Automobile Insurance
Auto Financing

Hitting the brakes on auto insurance costs

by Broderick Perkins

(3/16/2012) ERATE Exclusive - Heavy competition in the motor vehicle insurance industry generates a truck load of options you can use to save money and get the coverage you need.

The Insurance Information Institute says it's always smart to contact your insurance agent or company representative to be sure you get the auto insurance fit you need at a price that's right for you.

However, it's your job as a consumer to ask questions to get answers that will educate you about all your insurance coverage options and help you get all the available discounts.

The cost of insurance is generally based on your driving record, how much you drive, the type of car, where it's parked, where you live, your age, your credit score, claims history, and the type and level of coverage.

To get the most out of these factors in terms of lowering insurance costs and keeping them down, III offers the following tips:

• Drive a hard bargain. Prices and coverage levels vary. Get at least three quotes. Call insurance agents or companies, use insurance comparison sites on the Net, ask family, friends, co-workers and others you trust for referrals, but don't shop by price alone. You want a company with a reputation for good customers service.

Consumer Reports, J.D. Power, your state's governing insurance department and others often examine insurance companies to see how they stack up in service. Also visit financial rating companies like A.M. Best to see how companies stack up financially. You want a company that's not just solvent, but financially strong enough to serve you during a recession or worse economic downturn.

• Inspect insurance costs, then buy a car. The type of car, it's price, the cost to repair it, its overall safety record and the likelihood of theft all impact the cost of insurance. If you choose the type of car you want to buy first, you can determine if you can really afford the additional cost of insurance. (Conversely, choose your financing before your choose your car to determine what you can afford and to separate haggling over the price and financing.)

• Pump up your deductible. The deductible is the amount you pay before your insurance policy kicks in. A higher deductible on comprehensive or collision coverage can lower your premium costs substantially. Of course, before choosing a higher deductible, be sure you have enough money set aside to pay the larger deductible if you have a claim.

• Garage that coverage on older cars. Consider dropping optional comprehensive or collision on older cars. If the market value of your car is less than 10 times the auto insurance premium you are paying, collision coverage may not be cost-effective.

• Load up on discounts. Insurance companies offer a wide variety of discounts. Ask about these:

• Antitheft devices
• Multiple insurance policies with the same company
• College students living away from home
• Defensive driving courses
• Drivers ed courses
• Good credit record
• Higher deductibles
• Low annual mileage
• Long-time customer
• More than one car
• No accidents in three years
• No moving violations in three years
• Student drivers with good grades