Know About Car Insurance

Car Insurance Shopping Tips
As a savvy consumer, you know that it pays to do your homework and shop around for car insurance. Below are some tips that could help you save money and make the right insurance choice.

Do your research
Did you know that the cost for an identical car insurance policy can vary by hundreds of dollars every six months? Review your coverage. Shop around. You could visit car insurance company Web sites, or sites that give you rates for a number of companies. Keep your policy on hand while you’re visiting car insurance Web sites, so you can make a fair comparison. Most sites will save your insurance quotes, but you can also print them if you want to review them offline.

Stay with a leader
Visit A.M. Best, and Standard & Poor’s for information on the financial strength of various car insurance companies. See what benefits and features they offer? At progressive.com, you can learn about vehicle safety, view crash test videos, or use our calculators to determine repair costs.

Five Ways to Save Money on Your Car Insurance

1. Shop Around
This is the single most important thing you can do to get the best possible rate. A study by Progressive shows that the cost of a six-month auto insurance policy for the same driver with the same coverages varies from company to company by more than $500. It’s smart to review your coverage and shop around occasionally.

2. Don’t Carry Excess Coverage
Insurance companies only pay claims equal to a car’s actual cash value or market value, so comprehensive and collision coverage may not be worth keeping on an older car that has depreciated. It is generally recommended that you consider dropping collision coverage after four years, or when the collision premium equals ten percent of the car’s market value. Understand that by doing so, you will not be covered for damages to your car if it overturns or collides with another object.

3. Raise Your Deductible
According to the Insurance Information Institute, raising your deductible from $200 to $500 could reduce your collision and comprehensive cost by 15 to 30 percent.

4. Drop Rental Reimbursement Coverage
Rental reimbursement insurance is coverage that will pay for some or all of your car rental expenses while your car is being repaired or until you buy a new car. Policies and costs vary for this type of insurance, but there are always strict limits on the extent of the coverage. If you can find other transportation for a few days while your car is being repaired, you might not need this coverage.

5. Make Sure Your Current Policy Accurately Reflects You
It is important to update the information your insurance company has about you, your car and your driving record. You may be eligible for a rate reduction if you have gotten married, moved to the suburbs, no longer insure a younger driver, installed an anti-theft device, or if it has been at least three years since your last violation.

Why Insurance Rates Vary

You might think that your auto insurance rate would be pretty much the same no matter which company you choose. But did you know that your auto insurance rates can vary widely ? even by hundreds of dollars ? from company to company? Prices for the same coverages vary primarily because of:

Varying claims experience. Auto insurance is priced to cover the costs of accidents that may happen in the future. Of course, companies cannot see into the future, so to do this, they use information about their past claims experience. Since each company has had different claims experiences with the groups of people they insure, the rates charged customers by different companies vary.

Varying costs of doing business. Each company’s cost of doing business (how much they pay to sell and service policies), along with their financial goals, is different, resulting in different prices being charged to consumers.

In simple terms, auto insurance companies price policies to cover the amount they’ll need to cover:

# Accidents that have occurred;
# Claims salaries, building leases, and other claims-related costs; and
# Non-claims expenses such as customer service salaries, advertising and the price of selling policies.

Remember, it pays to shop around for auto insurance, because you could save hundreds each year. Research your coverages — and your company — to make sure you are getting the best value for your money.

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