insurance

Slashing your car insurance premiums

gold money sign being cut with knife and car keys
Highlights
  • Taking a safe driver course could save you 10 percent or more.
  • Improving your credit score could mean a 15 percent to 20 percent rate cut.
  • Dropping your PIP coverage can mean big savings, but it's risky.

When it comes to saving money these days, even those expenses normally thought of as fixed are fair game -- like auto insurance.

The cost of insuring your car remained fairly stable in 2008, with average increases of 2.5 percent to 3 percent, according to Carolyn Gorman, vice president of the Insurance Information Institute, or III. But that doesn't mean you can't find ways to cut your premiums.

In fact, industry insiders and consumer advocates are full of suggestions on how to do just that. Some apply equally well to everyone, while others are better suited for families with teen or senior drivers. Several moves, which involve cutting or minimizing certain types of coverage, will work better in some situations than others, so consider all the angles before you try them. And then there are the "old reliables" -- classic insurance tips that never go out of style.

We'll break the money-saving techniques down into four categories:

All drivers 

Track the mileage on each vehicle. Insurance companies always ask how many miles your car is driven annually, and the answer is factored into the premium. If you've cut back on driving because of volatile gas prices, you may be in line for a rate reduction. Similarly, if you've started driving a smaller car in the family fleet rather than the big sedan or SUV, you're probably putting fewer miles on the old gas guzzler. Even if you add another car, don't assume you'll be driving it the same number of miles as the first car. Many times, the total miles driven gets split between two cars, and the better mileage model often gets driven more nowadays, says Mark Savage, senior attorney for Consumers Union. Give your agent an accurate assessment of how many miles you putt on each of your cars -- but make sure you don't overestimate -- and you could be in for some savings.

Get the volume discount. By covering your home and auto (or more than one car) through the same company, you can save up to 15 percent on each premium, says Madelyn Flannagan, vice president of education and research with the Independent Insurance Agents & Brokers of America.

Shop around. Consumers see it as perfectly natural to comparison shop for the best prices on electronics, household goods and food, but they don't do the same for auto insurance. One driver can see "massive differences in the premiums" with different companies, Savage says. But make sure you're comparing the same coverage, he says. Be alert to differences in policies and terms. Also important: getting service in a format that works for you. Do you want a local office and agent? "You may pay a little extra for the privilege," Savage says. Conversely, a company that contacts customers almost exclusively through long-distance phone calls, mail and e-mail might offer a lower price but leave you cold in the personal service department. "It's important that the consumer know what he or she wants," Savage says.

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