imposed a 10% tariff on imports from most U.S. trading partners. Mexico and Canada face 25% levies on a tranche of goods, and many Chinese goods face import duties of 145%. Specific products also face tariffs, like a 25% duty on aluminum, steel and automobiles.

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