How to Save on Auto Insurance

Insurance premiums are relatively low for some and high for others. Insurance premium hikes have hit the breaks. The Insurance Information Institute projects a 0.5 percent decrease for 2007, bringing average annual costs to $847. This marks the first decline since 1999. One can find cheaper insurance coverage by doing some research and making telephone calls to these insurance companies directly.

Difficulty: Moderately Challenging

Instructions

Things You'll Need:

• Current automobile policy
• Personal information
• Internet and telephone

1. Shop around. When looking for a new policy, get at least three quotes. If you really want to save, gather several more than that. According to a 2004 survey of more than 100,000 consumers across the country, conducted by Progressive Insurance, rates for comparable coverage can vary by more than $500 for six months' worth of coverage.

2. Get all available discounts. Discounts can vary widely by company as well as by state. Some to ask about are combination discounts, if you insure your automobiles and homeowners' insurance policies; defensive driving classes; association & group discounts; safety discounts and retirement discounts, for example.

3. Increase your deductible. Your deductible is the amount you'll pay out of pocket when making a claim before your insurance starts picking up the tab. It applies to your collision and comprehensive coverage (not your liability) and is the insurance that specifically covers your car.
   Increasing your deductible can cut your premium dramatically. Since insurance is meant to cover the big stuff you can't handle comfortably on your own, having a higher deductible can make a lot of sense. In general, increasing your deductible from, say, $200 to $500 could reduce your premium by 15 to 30 percent, according to the III.

4. Drop some coverage. If you have an older car, such as one that's worth less than 10 times the amount you'd pay for coverage, you may consider dropping collision and comprehensive coverage altogether, according to the III. Collision and comprehensive can account for 40 percent or more of the cost of your premium, and covers only the car's replacement value. If any claim payment you'd receive wouldn't substantially exceed your premiums minus the deductible, then it's probably not worth it to get the insurance.

5. Clean up your credit report. Your credit report can affect whether a company is willing to insure you and at what rate.

6. Get the ight Cacr. If you're in the market for a new car, keep in mind those with the highest theft rates and repair costs will cost more to insure. So if you're debating between two models, it may be worthwhile to give your insurance agent a call to see if there is a notable difference in the insurance costs.

Tips & Warnings

• Visit your agent's website for information on the theft rates of different automobiles.
• Keep your credit report clean or repair your credit if you have dings.
• Bad credit will have an impact on your premium.
• Watch your driving record. A bad record will impact whether or not you will be covered by an insurance company and your rates will be high.