How To Save Money On Auto Insurance

Before providing some solutions to the rising cost of auto insurance, it’s important to understand why auto premiums can go up, even in the absence of a claim. When costs associated with auto repairs, labor, medical costs, fraud and theft continue to rise, insurers have to do more with the premiums collected. And who pays for these increases? We do.

Cutting your costs

Here are some ways to save on your auto insurance without sacrificing your insurance needs.

• Comparison shop. Check with several insurance companies and agents. Chances are that you’ll find differences in service as well as premiums. Service should be a major factor when making an insurance decision. Ask questions regarding their claims handling process; how long they’ve been in business; and insurance company financial stability or rating. Surf the Internet for company information, and ask family and friends for recommended insurance carriers.

• Raise your deductibles. You can reduce your premiums if you shoulder the smaller losses. Increasing your deductibles from $200 to $500 could reduce your collision and comprehensive premiums by 15–30%.

• Choose the right car. Before buying a car, ask your insurer how the premiums compare with similar models. Premiums are usually higher for most luxury, sport and four-wheel drive models because of repair costs and auto theft experience. Check the Insurance Institute for Highway Safety’s Web site for loss information at www.highwaysafety.org.

• Contact the Ohio Department of Insurance for a free auto insurance shoppers’ guide. It provides all types of information, including average auto premiums by company. Call 1-800-686-1526 for a copy or download it from www.ohioinsurance.gov.

• Eliminate collision and comprehensive coverages, especially older cars which depreciate in value. A general rule is to eliminate these coverages if your car is worth less than $1,000, as it may cost more to insure it than what you’d collect after a crash. Check with an auto dealer, bank or look up your vehicle’s value in Kelley’s Blue Book (www.kbb.com). Keep your auto liability coverage intact.

• Ask about discounts. Many companies offer a multiple car discount or a discount if you also carry homeowners or another type of insurance with them. Some provide good student discounts or allow a credit if a young driver is away at school more than 100 miles with or without a car, depending on the location. Some companies provide discounts for safety equipment or devices. There’s also a discount for seniors completing a state-approved defensive driver course. (Click here for a list of state-approved programs.)

• Eliminate duplication of coverages. Some auto medical expense coverages may duplicate insurance provided by your employer. If you belong to an auto club that provides towing services or it’s provided by the auto manufacturer, don’t duplicate the coverage on your policy.

• Reduce your daily driving. Statistics show that the farther you drive, the more likely you are to be involved in a crash—and the more you’ll pay for insurance. Some companies offer discounts for driving fewer than a predetermined number of miles.

• Drive defensively. An at-fault accident or major traffic violation can affect future increase premiums. In some cases it can place you in a high-risk category. Some companies reward policyholders for remaining accident-free for a certain period of time.

• Double-check how and where you park. Often the cost of vandalism and auto theft is overlooked.

• Avoid filing excessive or fraudulent claims. The more claims you file, especially small ones that you can cover yourself, the greater the likelihood that future premiums will reflect this. Padding insurance claims negatively affects the premiums we all pay.

• Keep tabs on your credit. An Insurance Bureau Score is a snapshot of your insurance risk picture based on information in your credit report. It reflects your credit payment patterns over time, with more emphasis on recent information. Many companies take insurance scores into account when assessing a potential auto insurance risk. To improve a score: Pay bills on time, keep balances low on credit cards, and apply for and open new credit accounts only as needed. Review your credit reports from the three major credit bureaus annually to check for inaccuracies. If you find errors, notify the corresponding credit bureau. Click here for more information on credit and insurance scoring which also provides a list of credit bureau phone numbers and Web site links.