Insurance Information Institute: How can I save money on auto insurance?
FULL TEXT (Rev. 11/07)
It’s important to understand that auto insurance premiums can increase, even in the absence of a claim. Costs associated with auto repairs, labor, medical costs, fraud and theft continue to rise. Subsequently, additional premium may be needed to cover such claims-related expenses.
Overall, the news is good for Ohio’s auto insurance consumer. According to the Ohio Department of Insurance, the top 10 auto insurance writers in the Buckeye state (about 72% of the Ohio market) reported back-to-back decreases in auto insurance premiums, averaging 1.2% in 2006 and 1.6% in 2005. In 2004, the overall increase was 0.1%.
Cutting your costs
There are ways to save on your auto insurance without compromising your insurance needs.
- Comparison shop. Check with several insurance companies and agents. Service, claims handling and company stability should be major considerations. Ask questions regarding the claims handling process; how long they’ve been in business and the company’s financial stability or rating. Company information is readily accessible on the Web. For more information on rating services, go here. Ask family and friends for recommended insurance carriers.
- Raise your deductibles. You can reduce your premiums if you shoulder the smaller losses. Increasing deductibles from $200 to $500 could reduce your collision and comprehensive premiums by 15–30%. A $1,000 deductible can save you even more. A note of caution: Should something happen to your car, you’ll need to cover the amount of your deductible.
- Choose the right car. Before buying a car, compare insurance premiums of similar makes and models. Premiums are usually higher for luxury, sport and four-wheel drive models because of repair costs and auto theft experience. Characteristics such as vehicle size, weight and body type (two-door vs. four, convertible, etc.) play a role in determining premiums. Vehicle loss information is available online from the Insurance Institute for Highway Safety/Highway Loss Data Institute at www.iihs.org/research/hldi/composite_intro.html.
- Contact the Ohio Department of Insurance for an auto insurance shoppers’ guide. It provides all types of information, including average Ohio auto premiums by company. Download it from http://www.insurance.ohio.gov/Consumer/OCS/CompleteGuides/CompleteAutoGuide.pdf.
- Eliminate collision and comprehensive coverages on older cars with significant depreciation. A general rule is to eliminate these coverages if your car is worth less than one-tenth of your annual premium, as it may cost more to insure it than what you’d collect after a crash. Check on your vehicle’s value with an auto dealer, bank or through Kelley’s Blue Book (www.kbb.com). Be sure to maintain auto liability coverage.
- Ask about discounts. Many companies offer a multiple-car discount or one for carrying homeowners or another type of insurance with them. Some provide good student discounts or a credit if a young driver is away at school more than 100 miles, with or without a car. Some companies provide discounts for safety equipment or devices. There’s also a discount for seniors completing a defensive driver course. (Click here for a list of state-approved programs and for a list of available auto insurance discounts.)
- Eliminate duplication of coverages. If you belong to an auto club that provides towing services or the auto manufacturer provides it, avoid coverage duplication on your policy.
- Reduce your daily driving. The more you drive, the more likely you are to be involved in a crash—and the more you’ll pay for insurance. Some insurers offer discounts for driving fewer than a predetermined number of miles annually.
- 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. Claims occur on average every 11–12 years, according to the Insurance Information Institute. The more claims you file, especially small ones that you can cover yourself, the greater the likelihood that future premiums will reflect this. Padding claims also affects premiums.
- Keep tabs on your credit. An insurance score is a snapshot of your insurance risk 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. For a fee, you can keep tabs on your insurance score via the Web on www.choicetrust.comfor $12.95. 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 annually to check for inaccuracies. If you find errors, notify the corresponding credit bureau.As of March 1, 2005, Ohio residents can order a free credit report from one or more of the major credit reporting services (TransUnion, Experian or Equifax) once every year. Reports can be ordered by the following methods:
Phone: 877.322.8228US mail:
Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281