Hold Down the Cost of Auto Insurance

The cost of insuring a car rose by 44% between 1987 and 1994. Premiums in some states have soared by more than 75%. Rates for insuring those big, bold sport utility vehicles - that are dangerous to others and themselves - are expected to rise even higher.

Here are my strategies to hold down the cost of premiums...

*Get price quotes every few years. One third of all drivers report that it has been at least six years since they shopped for a new policy. Another 20% said they never shopped at all.

Yet you could save hundreds of dollars a year by smart comparison shopping. There can be more than a twofold difference in prices for identical coverage from different insurers.

What you pay depends on where you live and the ages and driving profiles of you and your family.

Important, too - whether a particular insurer is interested in insuring people like you and your family. Even if one company quotes you an astronomical rate for the coverage you request, another may want your business and offer you a very good deal.

Your state insurance department has brochures that list low-cost insurers.

* Get quotes from several insurance companies. Don't assume that the biggest or bestknown company offers the best deal. Some of the lowest rates are offered by lesser-known local and regional insurers.

Example: One company may charge 25% to 30% less than some of the bigger brand-name companies that operate in its area.

Some insurers are cheaper because they are more efficient and have lower overhead than their giant counterparts. For example, get quotes from some no-load (no-commission) companies such as AMICA Mutual Insurance Company and GEICO. The largest company, State Farm, is another good company to contact.

* If you live in a big city, try to keep your car in a suburb. Insurance premiums in cities can be sky-high. But you can slash them by as much as 50% if you keep your car outside city limits.

This strategy works only if you use the car occasionally for pleasure - say on weekends and if you know someone who lives outside the city who is willing to let you leave your car there.

Warning: This arrangement must be legitimate. If you use the car to commute to work during the week, or if you use it to drive door-to-door from your city apartment to your ski resort condo every weekend, you would have problems if you were in an accident and the insurance company discovered the out-of-town garage arrangement was not bona fide.

* Designate who in your family will drive which cars. Doing so is especially important if you have a teenage driver or someone else in the family who is expensive to insure - perhaps because of a few accidents.

Some, but not all, insurance companies will permit you to say that a particular driver will not be allowed to drive the most expensive car you own.

Example: By specifying that your 16-year-old will not be allowed to drive the family Mercedes, you could save thousands of dollars a year in premiums. But you have to mean what you say to the insurance company. if your teenager drives the Mercedes and is involved in an accident, you would not be covered.

*Get rid of unnecessary coverage, but don't skimp on the essentials. Towing and labor coverage is usually not worth it. Nor is medical payments coverage if you have good medical coverage at work.

Your health insurance from work should cover you and your family.

The liability portion of your policy should take care of claims that passengers in your car may lodge against you. So, be sure you have plenty of liability coverage. A $1 million umbrella policy is adequate.

Important: It protects you against medical and property claims by others in accidents where you or a member of your family were found to be at fault.

Don't neglect uninsured-motorist coverage, which pays for damage to your property by someone without insurance, or without enough insurance to reimburse your costs.

This coverage is a real necessity now, with 20% of drivers on the road without insurance these days. The ratio rises to a breathtaking 50% or more in New York, Miami and Los Angeles.