Easy ways to save on car insurance

By SmartMoney

Here's a bit ofgood news for frustrated drivers: For the first time since 1999, auto insurance premiums are dropping this year, according to the Insurance Information Institute.

Granted, it's not by much -- a mere $4, or 0.5%, bringing the average annual cost to $847. Not exactly enough to fund a road trip.

But here's another way to cut costs: by installing security and tracking devices in your car. Not surprisingly, insurance companies are big fans of drivers who take extra steps to protect their cars, and they're willing to reward them with generous discounts.

Here are some easy ways to save -- and to make sure your car doesn't fall into the wrong hands.

Theft prevention

Has this happened to you? You go to drive your trusty automobile, only to discover it missing.

Car theft is more common than you might think: 1.2 million cars were snatched in 2005, according to the FBI's Uniform Crime Reporting Program. The most likely crime scenes included Las Vegas, Phoenix and Sacramento, Calif., the National Insurance Crime Bureau says.

Car alarms, keyless-entry remote controls and steering-wheel disablers such as The Club are surprisingly effective in deterring would-be auto thieves.

"If a thief sees a big iron bar, it has a strong impact," says Michael Jordan, the executive editor of Edmunds' magazine, Inside Line. So it's not surprising that many insurance companies will give you a discount if you go the extra mile and purchase one of these devices. Hartford and Allstate generally offer a 5% discount off comprehensive coverage while State Farm's discounts range between 2% and 10%. Discounts vary among insurers, states and counties.

These anti-theft devices are widely available at affordable prices. Most new cars are equipped with keyless-entry remote controls. You can also buy one for as little as $19 at Kmart. The Club is available at AutoZone for $40.

LoJack

Drivers also receive discounts when they install LoJack, a stolen-vehicle recovery system that puts a tracking device in your car. Again, discounts vary based on your insurance company and location. If you live in Massachusetts, Rhode Island, New York or New Jersey, you're in luck. Those states require insurers to give discounts.

State Farm's discount ranges from 10% to 30% off comprehensive coverage. Drivers who have only LoJack receive the 10% discount while those who have a layered anti-theft approach, which includes the devices listed above, are eligible for the 30% discount, says Jeff McCollum, a State Farm spokesman. State Farm offers these discounts in every state, but rates and categories vary from one state to another and by county.

Owning LoJack doesn't guarantee discounts from other companies. Hartford doesn't generally offer discounts for LoJack unless the state mandates it, company spokeswoman Sue Honeyman says.

LoJack costs $695 (a one-time purchase and installation fee) and is sold at car dealerships.

OnStar

OnStar, an in-car navigation system with tracking capabilities, also functions as a stolen-vehicle recovery system. Once the driver files a theft report, police can track the car's location. OnStar is installed strictly in General Motors cars, but similar systems are offered by other manufacturers.

GM drivers who are insured by GMAC Insurance are eligible for a 20% OnStar discount off their comprehensive coverage.

"This discount is available because OnStar reduces our comprehensive losses," says Wade Bontrager, the vice president of direct marketing at GMAC Insurance. "The success record of recovering stolen vehicles is such that it warrants a 20% discount. OnStar reduces our claims exposure since it helps us recover the vehicle quickly, usually before it's taken apart."

AAA discounts

Depending on which state you call home, you'll be assigned to membership in a specific AAA group. Although AAA members can apply to any insurance company for coverage, they can receive AAA discounts for security and tracking devices only if they have coverage through AAA. Some AAA groups offer coverage through their own insurance companies; others act as insurance brokers.

For example, AAA Southern California has its own insurance company, the Interinsurance Exchange of the Automobile Club. Members who receive coverage from this carrier and have car alarms and LoJack are eligible for a maximum of 9% and 18%, respectively, off their comprehensive coverage.

AAA New York doesn't have its own insurance company. Instead, it offers members coverage through Progressive Insurance, Hartford and Travelers, among others. Members who receive coverage through one of the club's affiliates are eligible for a 6% to 7% discount off the whole policy. Members who use car alarms, The Club or LoJack can receive 5% to 25% discounts off comprehensive coverage.

AAA South has its own insurance company, Auto Club South Insurance, and acts as a broker to members in Florida, Georgia, western Tennessee and Puerto Rico. Members with AAA coverage receive an average discount on their comprehensive and collision coverage of 3% for alarms, 3% to 5% for disabling systems and 10% for tracking devices. Members who receive coverage from one of the club's affiliates, such as Hartford or Progressive, receive similar discounts.

This article was reported and written by AnnaMaria Andriotis for SmartMoney.

Published Aug. 30, 2007