How to Trim Your Car Insurance Bill

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How to Trim Your Car Insurance Bill

By Kimberly Lankford
Kiplinger's Personal Finance

A reader asks, "What's the easiest way to lower my auto insurance rates?"

Auto insurance rates vary enormously from company to company for the exact same car and person, just based on the insurer's own experience.

So the easiest way to lower your auto insurance rate is to shop around and see what other companies are offering. You may be able to cut your premiums by hundreds of dollars just by switching companies.

Now is a particularly good time to shop around for auto insurance because many major companies are in the midst of changing their pricing structure.

In the past, they looked at a handful of variables when setting prices, such as your car, driving record, your age, and where you live. But because of advanced computing capabilities, they can now look at those and other features in a lot more detail when assessing the risk that you'll have a claim.

For example, instead of just looking at damage and theft claim payments for the car you're considering, which has been a key factor in determining collision and comprehensive premiums for many years, they're also looking at the cost of injury claims to passengers in that type of car. And more recently they've started looking at claim payment amounts for damages that car does to other vehicles and their occupants, which affects the cost of your liability coverage.

They're also looking more closely at how many miles you drive, and now study dozens of data points within your credit report, since insurers discovered that people with low credit scores are more likely to have claims than people with high scores.

Good Deals for Safe Drivers

Because of these changes, people with good driving and credit records and safe cars may be able to lower their auto insurance prices by up to 25%. And people who had bad driving records may finally be able to get coverage from a regular company, instead of getting rejected and shunned to a high-risk insurer.

It's easy to shop around. Check out price-quote Web sites like InsWeb and, which provide prices for several companies. Also visit a few insurers' own Web sites, like Progressive, State Farm, Allstate and Geico.

And you can get help from an independent insurance agent who works with many companies (go to the Independent Insurance Agents of America Web site to find an agent in your area). Some state insurance departments also publish rate comparisons; find links to your state's site on our insurance page.

Buy a Safe Car

Because of these changes, buying a safe car can also make a big difference in your auto insurance rate.

You can look up the car's cost to insure at State Farm's vehicle ratings page, which shows you the car's relative insurance costs in three categories: the damage and theft index grade (how its collision and comprehensive premiums stack up against vehicles in its price range), the liability rating index score (relative premiums for bodily injury and property damage liability) and the car's vehicle safety discount (the discount for medical payments or personal injury protection coverage, based on the cost of claims involving injury to the occupants of the insured car).

These ratings are from State Farm's claims experience and may be different for other companies. You can also look up a car's crash test results at the Insurance Institute for Highway Safety Web site.

Another easy way to lower your premiums is to raise your deductibles on your comprehensive and collision coverage, or drop that coverage entirely if your car is only worth a few thousand dollars. Increasing your deductible from $250 to $1,000 can lower your premiums by 15 percent or more and make you less likely to file small claims that could cost you a claims-free discount.

Make sure you're getting all of the discounts you deserve. Most insurers will reduce your rates if you have your homeowners and auto insurance with the same company, if the young drivers in your family maintain at least a B average in school, if your car has special safety and anti-theft devices and if you don't commute with the car and keep the annual mileage low.

You may also get up to a 20 percent discount if nobody on the policy has had an at-fault accident or moving violation within the past three or five years. The specific discounts vary by company and state, so ask each insurer you're considering about the rate reductions you could qualify for.

Driving Hazards: The Most Expensive Vehicles to Insure

By Jeff Zygmont

Insurance companies set their rates according to how much they expect to shell out if you should wreck your car. They also factor in the probability that you actually will wreck your car, based on the composite histories of people who own the same model.

These Top 10 Most Expensive Vehicles to Insure are pricey ones to begin with. On top of that, they possess idiosyncrasies that can contribute to higher repair costs, or increase the odds that repairs will one day be needed.

Go to to view the slideshow.

High-performance models made for athletic, aggressive driving are more likely to tempt you to make risky maneuvers. Powerful engines entice you to drive faster, which not only increases the likelihood of accidents but also can increase the severity of damage if you do encounter an unavoidable obstacle.

Other idiosyncrasies drive up the cost of repairs after you encounter such an obstacle. Lightweight materials like aluminum can cost more to straighten than plain, old steel.

Sport suspensions and brakes can require more time in the shop to repair. They can demand more skill from technicians and call for expensive replacement parts.

The same applies to exotic engines; complicated mechanisms like, say, retractable hardtops; and to sophisticated electronic systems, such as adaptive suspensions. Even the location of such systems can be a factor.

For example, the expensive radar sensors used by adaptive cruise control are typically hidden in the front end, where they're particularly prone to damage even in minor dust-ups.

"Some vehicles are just more difficult to repair," said Mike Siemienas, spokesperson for Allstate Insurance Co. "Exotic metals can drive up the cost, because of repairability. And as the electronics become fancier, they can also have an impact."

Our list was compiled for from ratings published by the Insurance Services Office (ISO). We arranged the cars from the highest manufacturer's suggested retail price to the lowest.

Top 10 Most Expensive Vehicles to Insure:

1. Mercedes-Benz SL65

6. Volkswagen Phaeton W12

2. Lincoln Town Car BPS

7. BMW M5

3. BMW 760 Li

8. Jaguar XJ8 Super V8

4. Audi A8L W12

9. Porsche Cayenne Turbo

5. Mercedes-Benz G55 AMG

10. Land Rover Range Rover Supercharged

The information was provided by Dave Dasgupta, ISO's public information officer. He selected current vehicles that receive the highest risk rating for damage assigned by ISO as of autumn 2006 (the service updates the rankings regularly, as vehicle histories change). These 10 cars and SUVs receive a risk rating of 27 on a scale of one to 27.

Also called the Vehicle Symbol Rating, a rank of 27 is applied to all new vehicles that list for $80,000 or more, Dasgupta explains. That makes them equal insurance hazards, according to ISO's methodology.

"The rating symbols are advisory in nature, giving an indication of cost to repair based on the MSRP by make and model," Dasgupta said. From there, individual underwriters assign their own rates.

"Individual companies do their own due diligence, looking into the history of the car as part of their underwriting process," he said.

Therefore, savvy consumers comparison-shop among insurers.

Shop Around

"Different companies determine different factors that influence the vehicle's insurance rate," said Chante Jefferson, spokesperson for the online insurance company Progressive Direct.

"At Progressive, the rate is based on the experience of the specific vehicle, influenced by characteristics that include model year, MSRP, weight, size of the vehicle, horsepower and manufacturer of the vehicle."

This ranking applies only to the physical-damage portion of a policy. The price of personal-injury protection is computed separately, but according to Kim Hazelbaker, senior vice president of the Highway Loss Data Institute (HLDI), physical damage is the major component of a new-vehicle policy.

Other factors also affect your individual insurance premium, especially the area in which you live and work and your personal driving record. A comparison of the relative insurance losses of all cars -- a good indication of their relative insurance rates -- is available in the report "Injury, Collision and Theft Losses by Make and Model" on HLDI's Web site.

The list shows that insurance rates are granular: They break down into particular versions of vehicles.

For example, a 50-year-old husband and wife who own a home in Washington, DC, have clean driving records and finance a basic 2006 Porsche Cayenne will pay $1,138. annually for the recommended policy from But if the '06 Cayenne is the turbocharged version, the couple's annual premium jumps to $1,750.

Besides the model you buy, other fixed factors help determine your personal insurance rate, including your age, gender and the location of your home. To help keep your rate reasonable, advises Allstate's Mike Siemienas, "be a good driver: Don't get moving violations, don't get into accidents and have a safe driving record."

"First and foremost, shop around for the best combination of price, coverages and services," recommended Jefferson of Progressive. "Keep a clean driving record, avoid lapses in coverage, don't carry excess coverage and manage your credit."

Click here to see the slideshow.

Back to Your Money

Need a Tow? Watch Your Insurance Bill

By Shaheen Pasha staff writer

Imagine you're having a really bad week: Monday, your tire blows out. Tuesday, you lock your keys in the car and Friday, your car battery dies.

Lucky for you, you added an emergency roadside assistance extension to your insurance policy. Think your problems are solved? Think again.

Using an insurance policy's roadside assistance program may seem like an ideal, inexpensive way for consumers to protect themselves against unexpected breakdowns and embarrassing lock-outs.

But buyer beware: insurers keep track of your roadside assistance claims and in some cases, you may find yourself paying a higher premium if your car blows a tire one too many times.

Go to to view the slideshow.

Auto insurers such as Allstate, State Farm, Geico and Progressive offer policyholders the opportunity to add roadside emergency services to their existing policies at a fraction of the cost of independent motor club programs, such as American Automobile Association (AAA) or Allstate Motor Club -- which are open to all consumers and can cost between $45 to over a $100 a year.

By comparison, those insurance policyholders that have added on emergency roadside services through their carrier can receive basic assistance such as towing services, jumpstarts, tire changes, lockout services or gas delivery for as little as $3 to $10 for a six-month policy period -- an attractive price for services you hope you won't have to use too often.

But what you may not know is that many insurers consider roadside assistance claims as one predictor of risk, which can impact premiums.

"Insurance companies have a huge amount of data at their disposal which they use to find correlations to loss history," said George Yates, president of Dayton Ritz & Osborne, a Long Island-based insurance agency.

"If an insurance company could determine eye color correlates with loss history, they'd use it to determine rates. It doesn't always make sense logically and may not always be politically correct but if they can determine a correlation, they'll use it."

Insurers consider a bevy of risk variables when attempting to quote a price on a policy, said Insurance Information Institute spokeswoman Loretta Worters.

"The type of car you drive, your driving record, where you live, your credit history...all that information helps companies measure risk so that they can charge customers a fair premium," she said.

While a one-time jumpstart is unlikely to raise any red flags for insurers or send underwriters running to raise rates, consumer usage of the emergency roadside service will be compared to other variables when insurers are determining a risk profile for a policyholder.

Keeping an eye on towing claims

Spokesmen for State Farm and Allstate -- two of the largest auto insurers in the country -- said their companies take note of roadside emergency claims but the use of those services would only impact a policyholder's premiums if there were multiple claims alongside a number of other risky variables.

"The chance that one of those claims would have an impact premium-wise is probably very minimal," said State Farm spokesman Dick Luedke. "But there is a correlation between those claims and auto insurance risk."

And consumers should know that, in some cases, any claims made under the add-on roadside assistance coverage can be reported as a towing and labor claim.

Towing claims are reported to a national database run by Atlanta-based ChoicePoint, which provides insurers with claims information on consumers to help insurers process insurance applications.

Insurers generally use that information to double-check their applications and make sure an applicant has been forthcoming with their accident and towing claims history. From there, insurers can make pricing determinations.

Richard Collier, senior vice president and general manage of insurance data services at ChoicePoint, said the company does not include autoclub -- such as AAA or Allstate Motor Club -- claims in its database. He said ChoicePoint attempts to keep roadside service claims out of the database and has advised insurers not to submit any claims made under "autoclub type" services.

But Allstate spokesman Mike Siemienas said the company considers all usage of its roadside services -- from jumpstarts to tire changes to gas delivery -- as towing claims.

And that may put consumers at a disadvantage if an insurer sees a towing claim but can't determine whether that claim was made because a car was towed after an accident or if it was made because a driver got a flat tire.

While insurers won't reject an applicant or cancel an existing insurance policy due to towing and labor claims, those types of claims -- particularly if there are a number of them -- may impact a policyholder's premiums, according to the Insurance Information Institute.

Shop around

For those interested in roadside assistance coverage, which can be desirable protection to have in case the unexpected happens, it pays to shop around.

Not all insurers use roadside assistance as a pricing variable. Spokesmen for Progressive and Geico said the companies don't consider usage of their roadside assistance programs in determining rates.

And Geico spokesman Kevin Grenier said the company is also putting a halt to reporting any towing claims to ChoicePoint.

Motor clubs such as AAA and Allstate Motor Club -- which is run by Allstate but is not affiliated with the auto insurance coverage -- may be a good bet for some consumers.

Motor Clubs are pricier but they provide a wider range of services than just basic towing and breakdown help.

AAA provides discounts on car rentals and hotels as well as other travel-related services while Allstate Motor Club also provides members with services such as legal defense for moving violations and arrest bonds.

An added perk? Consumers can rest assured that any claims made will be kept private.

Click here to see the slideshow

Back to Your Money

Insurance Non-Renewal

What you need to know if your insurance company isn't renewing your policy.

By Gerri Willis

Hurricane season will be here before we know it. And insurance companies have already been hedging their bets -- canceling and not renewing policies in places like Florida, New York, Texas and Louisiana.

If you're getting left high and dry by your insurance company, we're going to tell you what you need to know.

1. Be heard

If you get a letter stating your insurer won't be renewing your policy, you need to be the squeaky wheel. Don't wait to call your state insurance department.

While laws vary by state, you may have the right to a hearing. And if you think you've been treated unfairly, lodge a complaint with the insurance department.

A rise in complaints can trigger an examination of the company at the states' insurance department. To find the number go to the National Association of Insurance Commissioners Web site at

"The state insurance department handles hundreds of thousands of complaints," says Alessandro Iuppa, the President of NAIC.

2. Don't panic

If your insurer refuses to renew your policy coverage, don't sweat it. The insurance industry is still rife with competition.

If you live in areas outside of Florida or Texas you'll have a lot of options, says Amy Bach, founder of the insurance information Web site Surf online at or to see what else may be available.

Some insurance companies are competing for new customers, so you have some leverage in negotiating discounts. If you don't want to do the legwork yourself, check out an independent insurance agent. You can find get more information on the Independent Insurance Agents and Brokers of America at

3. Check your discounts

Some insurance companies offer a discount to people who insure both their auto and home insurance that can be 10 to 15 percent. But you may want to make sure those discounts still apply if your home insurance is not renewed.

4. Use only as a last resort

With another hurricane season poised to wreak even more havoc, this isn't the time to skip insurance. More and more insurance companies are going to be hedging their bets.

You'll be seeing more state pools, called FAIR plans. These plans -- called Fair Access to Insurance Requirements -- are operated by the insurance industry for homeowners who can't get insurance through the commercial market. But these plans should be your last resort. The premiums are higher, and the coverage is less generous.

5. Get your rights

While the law varies by state, if you have already sustained damage and you have an open claim, an insurance company cannot just cancel its policy. In Florida, your insurance company must wait 90 days after repairs are completed to issue you a non-renewal letter.

If you do have an active claim, the insurance company is legally obligated to adjudicate that claim, according to Iuppa, as long as you have continued to pay premiums and have taken some steps to repair the damage. If they don't, the state has the authority to make sure the situation is settled.

Back to Your Money

Reduce Your Home Insurance Costs

By Marshall Loeb

Home insurance rates are rising around the country, as evidenced by rate hikes by several major firms in Florida lately.

But there are ways to economize. The Insurance Information Institute offers several simple steps to lower your home insurance rates:

Consider increasing your deductible, the amount of money you must pay toward a loss if you ever have a claim. Higher deductibles usually mean lower premiums.

Consolidate your insurers by purchasing your homeowners insurance from the same company you buy your auto policy. You might be able to snag a discount.

Make your home safer. Security and safety systems such as deadbolts on doors, burglar alarms, fire extinguishers, smoke detectors and automatic sprinklers make your home more attractive to insurers. Find out whether your company offers a discount for these measures.

Set up an interior inspection with your insurance company. You may be able to get 10 to 15 percent off if you allow an inspector to review the inside of your home when you sign a new policy.

Find out if your insurance company offers loyalty discounts. If you've been with the same insurer for a certain number of years, you may be able to get a reduced premium.

Let your insurance company know if you don't smoke. Some insurers offer discounts to nonsmokers.

Shop around when looking for a new policy. It's much easier to compare prices these days. Many state insurance departments offer price comparisons for major insurance companies.

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