7 ways to save on car insurance

By Gregory Karp, Chicago Tribune

The ideal way to save money is to exert effort once and automatically reap savings over and over again, every month. That’s why examining your car insurance makes a lot of sense.

Auto insurance prices vary widely. On average, car insurance costs Americans $789 per vehicle annually in 2008, the most recent year of data provided by the National Association of Insurance Commissioners. “In an age when people are cutting out cable television, it pays to look at car insurance,” said Des Toups, managing editor of CarInsurance.com.

Here are ways you can save:

1. Compare: Premiums can be very different for the exact same policies, depending on what factors an insurer chooses to emphasize in its rate formula.

“The insurer asks, ‘What’s the least amount of risk we can take to make the most amount of money?’ That’s why the numbers are so different,” Toups said.

“Many people stick with the same insurance carrier year after year without ever shopping for a better deal,” Consumer Reports says in its guide to car insurance. “Blind loyalty to one insurer can cost you dearly.”

You can request quotes by phone or online. Check the Washington state insurance department website, www.insurance.wa.gov, for comparative information on insurers.

2. Bundling: You may be able to get your home insurance through the same carrier. Auto rates vary more and probably are more expensive, so let that be the insurance that, well, drives your decision.

Like bundling your cable, phone and Internet access, you can get discounts for bundling your insurance with a single insurer, said Jim Fults, associate vice president of auto and personal insurance at Fireman’s Fund Insurance. Customers may save $400 to $600 a year by bundling auto and home insurance.

If you have multiple vehicles with the same company, your most expensive driver will be assigned, by default, to the most expensive car. So, if your teenager will drive the Honda far more than the Lexus, make sure the teen is listed as primary driver of the cheaper vehicle, Toups said.

3. Deductibles: The higher deductible you’re willing to accept, the lower your premiums will be. Changing from a $200 deductible to $1,000 could save you 40 percent, the Insurance Information Institute says.

Personal finance experts typically advise choosing the highest deductible you can financially stomach if it will give you big price breaks on premiums.

4. Big Brother devices: Insurers are starting to introduce optional “telematic” devices, which collect data about your driving habits for the insurance company. You get a discount for agreeing to use one, and your rates are based on your driving habits.

People who drive less and drive slower might have lower rates than people who drive a lot at high speeds.

Such devices are available from several insurers and are allowed in most states. Insurance companies say the devices are used only for discounts, not for raising premiums, Toups said.

Some devices will block the use of cellphones in a moving car, often used for teenage drivers, Fults said.

5. Credit: Auto insurers insist there’s a link between your credit and your driving habits.

A CarInsurance.com study showed that drivers with credit scores over 750 save an average of $783 a year compared with a drivers in the same age bracket with average scores.

6. Discounts: Make sure you’re getting all the discounts you’re entitled to: For driving low miles every year or teen drivers with good grades, Toups said.

7. Drop collision: Consumer advocate Clark Howard said the time to consider dropping collision is when cars get to be about 8 years old. If your annual, not monthly, premium for collision and comprehensive is more than 10 percent of your car’s value, remove collision coverage and just pay the liability premium.