The Cost of Your Auto Insurance - What Can You Do?
By Michelle Martin, InsWeb
http://www.insweb.com/

Depending on the car you drive, your driving record, and where you live, you could be writing a pretty hefty check for your auto insurance. And as the economy tightens and financial services companies consolidate, the trend is toward continued higher rates and fewer discounts.

Auto insurance rates have risen 10 percent in the past couple of years, industry experts estimate, or an average of about $120 annually per policy. Combined with the decline in discounts and credits, that's even more significant.

How much you'll be affected varies by your state, since states regulate the insurance companies that do business within their borders. If you buy a nonstandard policy, which covers those with very poor driving records (and require additional fees and payment in 3- or 6-month increments), you'll see even higher rate increases.

The Insurance Information Institute (III) says higher rates result from several factors, including fraud, the rising cost of providing medical care to those injured in accidents, auto repair costs and ballooning jury awards.

The outlook is bleak, but consumers still have choices. Armed with the right information, you can still find savings and good deals. Find ways to lower your rates by following these tips from the III:

Shop around. Insurance costs vary dramatically from company to company. The same policy could vary by hundreds of dollars depending on which company you call. Ask friends, relatives and co-workers for the names of companies or agents they have good relationships with. Or go online for a list of insurers from your state insurance department. But don't buy based on price alone -- pick a company or agent with a reputation for good service.

Check insurance costs before buying a new car. Insurance premiums are based in part on a car's value, its repair costs, overall safety record, and likelihood of theft. The flashy convertible sports car is going to cost much more to ensure than the four-door sedan with lots of safety features - no matter what your driving record looks like. Buy a car you can afford to insure.

Raise your deductible. Higher deductibles can lower premium payments. Increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15-30 percent. Going to a $1,000 deductible can save you 40 percent or more. But be sure you have enough cash on hand to cover that deductible in the event that your car is damaged and needs repairs.

Drop unnecessary coverage. Drop collision and/or comprehensive coverage on older cars. It is often not cost-effective to buy these as the value of your car depreciates (your settlement from an insurance company will be less for a very old car whose resale value has dropped). Other types of coverage may also be unnecessary. For example, if your family has multiple cars you could drive, you may not need to carry rental reimbursement coverage.

Keep your credit clean. Your credit rating could affect your insurance costs. This varies from state to state and company to company, but drivers with good credit may be rewarded with a lower rate.

Ask about discounts. You might get a break if you have reached a certain age, car-pool to work, take a defensive driver-training course, or insure multiple cars with the same insurer. Some companies also give discounts to students with good grades or for low mileage. And drive safely. Those with poor driving records are seeing the highest rate increases.

Protect your car against theft. If you have an anti-theft device such as a Lojack or alarm system, you may qualify for a discount.

Avoid the garden state. In 2000, New Jersey had the dubious honor of the most expensive auto insurance rates in the country, with New York trailing right behind. Around the country, those in cities pay more than those in rural areas, because statistically there are more accidents, thefts, and vandalism in cities. If you live in a city, parking your car in a garage at night can help lower premiums. Compare the cost of the garage to any premium savings and cash outlay for deductibles.

Report fraud. Insurance fraud - staged accidents, false billing for medical care and supplies, falsified police reports and identity theft, to name a few examples - drive up costs for all customers in the state where they occur.

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