Getting a good deal on insurance
By Dana Dratch • Bankrate.com

Shopping for a car? Better shop the insurance first.

"People go to extreme lengths trying to save a few bucks buying a new car," says Gerry Goldsholle, CEO of FreeAdvice.com, a consumer legal advice site. "They could save much more money by looking at the kind of insurance they're going to put on the car."

Serious car buyers usually narrow their wish list to a few similarly sized models in the same general price range. And while consumers probably don't want to make insurance a factor in the buying decision, it's smart to include it in the budget. The cost difference between that Mercedes and BMW you're pricing "might be lost in the first year" of insurance premiums, says Goldsholle.

"Cost of insuring various types of cars is not something [car buyers] pay attention to," Goldsholle says.

Adding to consumer confusion is that two insurance companies might offer radically different premiums to the same driver for the same car. Recent studies by Progressive Auto Insurance have shown differences as great as $1,000 annually on premiums for the same driver and the same car, says company spokeswoman Leslie Kolleda.

"We tell them to call their agent or company to see what the effect is on the premium before they sign on the dotted line," she says.

That's because when insurance companies calculate the cost of your premium, they base it on the cost of the car and factor in the kind of claims, theft and injuries they have seen associated with the car. So while one company may associate a low history of claims with a particular car, or a version of that car, another company may have experienced nothing but trouble with the same model.

Depending on the way companies classify cars when they analyze loss, injuries and claims, something as simple as the number of doors on your car could affect your insurance rates, says Kolleda. So while the fact that your car is red might not increase the premium, the fact that it is a turbo might.

If you have this knowledge before you buy, you can choose your dream car accordingly. Or switch to a company willing to give you a better premium.

The good news for consumers is that shopping has never been easier. With a wealth of insurance sites, the Internet is a great place to get a rough estimate of premium differences between companies as well as a general idea of the premium price range for a certain car. Use 800-numbers or local agents to research which of the options you might be considering, such as a convertible, could affect your premium.

And don't forget the discounts. While you may have to ask, insurance companies give rate cuts for everything from good grades and safe-driver classes to anti-theft devices and garaging your car.

To shop smart you need to look beyond the premium. While two quotes may be close, does one company actually provide more coverage? Or does it throw in a feature like roadside assistance that might help tip the scales?

If you're into gadgets, find out what, if any, impact that new technology could have on your claims and possibly your premiums for the years you own the car.

Many up-market cars are offering a host of technology designed to prevent accidents. But if the car is damaged, fixing the equipment can be pricey, says Dan Kummer, director of auto insurance for the National Association of Independent Insurers.

As one example, Kummer notes that the Cadillac STS offers an optional radar system in the back bumper, designed to keep the driver from backing into anything.

"If someone raps you in the rear, and you're normally looking at $800 in repairs, you can figure three times that to replace a bumper with a radar system," he says.

So will technology send premiums up?

"That's a concern of ours with all the new technology they are putting into cars," he says.

But Kummer notes that it usually takes about two years before trends noticed on the roads impact actual consumer premiums.

And some factors aren't cut and dried. Airbags will usually net a nice premium discount. At the same time, Kummer says, "We are seeing more payout and more serious crashes, just due to airbags."

Shopping for safety
Premiums aren't everything when it comes to choosing a car. The ultimate insurance is walking away unhurt from a crash or potential accident. But choosing a safe car doesn't automatically mean a lower insurance rate, according to some insurance industry experts.

"Safety tests do not necessarily have a bearing on insurance cost," says Russ Rader, spokesman for the Insurance Institute for Highway Safety. The organization tests cars in crash conditions, rates performance and makes the data available on its Web site, which is a boon for car buyers.

The good news for consumers is that a safer car doesn't necessarily have to be expensive. "It used to be that luxury cars tended to do better on safety," Rader says. "Now we're seeing good crash worthiness performance across all price categories."

While the 2002 Lexis ES 300, Lexis IS 300 and Saab 9-5 earned "best pick" designations based on their performance in 40-mile-per-hour crash tests, so did the more affordable Acura TL and Toyota Camry, says Rader. Among the crop of 2002 models that earned a "poor" rating from the group were the Hyundai Elantra, Kia Sephia/Spectra, Pontiac Grand Am/Oldsmobile Alero, Chevrolet Cavalier, Pontiac Sunfire and Daewoo Leganza, he says.

One of the most popular pickups, the 2002 Ford F150, also earned a poor rating this year, says Rader.

And size does matter. "Small cars have twice as many occupant deaths each year as large cars," Rader says. Heavier cars usually will give passengers a better chance of surviving a wreck.

That's because a larger car provides "a longer crush zone to absorb the crash," he says. "The weight protects you in a two-vehicle crash because the heavier vehicle drives the lighter one backward, which means the crash is focused on the smaller car."

And before you buy, research your rollover risk. Sport utility vehicles carry a warning to consumers that rollover is possible in an accident, says Tim Hurd, chief of media relations for the National Highway Traffic Safety Administration. But, according to tests done by the organization, some SUVs are more stable in an accident than others. The organization rates a vehicle's resistance to roll over with anywhere from five stars (best rating) to one star (worst rating).

For example, the 2002 Acura MDX (four-door, four-wheel drive with side air bag) and the 2002 Pontiac Aztek (four-door, four-wheel drive with side air bag), both earn four out of five stars in roll over resistance tests, according to 2002 NHTSA test results. The 2002 Honda CR-V gets three stars, and the 2002 Chevrolet Blazer (four-door with two wheel drive) gets one star, according to the organization. To find out how your car, truck, SUV or van rates in various tests, including rollover resistance, visit the NHTSA's test results page.

"While companies may not take these ratings into their methodology, they have likely experienced similar things in real life," says Kolleda.

Who's behind the wheel
There's a lot more to a premium than the car itself. One of the major factors in calculating the insurance premium is the driver.

And if you think the auto-loan officer is the only one interested in your credit rating, think again. For some companies, credit rating plays a part in your premium.

"Insurance companies use your credit rating to create an insurance score," says Jeanne Salvatore, vice president of consumer affairs for the Insurance Information Institute, a nonprofit industry group. "If you have good credit, you will pay far less for insurance."

Other factors, such as where you live, the number of miles you drive, whether you commute and even gender can play a role.

But with any policy there's also a comfort factor. Not only should you shop for a good deal, but part of that deal needs to be a solid company that stands behind the coverage.

"It's not just price," says Goldsholle. "If you have a claim, you want to be treated properly."

Dana Dratch is a freelance writer based in Atlanta.

-- Posted: Oct. 1, 2002

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