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How to Trim Your Car Insurance Bill

What's the easiest way to lower my auto insurance rates?

What's the easiest way to lower my auto insurance rates?

Auto insurance rates vary enormously from company to company for the exact same car and person, just based on the insurer's own experience. So the easiest way to lower your auto insurance rate is to shop around and see what other companies are offering. You may be able to cut your premiums by hundreds of dollars just by switching companies.

And now is a particularly good time to shop around for auto insurance because many major companies are in the midst of changing their pricing structure. In the past, they looked at a handful of variables when setting prices, such as your car, driving record, your age, and where you live. But because of advanced computing capabilities, they can now look at those and other features in a lot more detail when assessing the risk that you'll have a claim.

For example, instead of just looking at damage and theft claim payments for the car you're considering, which has been a key factor in determining collision and comprehensive premiums for many years, they're also looking at the cost of injury claims to passengers in that type of car. And more recently they've started looking at claim payment amounts for damages that car does to other vehicles and their occupants, which affects the cost of your liability coverage. They're also looking more closely at how many miles you drive, and now study dozens of data points within your credit report, since insurers discovered that people with low credit scores are more likely to have claims than people with high scores.


Because of these changes, people with good driving and credit records and safe cars may be able to lower their auto insurance prices by up to 25%. And people who had bad driving records may finally be able to get coverage from a regular company, instead of getting rejected and shunned to a high-risk insurer.

It's easy to shop around. Check out a price-quote Web site such as InsWeb, which provides prices for several companies. Also visit a few insurers' own Web sites, like Progressive, State Farm, Allstate and Geico.

And you can get help from an independent insurance agent who works with many companies (go to the Independent Insurance Agents of America Web site to find an agent in your area). Some state insurance departments also publish rate comparisons.

Because of these changes, buying a safe car can also make a big difference in your auto insurance rate. You can look up the car's cost to insure at State Farm's vehicle ratings page, which shows you the car's relative insurance costs in three categories: the damage and theft index grade (how its collision and comprehensive premiums stack up against vehicles in its price range), the liability rating index score (relative premiums for bodily injury and property damage liability) and the car's vehicle safety discount (the discount for medical payments or personal injury protection coverage, based on the cost of claims involving injury to the occupants of the insured car). These ratings are from State Farm's claims experience and may be different for other companies. You can also look up a car's crash test results at the Insurance Institute for Highway Safety Web site.


Another easy way to lower your premiums is to raise your deductibles on your comprehensive and collision coverage, or drop that coverage entirely if your car is only worth a few thousand dollars. Increasing your deductible from $250 to $1,000 can lower your premiums by 15% or more and make you less likely to file small claims that could cost you a claims-free discount.

And make sure you're getting all of the discounts you deserve. Most insurers will reduce your rates if you have your homeowners and auto insurance with the same company, if the young drivers in your family maintain at least a B average in school, if your car has special safety and anti-theft devices and if you don't commute with the car and keep the annual mileage low. You may also get up to a 20% discount if nobody on the policy has had an at-fault accident or moving violation within the past three or five years. The specific discounts vary by company and state, so ask each insurer you're considering about the rate reductions you could qualify for.

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