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How Do You Get The Best Rates?

Automobile Insurance

By Jean Chatzky, Author of Talking Money, Everything You Need To Know About Your Finances and Your Future.

First, understand, being loyal to a single insurer can cost you. In 1999, Consumer Reports surveyed its readers and found that they had been loyal to their carriers for eleven years; 75 percent regularly renewed their coverage without shopping around. That's a mistake. Safer cars ( with air bags and antilock brakes) with tougher theft protection devices, coupled with the aging of the population, have boosted profit margins for auto insurers. They're willing to pass those savings on to consumers in the form of cheaper rates--but you're not going to get a discount unless you ask for one and shop around. The Insurance Information Institute suggests you call at least three different insurers before making a decision. These should not only include a traditional insurance agent, but a direct writer like GEICO or Progressive that sells via an 800 number. Spending an hour or two on the plhone can save you serious money.

Also, don't forget the Web. Two recent surveys, from Progressive, the country's fourth largest insurer, and InsWeb, a leading insurance site, found that electronic shoppers could save $400 to $500 a year over theri current auto insurance rates. Typically, you fill out a brief online questionaire providing details about your car and driving record and you receive quotes in return. You should also:

Buy the right car. Say you're choosing between a Dodge Intrepid and a Mustang GT. Similar price tag. But the cost of insuring the Mustang is nearly double that of the Intrepid. Why? The Mustang is stolen more often and has a higher accident rate. Moral: Call your insurer for a quote before you buy a car.

Increase your deductible. Raising your deductible o the collision comprehensive componet of your coverage from $250 to $500 should save you 30 percent annually. Increasing it from $250 to $1,000 should save you 30 percent or more. And if your car is worth less than $3,000 to $4,000, think about dropping this coverage altogether.

Stop commuting. Retirees who stop driving to work (and cut their annual miles in half) can typically get a 20 percent discount on their policies, and so can you. If you put fewer than 7,500 miles on your car each year, you may qualify for a similar discount. You can also usually lop 10 percent off your auto insurance premium by taking a defensive driving course. Just remember to ask for the discounts.

Stick with one carrier. Insuring your house and your car (or, better yet, cars) with the same company can net you a 15 to 20 percent discount.

Watch your credit rating. Auto insurers have discovered that your bill-paying patterns are even more indicative of the number of claims you'll file than your driving record: yet another reason to pay your bills on time.

Ask about other discounts. You may be able to cut your rate bby being a good driver (with no accidents in the past three years), the parent of a good student, or mature (over age fifty), and if your car has air bags, antilock brakes, or other safety devices, and an antitheft system. And if you're a nonsmoker, some insurers will slash up to 30 percent off the medical portion of your premium.

Don't file too many claims. Insurance companies will penalize you for filing more than one claim in a two-to three-year period. In some states, insurers aren't allowed to penalize you for accidents you didn't cause, but in other states, you may be better off paying small claims out of your own pocket instead of reporting them


Author Biography: Jean Chatzky, author of Talking Money, Everything You Need to Know About Your Finances and Your Future, appears weekly on NBC's the Today show, twice weekly on MSNBC, and writes a monthly column on the back page of Money magazine, the nation's leading personal finance magazine with nearly two million subscribers. She is also a frequent contributor to USA Today.


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