Ways To Lower Your Auto Insurance Costs (from Govt Publication)

[The Straight Story]

Ways To Lower Your Auto Insurance Costs

Insurance Information Institute
Cover of the publication 9 Ways to Lower Your Auto Insurance Costs

One of the best ways to keep your auto insurance costs down is to have a good driving record.

Listed below are other things you can do to lower your insurance costs.



1. Shop Around

Prices vary from company to company, so it pays to shop around. Get at least three price quotes. You can call companies directly or access information on the Internet. Your state insurance department may also provide comparisons of prices charged by major insurers. (State insurance department phone numbers and Web sites can be found here.)

You buy insurance to protect you financially and provide peace of mind. It's important to pick a company that is financially stable. Check the financial health of insurance companies with rating companies such as A.M. Best (http://www.ambest.com) and Standard & Poor’s (http://www.standardandpoors.com/) and consult consumer magazines.

Get quotes from different types of insurance companies. Some sell through their own agents. These agencies have the same name as the insurance company. Some sell through independent agents who offer policies from several insurance companies. Others do not use agents. They sell directly to consumers over the phone or via the Internet.

Don't shop price alone. Ask friends and relatives for their recommendations. Contact your state insurance department to find out whether they provide information on consumer complaints by company. Pick an agent or company representative that takes the time to answer your questions. You can use the checklist on the back of this brochure to help you compare quotes from insurers and on the same coverage.

2. Before You Buy a Car, Compare Insurance Costs

Before you buy a new or used car, check into insurance costs. Car insurance premiums are based in part on the car’s sticker price, the cost to repair it, its overall safety record, and the likelihood of theft. Many insurers offer discounts for features that reduce the risk of injuries or theft. These include daytime running lights and anti-theft devices. To help you decide what car to buy, you can get information from the Insurance Institute for Highway Safety (www.iihs.org).

3. Ask for Higher Deductibles

Deductibles are what you pay before your insurance policy kicks in. By requesting higher deductibles, you can lower your costs substantially. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15 to 30 percent. Going to a $1,000 deductible can save you 40 percent or more. Before choosing a higher deductible, be sure you have enough money set aside to pay it if you have a claim.

4. Reduce Coverage on Older Cars

Consider dropping collision and/or comprehensive coverages on older cars. If your car is worth less than 10 times the premium, purchasing the coverage may not be cost effective. Auto dealers and banks can tell you the worth of cars. Or you can look it up online at Kelley’s Blue Book (http://www.kbb.com). Review your coverage at renewal time to make sure your insurance needs haven’t changed.

5. Buy your Homeowners and Auto Coverage from the Same Insurer

Many insurers will give you a break if you buy two or more types of insurance. You may also get a reduction if you have more than one vehicle insured with the same company. Some insurers reduce the rates for long-time customers. But it still makes sense to shop around! You may save money buying from different insurance companies, compared with a multi-policy discount.

6. Maintain a Good Credit Record

Establishing a solid credit history can cut your insurance costs. Insurers are increasingly using credit information to price auto insurance policies. To protect your credit standing, pay your bills on time, don't obtain more credit than you need and keep your credit balances as low as possible. Check your credit record on a regular basis and have any errors corrected promptly so that your record remains accurate.

7. Take Advantage of Low Mileage Discounts

Some companies offer discounts to motorists who drive a lower than average number of miles a year. Low mileage discounts can also apply to drivers who car pool to work.

8. Ask about Group Insurance

Some companies offer reductions to drivers who get insurance through a group plan from their employers, through professional, business and alumni groups, or other associations. Ask your employer and inquire with groups or clubs you are a member of to see if this is possible.

9. Seek Out Other Discounts

Companies offer discounts to policyholders who have not had any accidents or moving violations for a number of years. You may also get a discount if you take a defensive driving course. If there is a young driver on the policy who is a good student, has taken a drivers education course or is at a college out of the area without a car, you may also qualify for a lower rate.

State Insurance Departments and Web sites

http://www.pueblo.gsa.gov/cic_text/cars/autoinsu/autoinsu.htm


Just an FYI from your friendly Straight Story. Lots of other publications:
http://www.pueblo.gsa.gov/
And more on cars:

http://www.pueblo.gsa.gov/results.tpl?id1=9&startat=1&--woSECTIONSdatarq=9&--SECTIONSword=ww

[magellan]

1. Question

"Insurers are increasingly using credit information to price auto insurance policies."

Why?

[cynatnite]

2. One place wanted to do that with us...

We told them we just wanted a quote and didn't want our credit ran. They said they couldn't do that and we walked out. We found another that didn't and gave us a better quote. Paid for six months and couldn't be happier.

I don't get it either. Credit rating has nothing to do with driving a car.

[The Straight Story]

3. Not sure

But that has been the practice. My rates were higher than I expected - no accidents or tickets ever, and I am 40 (not sure what I pay off top of head, pay yearly so will have to log on and see what last payment was).

After a divorce my credit tanked and X used my name to buy other things, some of which I am still finding out about many years later (got one call about a bill from 1992...).

[Ediacara]

4. Laziness

Nothing more, nothing less. Credit score is becoming a (false) proxy for personal trustworthiness. Its application in insurance and job applications is a form of discrimination, yet allowed by law.

[mrcheerful]

6. Credit reports are just a way for insurance companies to get top $$$ out

of good drivers. Here in michigan they also added a new twist, if you don't pay for car insurance for 6 months your put on high risk insurance policies. What it amounts to is a good driver with bad credit gets hit with high insurance costs while a bad driver or a drunk driver with good credit can actually pay less then a good driver that hasn't had an accident or any tickets. Its a scam aimed at the good drivers, who out number bad drivers. Also, if you noticed insurance rates go up after a hurricane or tornado because insurance companies use all monies collected to put into investments so when a hurricane or tornado happens they have no cash on hand to cover their loss.

[blurp]

5. Because there is a correlation between bad credit and accident risk.

Insurance companies use statistical techniques to see what correlates with accident risk.

If an insurance company sees that those with bad credit are more likely to get into an accident, then the insurance company will tend to charge more.

Insurance companies have mostly taken the human element out of insurance. They use cold, indifferent statistics gathered by computers mining huge databases to help decide what to charge.

Walmart uses a similar technique to decide just what it should put on the shelves. One of the most famous examples is the link they discovered between pop-tarts and hurricanes. Yes. People tend to buy more pop-tarts when a hurricane threatens. And Walmart makes more money by making sure they're on the shelves when a hurricane approaches.

Insurance companies are the same way. They don't care what the link is. If the link is there, they just go with it.

[magellan]

9. I'd love to see the data behind that correlation

Sounds like a lot of hocus pocus to me.

[blurp]

22. You can't. Because that data is worth serious money to an insurance comp.

Oh, it might seem like hocus-pocus, but it's certainly real. Huge amounts of money are made/lost based on finding/missing correlations.

[barb162]

11. that's my understanding

[SeattleGirl]

13. There are statistics, statistics, and damned statistics

Statistics can be manipulated (or rather, the way they are gathered can be manipulated) to get the result one wants. I learned that in my two stats classes in college. I'm not saying people MAKE UP things, just that a study can be done in such a way that you can get the result, or close to the result, that you want.

[blurp]

21. Yeah, but getting the statistics wrong means you lose money.

I'm not saying people MAKE UP things, just that a study can be done in such a way that you can get the result, or close to the result, that you want.


Oh definitely. The difference here is that insurance companies are coming up with this information for the benefit of fooling others, they use this information because it allows them to accurately price insurance.

Bad statistics means the insurance company loses money.

[SeattleGirl]

7. Their bullsh*t answer is that they know that people with better

credit scores are better drivers. Which is, of course, hogwash. This country is measuring more and more things about people based on their credit scores and their bank accounts. :grr:

A person with a good credit score but a bad driving record could still get a better rate than a good driver with a bad credit score.

[blurp]

8. How the hell do you know?

Bad credit correlates with increased accident risk. THAT IS A FACT.

You're intuition may say it's not so, but your intuition is wrong.

[SeattleGirl]

10. Ouch! You dont have to yell at me.

I asked my insurance agent when I first went to her company, and that's what she told me. So I am not going by intuition. I would like to ask you how you know it IS a fact? If you have some information I could read, that would be great. But please don't just swoop by, tell me I'm wrong, and not offer anything to back it up. Again if you have something to refer me to that I could read, I'm certainly willing to do that.

[leftofthedial]

18. how good a driver can you afford to be

in an ownership society?

[The Straight Story]

15. And so....???

can they discriminate against a single person because of what the group does? Do american indians pay more than me because indians have more accidents per capita?

Rates should be flat and then go up for the person who proves them right - but for people like me who prove them wrong I should not have to pay more.

If we allow such to continue - why not allow them genetic samples of people so they can see what other ways they can reduce their risk? Maybe tell them our sexual orientation, frequency, and color of hair and eyes as well.

I am punished because of something not relating to what they are insuring me for. And I have to have insurance or I cannot get to work (or do my work as some of it entails driving to different centers in Ohio and sometimes taking needed equipment with me).

Last place I lived was a small town in southern ohio. Hardly a soul around. But I paid more for insurance there because one spot in the county had more accidents than the previous county I lived in (and I literally lived 1/2 mile over the county line from where I used to live and was far from the county seat). I even had the one car listed as only traveling max 3 miles a day - to store and back, and still more expensive (even though the store was in other county) because I lived in ross.

Seems like a scam to me.

[SeattleGirl]

17. It seems like a scam, because it is.

I agree -- why should you, me, or anyone be judged on something that has absolutely NOTHING to do with what you are trying to get insurance for?

[cynatnite]

16. Back up your fact with a source...

that's usually the way it works around here.

[KT2000]

23. According the our state insurance

commissioner, the connection is not accidents but the person who has a lower credit rating MAY be more likely to have accidents.
He investigated and found no direct correlation to accidents and tried to get a law passed to get it stopped.

[SeattleGirl]

26. I remember when Mike Kreidler did that.

I thought it was great. Too bad the law didn't pass, but I gave him a lot of kudos for trying to fight it (and he's a Republican).

[KT2000]

33. Yes! He said he

started his job thinking the insurance companies were being pushed around by the state and he has done a complete change. He keeps trying to get laws passed to protect the consumer but apparently the legislature listens to others.
:-)

[SeattleGirl]

35. They listen to the insurance lobbyists.

I have a lot of respect for Mike, because he DOES pay attention to consumers. Perhaps it's time for we the people of Washington State to start bugging our state legislators about this. Pushing at them. Letting them know if they don't stand for us, we will stand against them!

[fleabert]

24. link please? nt

[Heidi]

31. Bad credit doesn't correlate with a risk to your life.

It correlates to a risk to your _bottom line_, and until you can back up your assertion (which seems to go along with the Bush-esque assumption that poor equals dangerous and/or undesirable) your words will fall on deaf ears among _real_ progressives.

[DarkmoonIkonoklast]

40. Numbers, friend... show me numbers!

MMHow do credit scores and driving ability correlate?
MMShow me numbers, or admit yours is just another opinion...

MM{author refrains from citing the adage about opinions...}

[LostinVA]

45. You are wrong

I had to declare Chapter 7 a few years ago due to medical bills. I'm 41, never even a speeding ticket. I know "others" like me -- So, give me the studies and stats from a legit source, because I'm calling BS.

[barb162]

12. Here's a tiny bit on it from a biased link but it gives the gist

"...Insurance Credit Scoring is based upon the belief that that there is a direct statistical relationship between financial stability and risk. In other words, the lower your insurance credit score, the more likely you are to file claims, inflate claims, commit fraud and commit arson. This score is based solely on information contained in consumer credit reports from Equifax, Experian, and Trans Union. This insurance credit score is then used in conjunction with motor vehicle records, loss reports, and application information to determine your insurance risk at a particular point in time. Some companies have also started using insurance credit scores to non-renew coverage regardless of whether a claim has been filed or premiums have been paid on time."
http://www.insurancescored.com/

[SeattleGirl]

14. "based upon the belief"

That's the kicker right there. "The belief." When I went to a new insurance agent, she said that the big companies (State Farm, Farmers, etc.) rejected me because my credit score was lower than they liked. I said, did they look at my driving record, which had NO tickets or moving violations or accidents on it. She said no, they just go by the credit score.

[magellan]

20. Here's an argument against using credit scores

http://www.ftc.gov/os/comments/FACTA-implementscorestudy/514719-00008.htm

It was long, I broke it into paragraphs. Makes some good points.

++++++++++++

Credit scores have no place in insurance rating and the practice of allowing insurance companies to use credit socres for the purposes of determining credit risk should be completly abolished. Credit Scoring should not be allowed to be used for what is in most states mandatory insurance purchases, nor should insurance companies be allowed to GENERATE inquiries lowering your credit score for the purpose of purchasing other financial services. Thereby then lowering your insurance score. Taking out a new mortgage or credit card which also can initially lower your score says nothing about insurance risk or risk in general. Therefore reliance on scores for insurance underwriting is arbitrary and punitive on the consumer.

This also says nothing of the fact that the credit bureaus are allowed currently to sell multiple credit reports bearing the same social security number for completely different named individuals. While hiding this activity from the rightful social security number holder. We have been the victim of exactly this form of ID theft and it is currently affecting our insurance rates. Insurance companies are not following fraud alert procedures no insurance company currently using our scoring information (There are three of them) has ever contacted us to determine it is really us prior to issuing a renewal or policy to verify fraud alerts. They claim they don't have to since it is not a financial transaction. They also claim this is the reason they don't have to report payment history on said insurance policies.

If it is not a financial transaction then they have no need for a credit score to determine insurance risk, if it is a financial transaction, they they should be required by law to report insurance payment history to the bureaus for the purposes of reporting a credit history back to the file they are collecting information from and that they be required by law to honor fraud alerts of victims of identity theft and to provide victims with the same disclosures under the FACTA act as other credit granting institutions. Do not allow the insurance industry to get away with not reporting good credit history while allowing them to use bad history to rig insurance rates in their favor. A bad credit score say nothing of a persons qualifications to operate a motor vehicle or their accident risk. It does allow the insurance industry to engage in selective insuring where by lower economic classes can be effectively discriminated against by insurers. They currently claim they are not required to comply with other laws under the FCRA since it is not a financial transaction.

If by some odd reason you see it necessary to continue this practice of allowing them access to these scores then they should be held to the same compliance and other requirements of the FCRA as other creditors. This includes the honoring of fraud alerts and the turning over of identity theft related transactional data for fraudulent policies issued due to identity theft. Tell the insurance industry they cannot have it both ways. Currently they are exploiting the system. They contribute nothing positive to the report's score and they only create negative inquiries which lower your credit scores and they are surely reporting their judgements obtained from lawsuits from accident claims. Tell them they must report payment history or no scores for them. Thank you very much for the opportunity to comment on this very valuable consumer issue.

[SeattleGirl]

25. Excellent read!

:thumbsup:

[barb162]

that's an excellent article esp. the part about ID theft

[cynatnite]

19. They don't have a source either...

they think you're a bad person if you have a low credit score which equals fraud, breaking the law, blah, blah, blah.

These people are fucking sharks who try to suck as much money as they can out of the public while trying to cut their losses at the same time.

Some of these insurance companies will do whatever they can to get out of paying a claim. Katrina showed a lot of that.

It's pure bullshit.

[magellan]

27. University of Texas did a study

All the other references I could find were to insurance company studies. (DOH...a bit like Bush** saying 'trust me'.) This MSN Money article does go on to point out very clearly that there are a lot of unknowns in using credit scores to price insurance, like how it affects minorities and the poor...not that that's stopping insurers from doing it.

How bad credit costs you with insurers

snip

There’s plenty of evidence to show the predictive link between credit and auto claims. Most recently, a massive study by researchers at the University of Texas at Austin found a “statistically significant” relationship between an individual’s credit scores and his or her tendency to incur auto insurance losses.

The researchers created a database of 153,326 policies from the first quarter of 1998, matching the people named in the policies with their credit scores. Then the researchers tracked who made claims in the following 12 months.

“The lower a named insured’s credit score, the higher the probability that the insured will incur losses on an automobile insurance policy,” the study concluded, “and the higher the expected loss on the policy.”

The policies with the lowest average credit scores had claims averaging $918, while those with the highest scores averaged $558. The average loss per policy was $695.

more...

[The Straight Story]

38. Which is funny in way - bad credit, pay more to us and less to debts

So you end up stuck in a low credit rating because you spend more on insurance and less on your bills which got you the low rating in the first place.

Pretty darned silly....

[SeattleGirl]

39. The illogical logic of big corporations

:eyes:

[The Straight Story]

29. I just went to geico

My insurance rate:
6 month policy is $782.70

Not much tweaking to std deductibles, etc. I said I had a wife and it asked a lot of questions about her (and I stated she did not drive).

Personalized Package
Types of Coverage

Coverage Limits
1995 Jeep Grand Cherokee SE
Bodily Injury Liability(BI) $25,000 / $50,000 $157.60
Property Damage Liability(PD) $15,000 $144.50
Medical Payments(MED) $5,000 $36.70
Uninsured Motorist Bodily Injury $25,000 / $50,000 $28.50
Underinsured Motorist $25,000 / $50,000 $10.00
Uninsured Motorist Property Damage NO not provided
Comprehensive(COMP) $500 deductible $77.00
Collision(COLL) $500 deductible $242.80
Emergency Road Service(ERS) YES $19.60
Rental Reimbursement(RR) $50/day, $1,500 max per claim $66.00
Vehicle Total: $782.70

[The Straight Story]

32. Just went to Esurance and got this quote:

$84.72 a month

$1,017.00 for 12 months
(Pay in full and save $121.00)

Selected a few less things and indicated I was single (I said married first and it said to call if spouse did not drive - what the heck has she got to do with my car? She has her own.)

So about 400 less so far. No accidents or claims at all in 20 years of driving.

[barb162]

41. I'd like to see premiums based on driving records and age and sex

not $$$$$

[SeattleGirl]

42. Wouldn't that be refreshing?

Not to mention, making a lot more sense!

[sandnsea]

28. Ah, poor people are scum

I see. Yes, it's the poor who bilked the government out of billions through Iraq and Katrina. How could I have missed that.

[SeattleGirl]

30. Well, goodness, keep your eyes open!

:rofl: :rofl: :rofl:

[The Straight Story]

34. Good point

Those who defraud the most amounts are those, it seems, with the highest pay and best credit (Enron, et al).

Screw the poor folks (at least, that is what the insurance industry wants to do).

We need to get some legislators, dems, to get some bills passed protecting people. Bad credit happens to good folks daily. Mine was ruined by my X. Not that I am perfect, but she really ran me thru the wringer (and I cannot sue her now, she has passed away).

Oh, and guess HOW they get that credit score. that's right - your SS#. And if you don't give it I seriously doubt you will get insurance.

[SeattleGirl]

36. You got that right! They get you coming and going.

Bastahds!

[hfojvt]

37. it is not necessarily true that poor people have worse credit

than wealthier people. My credit score has been pretty good, even when I was in the bottom quintile. Maybe I am just exceptional, but there are probably some higher income people too with worse credit scores.

[tammywammy]

43. Or a wealthier person

could easily have a higher debt to income ratio. We had a guy that had a hard time getting approved for a car. He made a ton of money per month, but also had a high income to debt ratio. If you make $17K a month, but have $10K a month in bills, it doesn't look too good.

edited to add: While I don't make a ton of money, my credit is okay. But my driving record is great (no accidents in over 5 years, no tickets in as many years) but I'm still penalized because my credit isn't perfect.

[ChoralScholar]

44. I think it should be illegal

for a business to pull your credit unless they are EXTENDING you credit. That's the only reason.

They ran my credit at the Cable company, where I am required to pay one month in advance. They're not extending credit.. they're providing a service which I've already paid for.

That's like McDonald's checking my credit before they give me my Chicken Nuggets.

It's bullshit, and it should be against the law.