Auto Insurance Online: Tips to Save You Money

Save Money on Auto Insurance

Wny are car insurance rates spiking by 50 percent or higher in some U.S. states? In the Consumer Reports article, they put the blame on an increase in automobile accidents, rising repair costs, and heightened litigation. The national average for car insurance is $2,000 per year for full coverage (comprehensive and collision) and just over $600 per year for minimum coverage.

It's true that where you live can have some impact on what you pay for car insurance. Bankrate.com has a chart of average car insurance cost by state which lists the average cost in each state for both minimum and full coverage car insurance. Florida, New York and Louisiana top the chart with average costs of about $3000/year, while drivers in Idaho, Vermont, and Maine pay roughly one third of that! Factors that insurers take into account are the number of licensed and uninsured drivers, traffic density, labor and repair costs, road conditions, weather conditions, local claims history and a state’s minimum insurance requirements.

Even the zip code within your home state can make a big difference. MarketWatch has an eye-opening list of
states with the biggest cost differences between zip codes. They compared car insurance premiums for married 35-year-old drivers with a clean driving record and good credit. The difference between rates in the quiet upstate New York town of Fairport and those in Brooklyn is almost $3000 per year. If you've ever driven anywhere in the NYC metro area, you can understand why this is true. The same holds true for Los Angeles and other urban areas with high traffic density. More cars = more crashes = higher insurance rates.

But outside of moving to another town, county or state, there are plenty of things you can do to reduce your ultimate cost of insuring your car. I scoured the Web to find some practical tips on how to shop for and save money on auto insurance. Here are some of the best ideas I found:

Compare Multiple Quotes: Use comparison websites or visit different insurance company websites to get quotes. Compare premiums, coverage limits, deductibles, and additional features to find the best policy for your needs. Sites like NerdWallet, BankRate, and The Zebra provide guides, articles, and tools for comparing insurance rates and finding ways to save on car insurance. But think twice before you fill out one of those forms to "compare auto insurance rates online". Some of them ask for a lot of personal information, which will be shared with insurers and other third-party affiliates, who will be texting, calling, and emailing you with offers.

A better option might be to contact a local independent insurance agent, who will compare coverage options and premiums from a range of insurance companies. It's in their best interest to save you money, unlike the agent who represents a single company such as Allstate, Progressive, Nationwide, or Geico.

Switching Insurance Companies: A Consumer Reports survey of 11,000 drivers showed that changing your auto insurance provider every few years not only saves money but also increases satisfaction levels. They recommend shopping around every year or so, because changes in your life such as moving, getting a new job, or retiring can affect your rates.

Check for Discounts: Many insurance companies offer various discounts, such as safe driver discounts, good student discounts, multi-car discounts, or discounts for specific safety features in your vehicle. If your car has anti-lock brakes, airbags, rearview camera, collision warning & blind-spot detection, adaptive cruise control, adaptive headlights, lane keep & lane departure warning features, you should be paying less. Not all of these discounts are automatically applied, so ask your insurance agent about these and any other potential discounts you might qualify for.

Bundle Policies: Most insurance companies offer discounts if you purchase multiple policies from them, such as bundling your auto and home insurance. Some companies may offer to bundle personal liability, motorcycle, RV, boat, or life insurance as well. Consolidating your insurance needs with a single provider should net savings of between 10% and 25%, compared to what they would charge for each policy individually.

Research the Company's Reputation: Look into the insurance company's reputation. Check customer reviews, ratings, and feedback about their claim process and customer service. A good price might not be worth it if the company has a poor track record in customer satisfaction. US News & World Report surveyed 10,000 auto policyholders across the nation who purchased a new policy or filed a car insurance claim in the last five years. They inquired about customer service satisfaction, the ease of filing a claim, claim resolution, whether they’d recommend the company and if they planned to renew their policy.

They ranked USAA and American Family as the best auto insurance companies, according to their overall scores in the survey, and becasue they have some of the lowest rates availble. (USAA only caters to the military community.) Other companies with survey scores in the top five were State Farm, Nationwide and Geico.

BankRate also compared auto insurers based on rates, coverage options, and other factors. Some of the same names bubbled to the top in their research. Geico and Amica scored 4.4 stars out of 5. USAA and Safeco scored 4.3, while Auto-Owners, State Farm and Progressive received a 4.2 rating. You can read their detailed reviews for each company.

Yet another way to rank car insurance companies comes from the National Association of Insurance Commissioners (NAIC) website. The NAIC Complaint Index gives insight into car insurance company complaint rates. To try it, select Insurance Type: Auto, enter the company name, and press ENTER. Click the "Click for Report Options" link, then click Complaint Trend Report. Scroll down to Company Complaint Index. The Complaint Index compare's a company's performance to others in the market. Numbers less than 1.0 are good. A score of 2.0 means a company has a complaint index twice as high as average. I ran a few and found these results. Allstate: 2.38; GEICO: 1.96; USAA: 1.73; Amica: 0.81; Auto Owners Ins: 0.57; American Family Ins: 0.57. Your mileage may vary.

The Consumer Reports article I've referred to above is titled How to Save Big on Your Car Insurance, and has some additional tips to save money on car insurance.

Increase Your Deductible: Raising your deductible from $500 to $1,000 could reduce annual premiums by 20-25%, but first make sure you can afford repairs if needed.

Dropping Full Coverage: When the premium is more than 10% of the car's value, consider dropping Collision and Comprehensive coverages as the vehicle's value decreases. You could save about $1000 a year. If you have an auto loan, however, your bank may insist on these coverages.

Taking Defensive Driving Courses: Some insurers offer discounts for completing these courses, potentially saving around $200 a year. In some states, you can complete these courses online in a few hours. You'll probably need to repeat the course every three years. The course will remind you of the rules of road, how speed affects your driving, and the dangers of impaired driving.

Driver Monitoring Programs: Insurers may offer discounts if drivers allow them to monitor driving habits, potentially saving around $800. You'll need to plug a gadget into your car's diagnostic port which will monitor and report on your speed, braking habits, where and how much you drive, and other factors. Good drivers may reap a discount, but if you're a speed demon or a heavy braker, this is not for you.

Other tips I picked up in my research into auto insurance include:

Improve Your Credit Score: In some states, insurance companies consider credit scores when determining premiums. Improving your credit score can potentially lead to lower insurance rates. See my article
Get Your Credit Score (without getting ripped off).

Choose the Right Car: Insurance premiums can be influenced by the type of car you drive. Cars with high safety ratings and lower theft rates typically have lower insurance costs. Also, consider the cost of repairs and the car's value when selecting a vehicle. See Online Car Buying Tips.

Both of those tips will require some additional research on your part, but may be well worth the effort. I hope this information will give you the tools and resources to help you understand car insurance, compare rates, and discover potential ways to save on your premiums.

Do you have any of your own tips to save money on auto insurance? Your thoughts on this topic are welcome. Post your comment or question below…