Making Sense of Car Insurance

2006-12-18

When signing up for car insurance, or renewing it, most people automatically go with their old provider, or with the dealer’s recommended policy. That isn’t necessarily the best one for you. While online sites like insweb.com can provide multiple quotes, some of the larger insurance companies don’t participate there – you’ll need to check multiple sites to check out.

There are several areas to consider while deciding on choices.

Are you getting the right deal?

• Check the average or sample rates for your state, from naic.org.
• Are you getting the deductions for a non-claim, accident-free record?
• If you’re car-pooling, or never driving out of state – you may get a rate break.
• How much is your deductible? Raising your deductible by a few hundred dollars could cut your premiums significantly. Over years, the money saved more than covers any additional costs you incur when you finally need to make that claim
• Are errors in your credit record raising your premium? If so, get them corrected.
• If your car is old, or has a low value, consider dropping the collision insurance – the cost of the insurance over a few years would be more than the cost of replacing the car.
• Did you know that some models of cars have lower premiums? All cars aren’t necessarily considered the same. SUV’s or trucks for instance, can attract higher premiums than small family cars. Consider trading in.

How much should you be insured for?

Many states recommend a minimum, but that isn’t the right amount. Generally, insurance of $100,000 per person, $300,000 per accident and $50,000 are recommended amounts. Make sure that you have uninsured motorist coverage; if you’re in a smashup with an uninsured or under-insured driver, you still have protection.

What are the extras you don’t need?

Insurance companies love to add extras – a rental reimbursement, covering the cost of rental if your car is smashed up; Towing costs; accident forgiveness, which promises that your premium won’t go up even if you need to make a claim; or “new car replacement” that doesn’t really cover the replacement cost.

One extra that can be worthwhile is full glass coverage – auto glass is expensive, and a stone can ruin your windshield in a moment.

Who’s driving your car?

If you have teenage children driving your car, your premium rates can be significantly higher. Make sure that you aren’t getting charged the same rate even for cars they wouldn’t be allowed to drive.

Most insurers offer discounts for students with a B average or better. Or if your children complete recognized driving classes, you could get the rates knocked down. Choose a vehicle that isn’t considered a “sports car” – that can hike up the rates charged. Auto insurance rates are generally higher for young men than for young women, since they are seen as greater risk.

When is the best time to change over?

Start shopping around about six months before your existing coverage expires. That gives you enough time to evaluate alternatives, and work through the reductions with your new provider. If you’re putting it off until the last minute, you can expect to pay more – much more.

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