Slash your auto insurance costs

an excerpt from consumer reports



Auto insurance premiums can slurp up a lot of your household cash flow. A typical family can pay more than $2,000 a year for two unflashy sedans. And like monthly mortgage payments, auto premiums seem like one of those annoying carved-in-stone costs in your budget.



Wrong! You may be able to do lots of things to shave your insurance bill by hundreds of dollars a year. Here are six ways to cut your premiums right now, and four tips on avoiding mistakes that can cause your rates to skyrocket down the road.



Shop until your rates drop. To get an idea of how much you can save by shopping around before you buy or renew a policy, we worked with InsWeb (www.insweb.com), an independent Web site where you can compare rates. After examining nine insurers' annual premiums for a two-car policy for a typical couple with clean driving records, we found the gap between the cheapest and the most expensive policies to be a whopping $800. Another place you may find rate-comparison information, as well as company-specific customer-complaint data, is your state's department of insurance Web site. (To find your state's insurance site, go to www.naic.org.)



Cut unneeded coverage. If you have collision and comprehensive--which reimburses you for damage other than collision, such as theft and vandalism--on vehicles worth less than, say, $4,000, depending on your financial situation you might want to consider dropping that coverage, says Catherine A. Franks, a vice president at Amica Mutual Insurance Company in Glastonbury, Conn. Why pay hundreds of dollars a year to replace a jalopy that you're on the verge of jettisoning?



Or raise collision and comprehensive deductibles--the amount of each loss that will come out of your pocket before coverage kicks in. If the levels are set at less than $500, consider hiking them to as much as $1,000. On a typical couple's policy, the difference between a $250 and a $1,000 deductible could be as much as $677 a year. Also, make sure you're not duplicating coverage, such as roadside assistance or towing benefits, which you may already have through an auto club or warranty. If you have medical insurance, consider dropping your auto policy's medical coverage, unless your state requires it.



Sniff out discounts. Insurance companies offer all kinds of price breaks. You may, for example, be able to get a discount for having a good driving record, for installing qualifying safety and anti-theft devices, or for buying several different policies with the same carrier. Check to make sure you're not overlooking any of those discounts. The multipolicy discount can be as high as 20 percent and apply to both your auto or home policy or both. Also, if you've changed jobs recently and your commute has been cut down or you've switched to public transportation, you may qualify for a price cut.



Take a class. In most states, a defensive-driving class can reduce your rates--not to mention the points on your Department of Motor Vehicles record--by 10 percent or more. If your record includes a motor-vehicle offense, you're insuring a teenager, or you're 55 or older, the savings may be even bigger.



Encourage Junior to get better grades. Insurers sometimes give discounts to high school and college students who maintain at least a B average.



Be a joiner. If you're a member of an organization, such as the AARP, you may be eligible for "affinity" discounts. Also check with your college alumni association, trade group, and bank or credit union.





RATE-SAVERS



Avoid tiny claims. If your comprehensive coverage has a $500 deductible and you get a $600 door ding, you might be inclined to file a claim for the remaining $100. But filing small claims, including those for minor damage and towing reimbursements, could eventually land you in a higher-risk category, which can translate into big premiums.



Buy with insurance in mind. If you're in the market for a new or used car, call an agent to check on premiums for each of the vehicles you're considering before you get your heart set on a particular model. Generally, the more expensive the vehicle, the more costly the coverage. Vehicle type also makes a difference. Annual premiums for sedans, minivans, and family cars are on average hundreds of dollars cheaper than for large sport-utility vehicles. Carriers also factor in a model's repair costs and its attractiveness to thieves. For a ranking of the most-stolen passenger vehicles, go to www.iii.org and click on Hot Topics, then on Auto Theft.



Pay your bills on time. This counts because it affects your credit score. Insurers believe that if you play fast and loose with your credit, you're probably also a higher risk on the road. If a couple's credit score drops from excellent to good, their premiums may rise by more than $500.



Drive defensively. Traffic violations and even fender-benders can inflate premiums. To avoid tickets and accidents, use cruise control on highways to help maintain the speed limit. Keep a safe distance from the vehicle ahead of you--doing so will help you prevent accidents and avoid stone damage to your paint and windshield. And park where your car is less likely to be damaged or stolen.