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5 Things You Can Do to Lower Your Auto Insurance Rates

While it's difficult to save money on homeowner's insurance, general liability insurance or health insurance, we all can do something to bring down the price of auto insurance.
While it's difficult to save money on homeowner's insurance, general liability insurance or health insurance, we all can do something to bring down the price of auto insurance.
iStockphoto/Thinkstock

Hear me roar, for I am the insurance king. It's not something I set out to become. I suppose it just happened -- like going bald. Maybe it's because buying insurance is as inevitable as death and taxes. And while we all cringe at the idea of purchasing something that we hope we never use, let me tell you from experience, insurance is nice to have when you need it. Of course, arguing with insurance companies is not so nice, but that's a story for another time.

What's neat is that you can buy insurance for just about anything. Jimmy Durante, the old-time actor with the huge nose, insured his prized schnoz for $440,000. That's a spit in the bucket compared to the price allegedly placed on Jennifer Lopez's butt. Reportedly, the shapely siren insured her best asset for $27 million, although she denies any such thing [source: Lyons].

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Although I don't have any body parts worth $27 million, or 27 cents for that matter, I am insured up to my eyeballs. If I'm sick, I'm insured. Work-related issues, I'm insured. If a hurricane barrels down the road, I'm insured. If I die, I'm insured.

While it's difficult to save money on homeowner's insurance, general liability insurance or health insurance (and I've tried), we all can do something to bring down the price of auto insurance, whether bought from a gecko with an accent, a brunette named Flo or the good hands people.

The first thing you should do is know what your state requires. Some states, such as New York, are "no fault" states, and others like New Jersey, require that you buy Personal Injury Protection.

Regardless of what state you live in, auto insurance policies combine many types of coverage. For example, liability coverage pays for injuries and property damage to others. Liability also pays for such things as court costs, and pain and suffering for the injured. Most states require a minimum amount of liability protection [source: Travelers].

Auto insurance also covers medical expenses regardless who is at fault. Collision pays for damages to your car if it hits another car. Comprehensive coverage pays for damage if the car is stolen or damaged by a fire, vandalism or other non-crash related circumstances [source: Travelers].

What you pay for auto insurance depends on a lot of things, including your driving record; how much you drive your car; where it's parked; where you live; what type of car you drive; your age; your sex; your credit score; and of course, the type and amount of coverage.

Yes, auto insurance is complicated, but with the helpful hints on the following pages, you might be able to save a few bucks.

One sure-fire way to save money is to increase the deductible. That's the amount a person pays before their insurance kicks in. For example, many years ago, I pulled into my mother's driveway at 2 a.m. and slammed into her statue of the Virgin Mary, which was shrouded in a grotto of rocks. Yes, I'm going to hell, but worse, I did $1,000 worth of damage to my baby -- the Mad Mustang. I stupidly tried to back off the rocks. My deductible was $500. Insurance paid for the balance.

By increasing your deductible to a princelier sum, your insurance premium will drop. That's because you're assuming a larger share of the financial responsibility [source: Car Insurance Rates] Think twice before increasing your deductible. Make sure you can afford the additional money. Also, consider your driving record. If you are accident-prone, it's probably not a good idea to increase your deductible [source: Car Insurance Rates].

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If you ever see a Ferrari or a Porsche motoring down the road, chances are the owner is paying out the you-know-what for auto insurance coverage. That's because such high-profile cars are more expensive to repair and popular with thieves. Think about it for a second: When you were a teenager, what was your first car? My cousin had a 1976 Cutlass, which was cheaper to insure than my brand-new Mustang. So, if you want to save some dough, forget the Ferrari and buy a Taurus. Also, before buying a new car, research the cost of insuring the vehicle.

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If you own a home, then combining auto insurance with homeowner's insurance can save you money. Most companies will give you a 10 percent discount on your entire policy. I get a 20 percent discount for having all my insurance with the same company. Ten or 20 percent doesn't seem like a lot, but as the years tick buy, it adds up. The key is to ask, because you never know how much cash you can save.

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Don't you hate paying for the same thing twice? If Personal Injury Protection, also known as PIP, is part of your auto insurance policy, you might be paying twice for the same coverage. PIP coverage pays medical expenses for the insured driver after an auto accident. Some states, mostly those with "no-fault" insurance, require drivers to purchase PIP as part of their coverage [source Cheap Oklahoma Auto Insurance].

Some PIP plans not only cover your medical and hospital expenses, but they can also help you pay bills, such as child-care expenses, while you're laid up. However, if you live in a state that does not require PIP insurance, and if you have good health, life and disability insurance coverage, then you probably don't need supplemental PIP coverage with your auto policy.

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One of the questions an insurance agent will ask when you apply for auto insurance is "how many miles do you drive?" Do you know? I certainly don't. Maybe we both should start counting the miles. Those that drive less, pay less. The logic is simple: The less you drive, the less likely you are to get in an accident.

Some companies offer drivers a 50 percent discount if they drive fewer miles. Fifty percent is an awesome savings, but it comes at a price. Big Brother is along for the ride. The insurance company will probably want to install a mileage tracking device in your car. Such devices not only track how many miles you drive, but also how fast you're motoring through town, and whether you drive mostly at night or in the day. You might even have to pay a charge each month for the device [source: Fuscaldo].

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Others offer customers a discount of up to 35 percent for those with a GM car equipped with OnStar Vehicle Diagnostics. If you have OnStar and drive less than 15,000 miles a year, you may qualify for the GMAC low-mileage discount. In addition, some companies offer pay-as-you-go insurance to give those who drive less than 15,000 miles a year a huge discount. The plan is meant for people such as city-dwellers who use public transportation, the elderly who don't drive a lot and someone who works from home (I just learned something new, today) [source: MSN].

Anyway, at the end of the day, the key to saving is to do you research, ask questions and shop around.

UP NEXT

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Is your car over-insured? Learn how to tell if your car has too much insurance at HowStuffWorks.


Author's Note: 5 Things You Can Do to Lower Your Auto Insurance Rates

What's nice about researching and writing these articles is that I always learn something new. In fact, I like that low-mileage discount so much, I'm going to phone up my agent this week. However, I won't install a tracking device.

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Sources

  • Auto Insurance In Depth.com. "No Fault Insurance." (March 5, 2012) http://www.autoinsuranceindepth.com/no-fault-insurance.html
  • Car Insurance Rates.com. "Car Insurance Deductibles." (March 2, 2012) http://www.carinsurancerates.com/car-insurance-deductibles.html
  • Cheap Oklahoma Insurance.com. "Money Saving Tips for Insurance Consumers." (March 5, 2012) http://cheapoklahomaautoinsurance.com/eliminate-duplicate-coverage.php
  • Fuscaldo, Donna. "Car Insurance for less, and less driving." Bankrate.com. (March 5, 2012) http://www.bankrate.com/finance/insurance/car-insurance-for-less-and-less-driving-1.aspx
  • Lyons, Kevin. "Policies for celebrity parts: Mariah Carey insured her legs for how much? Insurance Quotes.com (March 2, 2012) http://www.insurancequotes.com/insurance-celebrity-body-part/
  • MSN.com. "Cheaper insurance if you drive less?" Sept. 9, 2011. (March 2, 2012) http://money.msn.com/auto-insurance/cheaper-insurance-if-you-drive-less-insurance.aspx
  • Travelers Insurance. "Understand the basic of auto insurance." (March 2, 2012) https://www.travelers.com/insurance-basics/auto/the-basics.aspx

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