Shopping for auto insurance

After a crash is too late to find out if your insurance policy is good enough. Here's how to buy the right coverage now.

Savvy shopping for insurance requires a little more effort than many people tend to give it. Too many consumers simply grab the first price they come across or accept routine rate increases without digging further for a better deal. It is important to compare not only the price but the coverage and exclusions among carriers.
You don't want to find out after you file a claim that the new policy you purchased with the excellent premium does not include a type of coverage that you had with your previous carrier.
"It really pays to shop around," Dick Luedke, spokesperson for State Farm Insurance, told MSN Autos. "Premiums for exactly the same coverage can vary substantially from carrier to carrier."
Studies performed by Progressive Insurance between 1999 and 2004 reveal that six-month auto insurance rates vary significantly between companies, from an average low of $481 to an average high of $586 across the country. This means the same driver could receive a quote of $1,256 for a six-month auto insurance policy from one company and a quote of $775 for the identical policy from another company.
Another Progressive study reveals that only 20% of survey respondents said they had shopped around for better insurance rates in the last six months.
"Call around a lot," suggested Scot McCartney, spokesperson for Independent Insurance Agents of America. "Don't always grab the first quote you get. Make several calls, ask the same questions and be sure to get quotes on exactly the same coverage from each carrier."
It pays to mix it up
Call a couple of the larger carriers (State Farm, Allstate, Nationwide, SAFECO, etc.) and then check with a couple independent agents and phone-based carriers, such as GEICO or Amica, just to make sure you've covered your bases.
If you prefer to shop on the Internet, a number of services offer online price quotes. Web sites give you quick access to a number of quotes without ever picking up the phone. However, as convenient as they are, it's still advisable to consult other more traditional sources as well.
What to look for
When buying auto insurance, it's important to consider not only the price, but also the carrier and the coverage. As with any product, the value of a low price is quickly forgotten when you find out that the service or the quality of the product is not what you expected.
The old saying, "It's too good to be true" applies for insurance premiums as well. If the premium seems too low, be sure that you are getting all the coverage you need.
Check out the agent you'll be working with, advises the California Department of Insurance. Do you know and trust them? Also look into the insurance carrier itself. Is it a well-known and established company? Does it have the financial strength to pay its claims? You can obtain background and financial information on an insurance carrier from your state's department of insurance.
When talking with insurance agents, don't hesitate to ask a lot of questions. In addition to learning what coverage is offered and how much it costs, also ask about how claims are processed. Too often, people don't learn about the process until they have to make a claim. Knowing beforehand ensures you choose a carrier whose claim process is most convenient and appealing to you.
Don't forget to ask friends, neighbors and family who they are insured with and whether or not they like the service they receive. Often, they can provide personal examples of what went wrong and what went well when they had to file a claim.
Factors influencing rates
If your current rates seem particularly high (or low), you might want to know why. Indeed, if your rates (or quotes) are high, altering your lifestyle or vehicle choice can have a big effect on the rates you pay.
While criteria may vary slightly from carrier to carrier, according to State Farm's Luedke, the major determining factors fall into four basic areas:

-------*You. Your age, gender, marital status, driving record and record of prior claims play a major role in determining your risk level and therefore the premium you will pay. Traditionally, males under 25 years of age represent the highest risk, while married, middle-aged, non-smoking mothers represent the lowest.
-------*Where you live. Living in an urban area typically triggers higher rates due to increased incidence of theft and accident claims -- both of which are statistically higher in and around cities.
-------*Your vehicle. The type of vehicle you drive greatly affects the rates you pay. Vehicles that have a high frequency of claims (sports cars) or are expensive to repair (luxury cars, SUVs) are prone to higher premiums. However, larger vehicles tend to be safer in collisions, which sometimes offsets costs.
-------*How you use your vehicle. Statistically, the more miles you drive, the greater chance you have of being involved in a crash. High annual mileage will result in higher premiums.
Another way to reduce your premium is to increase the amount you self-insure by increasing the deductible amounts on the property damage coverage for your own vehicle. These deductible amounts on your comprehensive and collision coverages may be limited if you have the vehicle leased or financed, so check your financing contract before raising your deductibles too high.
Deciphering the code
Once you've begun researching insurance coverage, it won't be long before you come across liability limits displayed in an X/Y/Z form. These are the maximum limits of coverage for bodily injury or property damage that you become legally responsible for.
For example, 100/300/50 means you're covered for a maximum of $100,000 bodily injury per person, $300,000 bodily injury per incident and $50,000 property damage per incident.
You may also see the liability limit stated as a single amount, called a combined single limit. This limit is the total amount available for a single occurrence, without per person or property damage sub-limits. The advantage of a combined single limit is that if there are only minor injuries but considerable property damage, the total liability limit, not just the sub-limit amount, is available to satisfy a property damage claim. Conversely, if one person is injured severely, the entire liability limit is available to satisfy a claim by that one person, rather than just the per-person limit.
When setting your limits, make sure to set them high enough to protect yourself against possible lawsuits. The more assets and income you have, or the more earning potential you have, the higher liability limits you should consider. If you become legally responsible for bodily injuries or property damage in excess of the liability limits of your policy, your personal assets or future earnings may be required to satisfy your obligation.
Types of coverage
Shopping for auto insurance involves more than simply calling an agent and asking for a quote. To get the most out of your insurance requires that you first fully understand what risk you want to protect against and how best to shift that risk using the various types of insurance coverage.

Auto Insurance Center

5 ways to get auto insurance discounts

Some companies will cut your bill if you're an engineer or a teacher. Multi-vehicle and Web-access discounts are available, too, if you just shop a little.
Just when you thought you'd taken advantage of every discount and shrunk your auto insurance premium to its tiniest, auto insurers are offering more ways to make your bill smaller than ever, and all you have to do is be yourself.
Almost every insurance company gives you a discount if you've had no accidents or tickets in the last three to five years, or if you buy a homeowner's or renter's insurance policy with the same company (multi-line discount), insure more than one car on your auto insurance policy (multi-vehicle discount) or own a car that is equipped with air bags. But some companies also will reward you for your profession, for your age and for using the Internet.
That college degree is worth something

21st Century Group (formerly 20th Century) has found that drivers with degrees in engineering are lower risks than other drivers. If you have a bachelor's degree in any number of engineering or science-related fields -- biochemistry, mathematics or mechanical engineering, for example -- you can get a discount on your auto insurance premium if you buy from them.
21st Century sells auto insurance in Arizona, California, Nevada, Oregon and Washington, and offers the "engineering and scientist" discount in all of those states. If you're a scientist or an engineer with a good driving record, you can save between 10% and 30% on the company's base rate, according to Ric Hill, vice president of corporate relations.
A base rate is the average amount of claims paid plus the insurance company's claims-processing fee. For example, if the company's base rate is $400, you could save between $40 and $120.
"Our company's founder saw that educators, scientists, and engineers have lots of characteristics that seem to show that they're the best drivers," says Hill. "Engineers, for example, being accustomed to dealing with fine details, are somewhat meticulous, which means they take good care of their automobiles." 21st Century found that the same holds true for teachers and other scientists.
Teachers deserve a break

Horace Mann Insurance (which sells auto insurance in every state except Hawaii and New Jersey) offers discounts to teachers who belong to state education associations or the National Education Association (NEA). Horace Mann's discounts start at 8% and are based on some assumptions the company made about teachers: They have a stable occupation, stable employment, and they understand they are under scrutiny by the community.
The discounts are available through Horace Mann or one of its two subsidiaries -- Allegiance Insurance or Teachers Insurance. In addition to Hawaii and New Jersey and New York, the discounts are not available in Georgia, Mississippi, Texas and Washington D.C.
The discount program for teachers who are state association or NEA members started about 15 years ago. Although the auto insurance discounts aren't enough to cover annual association dues, Horace Mann estimates the average household (two cars) and the average insurance discount will pay for about 50% of an association's average dues.
21st Century also offers teachers a break on auto insurance premiums, but only if you're certified by the State of California Commission on Teacher Credentialing, or if you are a full-time college or university professor. Savings for this program range from 10% to 30% of the company's base rate.
Save all you can save in the Army

GEICO offers a 2% to 15% discount to active and retired members of the military. The military discount is available in all states except Georgia, Indiana, Maine, Massachusetts, Michigan, Mississippi, New Jersey, New Mexico, Tennessee and Texas.
Another benefit of buying your auto insurance with GEICO if you're in the military is your ability to drop all coverages except comprehensive if you're shipped overseas. "Most armed service personnel will put their vehicles in storage and we allow them to drop their liability and other coverages while they're out of the country," says Richard Kidd, a retired sergeant major of the Army and assistant vice president for military services at GEICO. Additionally, if Uncle Sam sends you to a country in which the government offers hostile-fire pay, GEICO will knock 25% off your comprehensive bill while your car's in storage.
Drive toward the discounts in your golden years
Remember when a nickel was worth a dime? If so, you're probably eligible for some deep discounts on your auto insurance. The Hartford's AARP Auto Insurance Program offers AARP members the chance to chop their auto insurance bills by as much as 45%.
The AARP program offers drivers a 20% to 25% discount for insuring multiple cars on one policy, a 10% discount for holding both a homeowners and auto insurance policy with The Hartford and 5% savings for staying with the company for more than five years and not having any violations on your driving record.
The Hartford also guarantees that drivers who buy auto insurance through the AARP program will never have their policies canceled except for nonpayment of premium, DUI conviction or loss of license.
Have Internet, can save
Web surfers who want to purchase insurance online can benefit from discounts offered by companies such as Unitrin Direct.
Unitrin will shave $50 off your auto insurance premium if you purchase a policy directly from its Web site. In addition, Unitrin also will give a 10% discount to four-year college graduates under the age of 30. Both discounts are only available in Arizona, Colorado, Connecticut, Florida, Illinois, Indiana, Missouri, Nevada, Ohio, Oregon, Pennsylvania, Texas, Virginia and Wisconsin.
Because of cutthroat competition in the auto insurance market, all you have to do is sniff around a little bit for good deals like these. And although you might not be a professor, teacher, engineer or geologist, you can still save on your auto premiums by being a good driver, having good grades or insuring more than one car.