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The amount of money you spend for car insurance can vary dramatically depending on the insurance company you choose, the coverage you want and the kind of car you drive. Are you spending more than you need to on insurance premiums? This Financial Guide will help you get the most for your car insurance dollar.

All that is required to cut car insurance costs is a little of your time. Here are 10 cost-cutting suggestions for lowering your auto insurance costs.

1. Comparison Shop

Do not assume that every insurance company charges the same rates. There are several thousand different auto insurers in competition. You can save from 30 to 50 percent just by comparing costs. Costs are usually based on factors such as the age, gender, and driving record of the vehicle's driver's; the state of residence; the age and value of the vehicle; and the frequency and purpose of the vehicle's use.

First, contact the insurance regulating body in your state and find out whether they provide a free pamphlet that ranks insurers by price. Many state insurance departments do this. Obtaining this pamphlet will save you a lot of time on the phone asking for price quotes. If no pamphlet is available, get quotes from agents (those who represent several insurance companies) and from "direct writers." Direct writers sell directly to the public and not through agents. You may save about 10 percent because you are not covering an agent's commission.

When calling an insurance company, ask if the insurer is a mutual company, one owned by its policyholders. If so, ask what percentage of its premiums are returned to policyholders. You may find, for example, that one company's premiums are higher than those of some other companies, but that it pays annual dividends of 18 to 20 percent to policyholders, which reduce your insurance costs.

In addition to asking insurance agents and insurance companies, be sure to ask colleagues and friends about their carriers. You might also look on the Internet, look in the yellow pages, check with your state insurance department, and review consumer guides.

Planning Aid: For advice on how to shop for car insurance and which companies offer lower rates, see Consumer Reports Online.

It is important not to neglect factors other than price. Although quality personal service may cost a bit more, it provides added conveniences, so talk to a number of insurers to get a feel for the quality of their service. Ask them how you can lower your costs.

Tip: Be sure to check the financial ratings of carriers. Check them out in a ratings service company such as Moody's, and then supplement your review by calling your state insurance department for further information. Some state agencies will supply you with the number of justified complaints that have been made about insurers.

Note: In some states, car owners with good driving records cannot be turned away by the insurance company of their choice. On the other hand, an insurance company can deny you coverage or charge you substantial premiums if you have a poor driving record.

2. Choose Your Coverage Carefully

Although certain minimum coverages are mandatory in most states, the amounts of such coverage vary among policies. Most coverages are discretionary. Therefore, you should choose your coverage carefully to avoid being over insured, resulting in unnecessary premium costs. For those who are not familiar with auto insurance policies, all drivers are required to have the following basic coverages:

• Liability covers physical injuries to other people, including compensation for expenses that might arise from such injuries, and damage to other people's property.
• Comprehensive and collision covers damage to your car due to collision or overturning, fire, flooding, or theft (there is usually a deductible).
• Uninsured (or underinsured) motorist covers the expenses of an accident if the other driver has insufficient insurance.
• Medical protects you against medical costs for injuries to you and other riders in the car.

Note: In certain states with "no-fault" insurance laws, personal insurance protection coverage is required and there are some restrictions on liability lawsuits.

Your policy will show the total amounts of bodily injury, liability, and property damage coverage. For instance, a policy of $25/$50/$20 means that, in a single accident, you are covered for $25,000 for an individual injured, $50,000 for all persons injured, and $20,000 of property damage.

The amount of coverage you choose will depend on the state's minimum requirements, the replacement cost of your vehicle, and how much medical coverage you already have under other policies.

3. Consider Higher Deductibles

It may pay to absorb the cost of fender-benders yourself. In other words, get the highest deductible you can afford. If you absorb the cost of small claims and the insurance company covers the large ones, it makes a huge difference in your premium. For example, raising your deductible from $100 to $500 will reduce your premiums by 10 to 20 percent and raising it to $1,000 will save 25 to 30 percent.

Tip: Do not file a claim for a minor accident. If the damage costs a couple of hundred dollars in repairs, pay for it yourself. The expense will be more than offset by the rise in your insurance rates that will occur when you file a claim.

4. Drop Collision And Comprehensive On Older Cars

You may wish to drop collision and/or comprehensive coverage on older cars. (Collision coverage takes care of the cost of repairing your car if you are in an accident, regardless of who's at fault; comprehensive pays if your car is stolen or damaged by fire, flood, hail or wind.) If your car is not worth much, why pay a premium for repairs on a vehicle you will probably replace if it's badly damaged? Collision damage for an older car can cost more than the car is worth.

Tip: Drop collision if your car is worth less than $2,000 or if your premium is equal to 10 percent or more of the value of your car. But remember that you generally can't drop collision until your auto loan is paid off.

Tip: Check the value of your old car in the "National Automobile Dealers Association Official Used Car Guide," known as "The Blue Book" (auto dealers, banks and libraries have copies) or on the Internet, a faster, more efficient procedure.

5. Buy A Low Profile Car

Before you buy a new or used car, check into insurance costs. Cars that are expensive to repair or that are favorite targets for thieves have much higher insurance costs.

Not surprisingly, the more expensive the car, the more expensive the insurance. Cars that thieves love-Porsches, Jaguars, BMWs and sports models, in general, are more costly to insure. The latest study shows that it costs three to four times as much to insure a Porsche as a Ford. If you buy a used car, insurance will be significantly lower.

Related Guide: Please see the Financial Guide YOUR NEXT CAR: Should You Buy Or Lease?

Tip: Call your insurance company or agent before buying a car and ask about the costs for several different models.

6. Avoid Duplicate Medical Coverage

If you have an adequate comprehensive health insurance plan, you should consider dropping the of medical expense coverage from your auto insurance policy. This could lower your premium by up to 40 percent.

7. Maximize Discounts

Most insurance companies will reduce premiums 10 to 20 percent for some or all of these situations. However, you may have to bring up the subject with your agent.

• Automatic seat belts and air bags
• Anti-lock brakes
• Insuring more than one car
• No accidents in three years
• No accidents ever
• Drivers over 50 years of age
• Driver training courses
• Anti-theft devices
• Good grades for students
• Low mileage discounts
• Insuring your home or apartment with the same company
• College student living at least 100 miles away from home without a car on campus
• Not smoking
• Not drinking
• Serving in the armed forces (past or present)
• Car pooling
• Ignition cutoff system and/or a hood or wheel-locking device
• Being a doctor, lawyer, farmer, or member of a profession that the insurance company regards as a good risk
• Being female and the only driver in the household
• Renewing for longer than a year

8. Collect All Of The Benefits You're Entitled To

Here are some tips for making sure that you obtain a fair settlement and obtain payment on a claim as quickly as possible.

• Start a file on the accident immediately. Put into it hospital bills, police accident reports, and copies of claims you have submitted.

• Where practical, write a follow up letter summarizing any phone conversations with an insurance company representative. Include the date of the conversation and the name of the person spoken to. Put a copy of the letter in the file.

• If it is taking a long time to obtain your settlement, check your policy to see whether interim rental car expenses are covered. If so, rent a car. The insurer will be motivated to speed things along to avoid incurring this cost.

• If you feel the company is being unreasonable-is delaying or not acting in good faith-make a complaint to your state's insurance regulator.

• If you are getting nowhere, and the claim is substantial, consider consulting an attorney.

9. Use Car Repair Networks

The Direct Repair Program, or DRP, is a type of "managed care" approach to getting your car repaired, available from many major insurers. The idea behind DRP's is that they will save insurers money by cutting car rental periods for loaners, by eliminating the need for adjusters and by taking advantage of discounts on parts and labor. Some of these savings should be passed on to you. In some cases, insurers have been known to take up to 20 percent off premiums for collision/damage coverage.

Whether most people will save much with a DRP is unclear. However, if you have a busy schedule, the DRP's advantage is that it will certainly save you time. In addition, it can take the stress out of filing a claim.

Tip: Insurers seldom advertise their DRP's, so you will have to ask. Then get a list of repair shops near you. Skip the plan if you have to travel too far to an approved garage.

The DRP plan lets you choose between using a prescreened network of repair shops or your own mechanic. The repair shops participating in the network have already negotiated agreements with the insurance company. Use one of them and the insurance company will cover all costs except the deductible. Without this program, the old rules apply: you get the best estimate and then hope your insurer will pay.

The great advantage is that you do not have to shop for estimates because the garage is authorized by the insurer to do the repairs. Some even loan you a car while repairs are being done. And, because you do not have to wait for a claims adjuster, you will probably get your car back sooner. Sometimes the garage or the insurer also guarantees the repairs for as long as you own the car.

Before signing up for a DRP, get answers to these questions:

• Will I get a break on my premiums or a lower deductible on collision?
• Are eligible repair shops nearby?
• What if I have an accident while traveling out of state?
• For how long is the repair work guaranteed?
• Will I get a free loaner while repairs are done?

10. Drive Carefully And Take Your Car Key

Finally, at the risk of being obvious, drive carefully. Accidents can greatly increase your premiums as well as cause the insurance company to refuse to renew (or, in serious cases, to cancel) your policy. And don't forget to take your car key when leaving your car: a car is stolen every 19 seconds in the U.S. and over 20 percent have the key in the ignition.

Auto Information Checklist

When calling insurers to request price quotes, this checklist of information will come in handy.

Learn More

• For free brochures on buying and insuring cars, contact:

The Insurance Information Institute
110 William Street
New York, NY 10038
Tel. 212-346-5500