insurance

Slashing your car insurance premiums

Pull your credit report. The importance of your credit rating "is huge in today's insurance environment," says Jack Hungelmann, author of "Insurance for Dummies" and an agent/consultant with Corporate 4 Insurance Agency in Edina, Minn., who says that he's seen discounts of 15 percent to 20 percent for great credit.

For some consumers and consumer advocates, that practice is deplorable. "It's not a valid factor because it does not measure the risk of getting into an accident," Savage says. But most insurers insist it's a valid use. "There is a direct correlation between the way a person manages their credit and whether they will file an insurance claim," Gorman says. But even when it's used, it's just one of many factors, says Robert Hoyt, a professor of risk management and insurance at the University of Georgia and past president of the American Risk & Insurance Association. "No state allows a credit score to be the only basis of a decision," he says. And that makes it "all the more important to shop around," he says. "Not everyone is weighing it in the same way."

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To protect yourself, review each of your three credit reports at least once a year and have any errors corrected. (You can get all three for free through www.AnnualCreditReport.com.) If you find any errors, have them corrected, then request that your insurance company rerun your credit, Hungelmann says.

Families with teens or seniors:

Get schooled -- or reschooled. Taking a safe or defensive driving class will frequently net you a nice savings on your premium. In Minnesota, for example, taking a class that runs about $20 will save you about 10 percent on your auto premium for the next three years, Hungelmann says. Usually this move will net the greatest payback for new drivers and seniors, Hoyt says. But don't be afraid to call your company and ask "what will I save?" he says.

Keep teens on their toes (and heels). Driving teens drive up auto premiums. If your teen doesn't have a driver's license -- and doesn't drive without one -- the insurance company can't put him on the policy. Find out what it will cost you before you take Junior for the driver's test. If your family can't afford the increase, keep them walking or pedaling a while longer. Of course, that means you may get to play chauffeur more often. If your teen is already licensed but having trouble or acting irresponsibly, consider surrendering the license, suggests Hungelmann, and watch your auto rates go back to normal.

For risk-takers only: 

Reduce or eliminate no-fault medical coverage. If you have health insurance, you can cut back on premiums by carrying only the state-required minimum for no-fault medical -- sometimes called personal injury protection, or PIP -- insurance on your auto, Hungelmann says.

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