Four Ways You Can Save on Auto Insurance in 2009

Written by Sanford Ellowitz on February 3, 2010 & Posted in Auto Insurance

With the economy in turmoil, many people are trying to save money wherever possible, including reducing their auto insurance coverage. If this thought has crossed your mind, you may want to reconsider. Cutting coverage for liability or property damage could leave you in very big trouble if you're involved in an accident and have inadequate coverage. Instead of reducing the amount of auto insurance you carry, try one of these options instead:

1. Increasing your deductable. A higher deductible is a great way to cut costs if you can afford the higher amount you'll pay out of pocket if you file a claim. And as long as you remain claim-free, you save money.

2. Changing your policy. If you've switched jobs or moved recently, you may also be able to reduce the cost of your auto insurance. With a shorter commute or a switch to public transportation, you may be driving substantially less than you did when you took out your policy. Contact your agent or insurance company and tell them about your new situation. You may be pleasantly surprised.

3. Watching what you drive. Why do auto carriers charge more to insure certain cars? Well, it depends on whether you drive a Hummer H2, a pickup truck, or something in-between.

If you've been wondering why you pay more than someone else for the same auto insurance coverage, it might be the car you're driving. To begin with, insurance companies generate rates by sorting drivers and their vehicles into classes. For instance, everyone in a certain age group is put together and their risk of causing claims is measured as a whole. While you can't do anything about your age or certain other factors that affect your class and the cost of your auto premiums, you can do something about the type of car you drive.

A study conducted by Quality Planning showed the Hummer H2/H3 with the highest percentage of violations, while pickups had below average rates. Violation rates are taken into account by insurance carriers when they set rates. Even if you are a safe driver, simply as an owner of a vehicle such as Hummer you will pay more than your neighbor who drives a mini-van, another type of vehicle with below average violation.

4. Improving your credit score. You may not have known that your credit rating is taken into account when your insurance company determines your rate. A bad credit rating may mean that you are viewed as a bad risk, with a higher likelihood than someone with a good rating of either not paying your premiums or paying them late. If your credit score has improved, you may want to make your insurance company aware of this.

Sources
National Association of Insurance Commissioners
Quality Planning, ISO

About the Author

Sanford Ellowitz is a New York State licensed insurance agent. He is also a Certified Financial Planner and a Certified Employee Benefit Specialist. He has over 25 years experience in the insurance and financial services industries. His experience includes financial analysis, product development and marketing. He provides insurance planning and product sales.

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