Car insurance buying guide
Getting started
Those quirky characters in auto-insurance TV ads might offer you more laughs than actual savings, as outlined by a 2009 survey by the Consumer Reports National Research Center. Only 14 percent of 4,500 ConsumerReports.org subscribers who compared premiums found that they would spend less by switching insurers.
That does not imply shopping is a waste of time. But it's just one way to save on auto premiums, which currently are buffeted with a slew of variables, including:
Rising costs
Auto-insurance premiums are up 10 percent since 2008, in comparison with zero for overall inflation. That's a big change from the three prior years, when rates rose 1 percent per year typically.
Credit-based insurance scores
Hard times have hurt many consumers' people's credit reports. That could result in rate increases, due to most carriers' using credit-based insurance scores in setting premiums. Consumer advocates (including Consumer Reports) have long argued that credit-based scoring is unfair because scores are certainly not related to accident risk. But legislative efforts in 27 states to ban or restrict the practice over the past two years are already unsuccessful.
Uninsured motorists
The recession has prompted unemployed consumers to go without insurance, which could shift some or their liability costs for your requirements.
Data mining
Some insurers use consulting firms that mine databases for private policyholder information that may or is probably not accurate. One company says he will dig for details about your kids, your marital status, your career, and also other data with which to confront you for the possible rate hike.
Corner-cutting repairs
Some insurers push policyholders to get their cars fixed at specified repair shops, which left our readers less satisfied, so the companies can reduce costs, often through use of cheaper aftermarket replacement parts.
Some cost factors are away from control, but there is still plenty that you can do to reduce your premiums for the auto coverage you may need.
Control insurer cost factors
Do an annual rate check
Check rates off their insurers annually to make certain you're obtaining the best deal. But if you've been with the same insurer quite a while, it could be tough to beat its rates. That's one reason searching didn't pay back for our survey respondents: More than 60 percent have been with the same carrier for 10 or more years. "Insurers reward longevity, particularly loss-free longevity," says Bill Wilson, associate second in command for education and research at the Independent Insurance Agents and Brokers of America. Long-term policyholders get bumped up into better rate tiers.
But most consumers, 75 percent, haven't shopped for auto insurance in the past year, in addition to those who did, most researched only 1 or two companies, in accordance with a recent insurance-industry survey. By looking father afield, you will have a better shot at savings.
For example, a San Diego multicar couple within their 40s using a 17-year-old male driver on their policy and no violations or accidents might jump at Progressive's $6,104 annual premium when they were already paying $8,593 to Farmers Mid-Century. But they'd find even lower rates at State Farm ($4,625), Safeco ($3,717), Geico ($3,648), and USAA ($2,883), in accordance with rate comparisons published by the California Department of Insurance.
Check whether your state insurance department provides rate comparisons; head to www.naic.org/state_web_map.htm to locate a link for your state's agency. You can also compare multiple insurers online at Answer Financial, Insure.com, InsWeb, and NetQuote. You usually won't receive an immediate quote online, however you will get e-mail messages from hungry agents.
Consider forming a relationship with an independent agent, who will check rates to suit your needs at a range of carriers.
Pick a top-rated insurer
Saving is not just a matter of finding the lowest premium. An insurer can charge less in premiums but run you more overall by low balling loss estimates, hassling the repair shop to cut corners, and forcing that you pay extra for your manufacturer's replacement parts if you choose them over cheaper knockoffs. It can also unfairly jack up your premiums after any sort of accident.
We surveyed 28,241 ConsumerReports.org subscribers who filed an incident between 2006 along with the first half 2009. Eighty-six percent of them were highly satisfied with the handling of the claims. Among the highest-rated groups were NJM, USAA, Amica, and Auto-Owners, with overall satisfaction scores of 92 or more. Availability for a lot of insurers is fixed by region or policyholder eligibility rules.
Only ten percent of Auto-Owners policyholders were not impressed with claims-related problems, such as delays and disputes over fault or damages. By contrast, 26 percent of Commerce customers a complaint in that area.
Set the deductible right
A higher deductible reduces your premium when you pay more out of pocket if you have an insurance claim. Hiking your deductible from $200 to $500 can reduce your premium on collision by 15 to thirty percent. Go to $1,000 and you could save 40 percent. If you have an excellent driving record and haven't had an at-fault accident in years, when, opting for a higher deductible on collision might be a fantastic bet. Just make sure you can pay for to pay it in case your luck expires.
Review all of your coverage
Your liability coverage will cover bodily injury and property damage that you cause in accidents. Don't get caught short by reducing your liability limits towards the state minimums. Buying more coverage might appear like an odd strategy for saving, though the benefit comes when you have a costly claim, which could put your individual assets in danger. Buy standard 100/300/100 coverage, which will cover bodily injury up to $100,000 per person and $300,000 per accident, and property damage up to $100,000. If you have a high net worth, boost bodily damage to $250,000 per person and $500,000 per accident.
One of the six drivers today may be uninsured, based on the Insurance Research Council. If you get hit by an uninsured at-fault driver, you'll have to cover for repairs from your own pocket and sue the at-fault driver for damages. Protect yourself by buying uninsured/under insured motorist protection with the exact same limits as your liability coverage.
You can probably cancel your collision and/or comprehensive coverage if the annual cost equals or exceeds ten percent of your automobile's book value. Otherwise, you might end up paying more with time than you'll recoup for repair or replacement of your damaged, stolen, or totaled vehicle.
If you've got another car that you just can use while your motor vehicle is being repaired, you don't need to pay for rental-reimbursement coverage. Dump roadside assistance for those who have an auto-club membership what a better deal. Think carefully about personal-injury protection and medical-payments coverage: Forget it if you have good health coverage; ensure that is stays if you don't or if your usual passengers might not be well insured.
Watch crash repairs closely
Claims payment is where the rubber hits the path. Your insurer might push you to use shops in a direct-repair program (DRP) or use cheaper replacement parts, instead of the original equipment manufacturer (OEM) parts. Tests have found out that some non-OEM parts fit poorly, tend to be prone to rust and corrosion, don't always meet federal safety standards, and may even not provide good protection in the crash.
In our survey, respondents' satisfaction with repairs was significantly lower among those who felt pressured to utilize DRP shops and non-OEM parts. And respondents who said they were pressured to utilize non-OEM parts had significantly more problems with their repairs.
Take advantage of discounts
Discounts are designed to attract the organization of lower-risk drivers. Those drivers include students with high gpa's, new drivers who have taken a driver-training course, older drivers who may have taken a refresher course, and members of affinity groups, for example college alumni and certain occupations and professions. Antitheft and safety equipment will also have you a discount.
Insurers also offer discounts if you opt for your homeowners, renters, or life-insurance policy from them. But make sure to check out total costs both ways: premiums from different insurers combined in comparison with single-insurer packages.
At least two insurers offer discounts in some states determined by electronic monitoring of the driving habits. With Progressive's "Snapshot" discount, eligible drivers in 22 states plug a digital data recorder to their car's data port (available only for cars from model year 1996 or later). The device tracks miles and time the car is driven and the way often you brake suddenly. If the device shows that you drive lower than average, avoid operation from midnight to 4 a.m., and stomp for the brake pedal, you might get up to a thirty percent discount. If it shows which you're a riskier driver, you might see your rate increase by as much as 9 percent in some states. If you quit this software, Progressive won't use the data to set your premium, except in Alabama, the place that the insurer may use it to get a year after you quit.
State Farm's "Drive Safe & Save" discount, available only in Ohio, uses your GM vehicle's OnStar system to track and transmit monthly odometer readings. A 30- to 49-year-old driver who pays $600 a year in premiums, by way of example, is certain to get a 9 percent discount if he drives 13,000 miles each year and a 23 percent reduction if he drives only 6,000 miles. But if he's rated as "short annual mileage," below 7,500 miles annually, he could find yourself paying more if your data reveal that he drives more.
Control your cost factors
Maintain a great credit score
For some consumers, the recession has dragged down people's credit reports and their close cousins, credit-based insurance scores, which most insurers use to set auto premiums. In general, lower scores produce higher premiums, though the impact varies unpredictably because insurers use different rate-setting formulas. So if the insurer hiked your rate depending on your score, start shopping for the lower premium.
Most states allow insurance scoring, so take steps to protect yourself: Regularly check and correct credit-reporting errors; avoid department-store charge cards, that may hurt your score; pay bills by the due date; and your credit balances low in relation in your credit limits. If your finances are already adversely affected with the recession, military deployment, divorce, job loss, death of your family member, or medical problems, ask your insurer for an exception. You should also ask being rescored once per year.
Report reduced mileage
A major cost component in car insurance is miles driven annually. The average is all about 12,000. But if you've changed jobs and commute fewer miles, the low mileage might result in lower premiums. A new job that's only 6 miles closer than your old you can reduce your annual commuting miles by 3,000 and trim your annual premium by $50. Let your insurer determine you've retired or lost your career; your reduced driving could cut 5 to 10 % off your premiums.
Your insurer usually won't contact you to definitely ask whether you're driving fewer miles, but it might find out in case you are driving more. Twenty-eight from the 30 largest auto insurers been employed by with Quality Planning Corp., a California company, to research whether their policyholders deserve rate increases.
For example, QPC compares individual policy information--say, coverage for a Ford F-250 pickup used by pleasure, not business--with vast sums of records from numerous public and proprietary databases. If QPC finds the driver's name on, say, a database of licensed contractors, that raises a warning sign. If your 16-year-old son buys electronics and mails in a warranty card including his name and address, that information can be cross-checked to determine whether you've listed the teenager on your policy. If you listed yourself as married and pay a lower rate than you'll if you were single, QPC could most likely check up on you.
When a warning sign is raised, QPC calls the policyholder must questions about it, according to Bob U'Ren, senior vice president at QPC. The company reports the information towards the insurer only when it's verified through the customer, U'Ren says.
Choose your car or truck wisely
Vehicle damage will be the biggest cost component for auto insurers. So your premiums will change by auto model. When comparing models, ask your car or truck dealer to inform you the "Relative Collision Insurance Cost Information Booklet," produced annually by the National Highway Traffic Safety Administration. The Highway Loss Data Institute also posts data on collision, bodily injury and property-damage liability, and also other types of losses by vehicle model at hldi.org/research/hldi/composite_intro.html. Or ask your insurer for premium quotes for the different models under consideration.
Beware of scams
Plenty of crooks rip off drivers with staged accidents. Fraud investigators describe useless in which a driver swoops in front of one's car, then slams the brakes, forcing that you rear-end him. The result might be an at-fault accident claim against you, fake injuries, and exaggerated damage costs. You get the stress of your crash and legal claims, a bad mark on your driving record, and premiums for three years.
Avoid that by always following good driving practices, including maintaining a secure distance off their vehicles, not speeding, remaining alert at all times, and don't tailgating. Keep a camera in your car to photograph a crash scene. Always call police to file an official report.
Manage teenage-driver risk
Teenage drivers have higher accident rates, so adding an adolescent to your policy can hike your costs by 50 to 100 percent. Immaturity and deficiency of driving experience make motor-vehicle crashes the key cause of death for U.S. teenagers. You can protect your child and trim your rates.
Make your son or daughter take a driving course just before a license. Then make sure they complies with all laws and drives inside a safe manner, with loss in driving privileges because punishment for violations.
Consider getting your teenager hold back until age 18 or 19 to obtain a license, instead from the usual 16 in most states or as little as 14 in a few. Inform your insurer when the child isn't licensed or is away at college without having a car.
Beware of hidden cost factors
Are low-cost replacement bumpers safe ?
A number of auto insurers have recommended or required use of aftermarket crash parts, which are generally produced in overseas factories and could be significantly less than the parts from original equipment manufacturers. Unfortunately, the various might also be cheaper in quality.
Some safety experts are worried about the internal bumper parts: a bumper beam, bumper isolators, foam, crush cans, brackets, and radiator supports. In a frontal crash, those pieces interact to properly transmit the crash pulse, or vibrations from impact souped up that moves from the vehicle, to air-bag sensors and from the passenger compartment to lessen or prevent injury.
"There's plenty of engineering that adopts making an accident-protection system," says David Zuby, chief research officer to the Insurance Institute for Highway Safety. "You can't willy-nilly change those parts since the system might not work operate was designed."
In July, Ford reported that its engineers had found alarming differences in two aftermarket parts tested. One bumper bar was developed of mild steel, instead from the ultra-high-strength steel the original Ford part uses. A radiator support was made of plastic instead from the magnesium used in the Ford part. In computer-simulated crash tests, the fakes changed the timing from the crash pulse, which can affect air-bag deployment.
"Differences in material could bring about a difference in the timing with the air-bag deployment," says Mike Warwood, Ford's parts marketing and re-manufacturing manager. "The air bag might deploy prior to when it should or later than it should. Or it might deploy in the event it shouldn't or otherwise deploy whatsoever when it ought to."
Ford's testing follows a demonstration recently by Toby Chess, a master collision-repair instructor, who used a reciprocating saw to easily slice using an aftermarket bumper bar. The saw couldn't cut over the original automaker bumper bar.
Some insurers have suspended use of the bumpers in repairs. In February, the Certified Automotive Parts Association, which certifies the grade of some aftermarket replacement parts (and not bumpers), tested a sample of aftermarket bumpers. It found "serious deficiencies" in metal hardness, material thickness, and fit.
Bottom line
Don't let your insurer pressure you into using aftermarket collision-repair body parts, especially safety-related ones. If your car or truck has already been repaired, look at your invoices or ask your insurer to find out whether aftermarket parts were used. If knockoffs were chosen, demand that they be replaced with original equipment.
