The $5,000 car insurance bill

Tips for cheaper coverage

Check out your state's buyer guide for auto insurance. Because auto insurance requirements vary from state to state, the first step is visiting your state's insurance department Web site. You'll learn the minimum coverage that's required for drivers in your state. And the buyer's guide may help you track down insurers with more-affordable policies.

The National Association of Insurance Commissioners Web site has links to the insurance department in each of the 50 states.

Shop around. Just an hour or two of your time comparing insurance policies from company to company could save you hundreds, even thousands of dollars. This isn't just an advertising come-on; it's by far your best shot at cutting your premiums.

"Different companies have different exposures," says Worters, of the Insurance Information Institute. "Shop around and see what the best price can be."

Here's a graphic illustration of the need to shop around: With a ticket and accident on his record, that young male Los Angeles driver could pay as little as $1,800 a year for basic coverage, rather than the $8,200 mentioned above. With a perfect driving record, he could pay anywhere from $700 to $3,700 for basic coverage.

"It's important to shop around -- very important," says Mark Savage, a senior attorney at Consumers Union. "Even if you've had an accident, different companies will charge you different premiums for that."

More from MSN

• Tell us: Are you paying a fortune for car insurance?
• What to do after a car accident
• It pays to avoid a speeding ticket -- or fight one
• Should you buy your kid a car?
• MSN Autos: Parents, teens and used cars
• Compare quotes from auto insurers

Drop the comprehensive and collision coverage. If you drive an older car that's worth $500 to $1,000, you may want to drop comprehensive and collision coverage from your policy. (See "Dump the insurance on your clunker.")

"The cost of the coverage may actually exceed the value of the car," Savage says.

Collision coverage pays for damage done to your car from a collision with another car. Comprehensive coverage pays for the loss of your car due to theft and damage caused by something other than a collision with another car such as fire, flood, windstorm, vandalism and falling objects.

When your premiums are greater than the value of your car, it's a good idea to drop the collision coverage and comprehensive coverage. Neither is required under state laws.

"Buy the bare minimum coverage that doesn't cover any damage at all to your car," says Stephen D'Amato, a consultant to the Center for Insurance Research.

Drive a car that's less likely to be stolen. Cars that are popular with consumers as well as thieves, such as the Honda Civic or Toyota Camry, are more expensive to insure. Driving a less popular sedan could save you some money on your insurance.

"I happen to drive a Honda Civic, and I know it costs me more," says Carmen Balber, a consumer advocate at the Foundation for Taxpayer & Consumer Rights. (You can compare the relative risk ratings of different cars here.)

Video on MSN Money

The hidden price of a traffic citation
If you get a speeding ticket, think twice before paying it off immediately. Here's why.

Be a good driver. Obey the speed limits and be a squeaky-clean driver. If you haven't had an accident, ticket or other violation in the past three to five years, you may be eligible for a good-driver discount on your policy. (See "It pays to avoid a speeding ticket -- or fight one.")

Take a driver education course. If your driving record is less than pristine, consider taking a driving class.

"Take a driver education course, a refresher course," Worters says. "Keep a clean driving record that includes no speeding tickets, no violations -- all that will help."

*Most-recent data available.
**Not all drivers carried all forms of coverage.
***Texas results not directly comparable.
Source: National Association of Insurance Commissioners

Lucy Lazarony is a freelance writer based in Florida.

Published March 13, 2008

< previous |  1 | 2 |

Rate this Article

Click on one of the stars below to rate this article from 1 (lowest) to 5 (highest). Low

Thank you for rating.

High

• View all top-rated articles
• E-mail us your comments on this article
• Discuss in a message board