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Auto Insurance

Tune Up your Auto Policy

Are you paying too much in premiums? Shop around.

Okay, you religiously change your oil every 3,000 miles, get regular tune-ups, and check your tire pressure. But when was the last time you rechecked your auto insurance policy?

Maybe all you need are a few minor adjustments, or perhaps it's time to trade in your old policy for a more economical one.

Review your old policy

If you're happy with the way your current insurer handles claims and your premiums aren't increasing, stick with the company you have. Also, don't plan on switching if you've had an accident or received a ticket in the past three years.

If your driving record is clean staying with the same company for at least three years can bring discounts. Also, an insurance company likely will be more lenient on long-term policyholders if they have an accident or get a ticket. You'll miss out on these benefits if you jump from company to company.

Even if you're not thinking of switching insurers, review your policy at least once a year to make sure there are no gaps or overlaps in your coverage. For example, an auto policy's medical coverage might duplicate medical coverage you have through your employer. Liability amounts may meet state minimums, but may not be enough to protect your assets if you're sued. For more on building a solid auto policy and how much coverage you need, see the "Smart Shopper's Guide to Auto Insurance."

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Other money-saving moves:

  • Special discounts. Update your agent on any changes in your lifestyle or your vehicle. For example, if you've moved closer to work or started taking public transportation you might be able to knock off added surcharges for daily commuters. Installing anti-theft devices and even quitting smoking might have an impact on your rates.

  • Boost your deductible. By increasing your deductible from $100 to $1,000 you might be able to shave as much as 25% from your annual premium (if you're financing the car you might be limited to a $500 deductible). But be realistic. Keep the deductible at a level you can afford.

  • Consider dropping collision coverage. If you have an older car -- like the one you gave your teen -- consider removing this optional coverage. The highest payout you can possibly get, minus the deductible, will rarely be worth the price if the car is worth less than $1,000 or if the insurance costs more than 6% of your car's value. Look up the car's value in the Kelley Blue Book to see how much the insurance company probably thinks your car is worth.

  • Consolidate your coverage. You get a break for the second and successive cars covered by the same policy, so it's usually more economical to put all your cars on one policy. Similarly, consider using the same company for other policies. Some insurers offer discounts of up to 10% if you cover both your car and your home with them.

For more about keeping a lid on your premiums see "How to Get a Good Deal."

Shop around

Premiums for the same coverage can be all over the map, so to be sure you're getting the best rates and services get quotes from several different companies.

Mary Bonelli of the Ohio Insurance Institute recommends checking with three sources for quotes:
  • The Internet. Web sites such as Progressive.com and InsWeb.com allow you to search for insurance quotes on your own time, but be prepared to answer a lot of questions.

  • An agent who represents only one company -- such as State Farm or Allstate -- or companies such as Geico or USAA that deal directly with consumers.

  • An independent agent. Independent agents are in the comparison shopping business. By selling policies from several companies, an independent agent can recommend those that best fit your situation. The Independent Insurance Agents of America Web site can help you locate an independent agent in your area.

    However, if you purchased your last policy from an independent agent don't assume that he or she will alert you to a better deal. Customers who want their agents to shop for better policies must ask.

Also, find out if your employer offers a group insurance policy, which might be cheaper than an individual policy.

When comparison shopping on your own, be sure to provide the same information to each company or agent. And to get a more accurate price comparison, make sure you ask for the same coverage.

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For the lowest rates, ask about discounts for such things as vehicle safety features, driver training or a clean driving record. And remember: Insurance companies can and will access your driving records.

Check out the company

Once you've narrowed your search to a couple of prospective policies, contact your state insurance department to find out how the company's complaint ratio compares with its competitors. Some states do not gather or release complaint information.

Your final evaluation should focus on the company's financial stability, particularly if it's a smaller insurer you're not familiar with, says Jeanne Salvatore, spokeswoman for the Insurance Information Institute. She recommends checking with the insurance rating firms A.M. Best (search for a company; about the ratings) and Standard & Poor's (search).

Finally, don't cancel your current policy until your new one has started. Once you've signed with a new company, let your previous insurer know the date you're planning to switch coverage and ask for a cancellation request form.