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Thursday, January 14, 2010

Auto insurance: just about everybody needs it, but almost nobody really wants it. After all, car insurance bills are a lot to pay for something you may never end up needing. While many of the factors that affect insurance premiums are out of your control, there are a number of things you can do to increase your chance of getting the lowest price for your coverage. Here’s how to get the insurance protection you need while also protecting your wallet.

Shop around. In most states, insurance companies’ rates vary wildly. Different companies may have better rates for different vehicles or different zip codes. One company may have great rates one year and then raise them the next, so it pays to shop around periodically. Get as many quotes as you can, and get them in writing if possible. Be honest with each agent so that he or she can give you an accurate rate, and have each company quote you for exactly the same coverages—if you’re not getting “apples-to-apples"? quotes, you can’t tell which company is really cheaper. Also look into doing the following:

Insure all your cars with one company. You can save big with “multi-car"? discounts, so you should generally insure all your cars in one place if at all possible. Insure your home where you insure your cars. Many companies offer discounts if you have both your home (or tenants) insurance and auto insurance with them. The discount may apply to one policy or to both. Even if you can find a better price with another company for one of your policies, your total insurance cost may be lower if you have both policies with the same company. Sometimes you can also get discounts for insuring boats. Get insurance quotes for vehicles before you buy them. If you’re in the market for a new car, but you can’t decide between a few different models, call your agent and find out how much it will cost to insure each one. Insurance companies calculate vehicle-specific rates based on how much the vehicle costs and how often a particular model is involved in accidents or is stolen, among other things, so the premium difference for similar cars may be substantial.

Stay insured. Never let your insurance policy lapse. You may find it difficult to obtain insurance if your policy expires, and your insurance may be more expensive than it was before. Customers who let their insurance expire—even for a couple days—are statistically higher-risk, and insurance companies often charge extra for this.Increase your deductibles. Some coverages, notably comprehensive and collision, have deductibles, an amount you pay out of pocket before the insurance company begins to pay. The higher your deductible, the lower the price for that coverage, so have your agent quote you higher deductibles to see how much you could save. Make sure that you can afford to pay your deductible before raising it—a $1,000 deductible, for example, may be substantially cheaper than a $250 deductible, but you’ll have to pay $750 more in the event of an accident.

Buy only the coverage you need. Review your coverage with your agent at least once a year. Depending on your assets and personal preferences, you may not need as much liability coverage as you currently have, or you may wish to reject certain coverages such as uninsured motorist or personal injury protection. Make sure you fully understand the implications of dropping or reducing coverage—in many cases, the extra risk you take on by doing so exceeds the money you save. For example, if your car isn’t worth much, you may be better off dropping the coverages that protect against damage or theft. You may also be able to drop just collision coverage, which is usually the more expensive of the two. Check your policy to see how much comprehensive and collision cost you, and make sure that if you drop the coverage you could afford to repair or replace the vehicle on your own.

Don’t insure vehicles you don’t drive. If one of your cars broke down and has been sitting in the backyard for a year, make sure it’s not still on your insurance policy. Keep in mind, though, that many states require that you have any registered vehicle insured, so if you drop insurance you may want to register the vehicle as “inoperable"? to avoid any complications or penalties. Only drop a vehicle from your policy if you’re sure you’re not going to be driving it for a long time.Buy a longer policy. There may be a price penalty attached to 3- or 6-month policies, so the longer your policy term, the cheaper your rates will likely be. Regardless of the length of your policy, you may be able to save money by paying it up front in full instead of in monthly installments. If installments are the only affordable option, you may be able to avoid fees by having your premiums automatically deducted from your bank account each month.

Take a driver training course. Some companies offer discounts—especially for kids or people over 55—for taking an approved driver training course. Check with your agent before investing a lot of money in such a course, however, as the discount usually isn’t very big. Nonetheless, no matter what your age, a training course may help you become a better driver, which will lower your insurance premiums in the long run.
Drive safely. Accidents, especially accidents where you are at fault, may increase your insurance premium, usually for 3-5 years. If you haven’t had an accident in a while, be sure to ask your agent if you qualify for an accident-free discount. If you get into a minor accident, especially one in which yours is the only vehicle involved, you may want to pay out of pocket instead of reporting a claim—the amount you pay in accident surcharges can be more than the vehicle repairs if the claim is just for a few hundred dollars.

Avoid tickets. Speeding tickets and other moving violations can push your rates up
Build good credit. There is a statistical correlation between certain aspects of a person’s credit rating and the number of insurance claims the person might be expected to file, so depending on what state you live in, many insurance companies charge more for bad credit or give you a discount for good credit.Make the kids wait to get their licenses. Young, newly licensed drivers are the most likely to get into accidents, and insurance companies price for them accordingly. If your child gets his or her drivers license, you must pay the extra premium, and the price increase will probably shock you. It can be hard to make your kid wait to drive, but if insurance bills are already stretching you thin, it may be the best choice. If your child already has a license, you may be able to exclude him or her from coverage by signing an exclusion form. Rates usually go down a little after the driver turns 18, and the price plummets later, usually at age 21 and/or 25. Visit automobileinsurance. for more information.


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