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Top 10 Ways to Save on Auto Insurance?

Car insurance is a major household expense. There are several ways for you to cut your insurance costs and still maintain adequate insurance for your needs.

1. COMPARE QUOTES
Prices vary from company to company, so it pays to do some research. Get at least 3 price quotes. Call companies directly or access information on the Internet. Pick an agent or company representative that takes the time to answer your questions. Ask friends and relatives for their recommendations. Your state insurance department may also provide comparisons of prices charged by major insurers and information on consumer complaints by company.

You buy insurance to protect you financially and provide peace of mind. Do not shop by price alone. It's important to pick a company that is financially stable. Check the financial health of insurance companies with rating companies such as A.M. Best (www.ambest.com) and Standard & Poor's (www.standardandpoors.com/ratings).

2. BUY A LOW-PROFILE CAR
Before you buy a car, check into insurance costs. Vehicles that are more expensive to repair, have a high theft rate, and a lower safety record will cost more to insure. For information on vehicles' risk levels visit the Insurance Institute for Highway Safety's website. (www.iihs.org)

3. INCREASE YOUR DEDUCTIBLE
Deductibles are what you pay out of pocket before your insurance policy begins to pay. Having a higher deductible can lower your costs substantially. Increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15 to 30 percent. Going to a $1,000 deductible can save you 40 percent or more. Before choosing a higher deductible, make sure you can pay the deductible if you have a claim.

4. DROP UNNECESSARY COVERAGE Consider dropping collision and/or comprehensive coverages on older cars with low market values. If your car is worth less than 10 times the premium, purchasing the coverage may not be cost effective. To assess the worth of your car ask an auto dealer, your bank, or visit Kelley's Blue Book online at www.kbb.com. Review your coverage at renewal time to make sure your insurance needs have not changed.

5. BUNDLE YOUR INSURANCE POLICIES
Many insurers will give you a discount if you buy two or more types of insurance. You may also get a reduction if you have more than one vehicle insured with the same company. However, you should still compare quotes because you may save money buying from different insurance companies.

6. MAINTAIN A GOOD CREDIT RECORD
Establishing a solid credit history can cut your insurance costs. Statistics show that people with good credit have fewer claims,and many insurers use your credit score in determining your premium. To protect your credit standing, pay your bills on time, do not obtain more credit than you need and keep your credit balances as low as possible. Check your credit record on a regular basis and have any errors corrected promptly so that your record remains accurate.

7. TAKE ADVANTAGE OF LOW MILEAGE DISCOUNTS
Some companies offer discounts to motorists who drive a lower than average number of miles per year. Low mileage discounts can also apply to drivers who car pool to work.

8. ASK ABOUT GROUP INSURANCE
Some companies offer reductions to drivers who get insurance through a group plan from their employers, through professional, business, and alumni groups or from other associations. Ask your employer and inquire with groups or clubs you are a member of to see if this is possible.

9. CONSIDER KIDS & DRIVING Make your kids wait to get their license. The premium will drop some when they turn 18 and will drop even more when they turn 21. Some insurance companies will offer discounts if you participate in their "monitoring programs" of teen drivers. The programs vary by insurance company and not all offer them. Ask your insurance company whether they offer such a program.

10. ASK ABOUT DISCOUNTS
When you comparison shop, inquire about discounts. Review your policy at renewal to make your discounts still apply. Some, such as the good student discount, may have to be certified each year. The key to savings is not the discounts, but the final price. A company that offers few discounts may still have a lower overall price.*

Here are some discounts that may lower your auto insurance premium:

  • Anti-theft Devices
  • Bundling Auto and Homeowners Coverage with the Same Company
  • College Students away from Home
  • Defensive Driving Courses
  • Drivers Ed Courses
  • Good Credit Record
  • Higher deductibles
  • Low Annual Mileage
  • Long-Time Customer
  • Multi-car Policy
  • No Accidents in 3 Years
  • No Moving Violations in 3 Years
  • Good Student

*The discounts listed may not be available in all states or from all insurance companies.

Last Modified: Sunday 21st February 2010

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