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Auto Insurance Article

Tips to Save on Car Insurance

Check out these five ways you can take control of what you pay for auto insurance.

By John Loos    

Certain things in life are out of your hands: aging, the job market, the weather.

The good news is that your auto insurance rate doesn't have to be one of them.

In fact, there are several ways you can gain more control of your auto insurance rate and potentially lower your costs.

Check out these five ways you can take the wheel on your car insurance rates.

#1 - Shop Around

Choosing the right company to insure your vehicle can take a bit of patience, but it may also help lower your rate.

According to the North Dakota Insurance Department's February 2011 cost comparison study, each "good" hypothetical driver was given 18 monthly quotes from 18 different companies. Rates varied by as much as $604, proving that shopping around may yield significantly different rates.

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On the other end of the spectrum, one "high risk" driver was given quotes from 16 insurers, which varied by as much as $1,451.

So regardless of your driving history, don't assume you're locked into your current rate. Each company is different, and each quote will likely vary as well.

Overall, knowing your options and taking the time to find them could provide you with significant savings.


#2 - Keep a Clean Driving Record

"Being accident-free and having no serious traffic violations on your record tops the list of things you can do to lower the cost of insurance," says Lynne McChristian, Florida representative for the Insurance Information Institute (III), an organization dedicated to the enhancement of public understanding of insurance.

The better you are behind the wheel, the better chance you'll have more - and cheaper - options when comparing quotes from insurance companies. A quote is the monthly rate that a company would make you pay if you were to choose them as your insurer.

For example, the North Dakota Insurance Department's cost comparison study created hypothetical drivers with different driving records, and then had state insurance companies provide sample quotes for each driver.

Three "good" drivers were covered by most low-cost insurers, while the two "high-risk" drivers both received significantly higher overall quotes.


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#3 - Maintain a Good Credit Score

Did you know that your behavior outside the car can be just as important as your abilities behind the wheel?

In many states, your personal credit history could be used by insurance companies to create an internal score that affects your rate.

"Credit-based insurance scoring is one of the statistical tools that insurers use to predict the likelihood of a person filing a claim and the likely cost of that claim," says McChristian.

McChristian adds that a company's credit-based insurance score can be based on personal payment history, outstanding debt, bankruptcies, and the length you've had an actual credit history. The cleaner the history, the more likely a company is going to reward a client with a lower rate.

So try to keep your credit card in check if you want to take better control of your auto insurance rate.


#4 - Get a Cheap Car to Insure

All you auto buffs, beware: Insuring your dream car may be costing you a small fortune.

As the III notes, a new car may be more costly to insure than your old car. Here's why: insurance companies consider factors such as the likelihood that your type of vehicle will be stolen, the vehicle's safety record, and the overall cost of repairs in the event of an accident.

If you pick an expensive car with a subpar safety record, you may be saddled with a higher premium, which is the monthly amount a company charges you for coverage. To learn more about your vehicle's safety rating, check out safercar.gov, a resource for both car owners and consumers looking to purchase a new car.

Additionally, "be sure to tell your insurance company as soon as possible that you have added or replaced a car and which coverages you want," says the Texas Department of Insurance. "You could lose coverage on an additional or replacement car if you wait longer than the number of days specified in your policy to notify your insurance company."


#5 - Ask About Discounts

Most insurance companies offer discounts for good driving and/or completion of special driving courses. They may not always be advertised, so be sure to ask your agent about their availability.

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"Several states have laws mandating that mature drivers (55 and over) can get discounts of five to 15 percent for a three-year period after completing a driving safety course - Florida is one of those states," says McChristian. "And the classes can be completed online, which makes it a smart, simple money-saving move."

Finally, bundle your auto insurance with your home and life insurance. If you use the same company for all, it may create another discount to lower your overall payment.


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