Simple Steps to Lowering Your Premiums

Auto insurance rates may be on the rise, but that doesn’t mean consumers must simply accept higher costs. Policyholders may find that taking a few simple steps can save a bundle.

What’s a consumer to do?

* Shop around: Even if you shopped for the best insurance rates a few years ago, you might be wise to shop again--especially if your insurer is raising rates substantially and you’re a good driver. Why? Insurance companies usually set rates based on their own loss experience from the previous year or two. If one company has unusually high losses, its rates may go from cheap to expensive in short order.

“You’ve got to shop it,” said Rick Holbrook, chief of the California Department of Insurance’s San Francisco rate filing bureau. “You could save $400 or $500 from one company to another.”

There are many ways to shop for auto insurance rates, including simply calling an insurance agent to see what else is available. Many state insurance departments also offer insurance rate comparisons on their Web sites. The California department’s Web site is at https://www.insurance.ca.gov.

However, you need to realize that these rate comparisons often use sample customers whose situations may vary widely from your own. The fewer questions asked of you, the more generic the quote. Generic rate comparisons should serve only as a guideline, showing how wide rate disparities can be and giving consumers an idea of what companies they should call for further information.

If the Web page asks a lot of questions--ranging from driving record to ZIP Code--the quotes are probably more accurate, but they’re still subject to change until the insurer checks all the applicant’s information.

* Bundle: If you insure your home and cars with different companies, investigate what deals you’d receive if you moved your business to just one insurer, suggested James Armitage, vice president of Arroyo Insurance Services in Pasadena.

“You can get some pretty nice discounts for having your home and auto insured with the same company,” he said. “It’s known as a multipolicy discount and can save anywhere from 10% to 20% on either your auto insurance, your home insurance or both.”

* Watch the deductible: The deductible on an insurance policy is the amount that the consumer must pay before coverage kicks in. Many consumers keep their deductible levels low, either because they hate paying for minor repairs or because they simply haven’t reviewed their coverage in years, Armitage said.

However, if you rarely make a claim, a low deductible may cost a fortune in premiums.

“If you go from a $200 to a $500 deductible, you could save between 15% and 30% on the cost of collision and comprehensive coverage,” said Robert Hartwig, vice president and chief economist at the Insurance Information Institute in New York.

“If you go to a $1,000 deductible, you can save 40%.”

However, before changing a deductible, ask about the precise cost savings, Armitage said. The savings are not standard for every company, every consumer and every type of policy. It makes little sense to put more of your money at risk if the savings are slight.

“If I double my deductible to $500 from $250 and I only save $25 a year, it doesn’t make much sense,” he said. “But if I save $75 to $100 on premiums, even if I have a claim, I’m going to get my money back in about three years.”

* Reconsider the Camaro: Everybody knows that it costs more to insure a luxury car than a compact, but there are also wide variations within car categories. One $20,000 convertible may cost substantially more to insure than another.

The reasons for these disparities vary. Some cars--Camaros and Firebirds, for instance--attract higher-risk drivers, who are far more likely than the average to die in a crash. Other cars are popular with thieves, while others may be costly to repair or might not hold up well in accidents.

To get a reading on how cars rate in all these categories, consumers can go to the Insurance Institute for Highway Safety Web site at https://www.iihs.org.

The site does not compare insurance rates--just how the various cars rate on safety, theft and cost of repair. Few drivers bother to check these details before they buy a car, Hartwig said, but if they did, they might be able to save hundreds on their auto insurance.

* Consider discounts: If you have had an alarm or safety system installed on your car since you secured insurance, you should tell your agent, Armitage said. Insurers often offer valuable discounts for certain safety features, and even to drivers who take certain driver education courses.

In addition, parents of youthful drivers need to keep an eye on their grades. Good student discounts--available to those maintaining at least a “B” average--make a dramatic difference, he said.

* Pay promptly: Credit scores are increasingly becoming a key component in how insurance companies set rates, said Jerry Carnahan, president of Farmers Insurance Group’s personal lines division.

“We find that people who are careful about how they handle their money are also careful about how they handle their cars,” Carnahan said.

You get a high credit score for paying bills on time, maintaining long-term credit relationships and a variety of other factors. For a detailed view of how credit scores are tabulated, go to https://www.myfico.com.

* Marry: If you are single and want to keep the Camaro, your only hope for lower rates is to get married. Insurers consider married couples comparatively better risks because they are less likely to frequent singles bars and drive inebriated acquaintances home in the middle of the night.

Insurance rates are often half as expensive for marrieds as for singles. But, naturally, marriage has some costs of its own.