9 Ways To Lower Your Auto Insurance Costs

1. Shop Around

Prices vary from company to company, so it pays to shop around. Get at least three price quotes. You can call companies directly or access information on the Internet. Your state insurance department may also provide comparisons of prices charged by major insurers. (State insurance department phone numbers and Web sites can be found here.)

You buy insurance to protect you financially and provide peace of mind. It's important to pick a company that is financially stable. Check the financial health of insurance companies with rating companies such as A.M. Best (http://www.ambest.com) and Standard & Poor’s (http://www.standardandpoors.com/) and consult consumer magazines.

Get quotes from different types of insurance companies. Some sell through their own agents. These agencies have the same name as the insurance company. Some sell through independent agents who offer policies from several insurance companies. Others do not use agents. They sell directly to consumers over the phone or via the Internet.
Don't shop price alone. Ask friends and relatives for their recommendations. Contact your state insurance department to find out whether they provide information on consumer complaints by company. Pick an agent or company representative that takes the time to answer your questions. You can use the checklist on the back of this brochure to help you compare quotes from insurers and on the same coverage.

2. Before You Buy a Car, Compare Insurance Costs

Before you buy a new or used car, check into insurance costs. Car insurance premiums are based in part on the car’s sticker price, the cost to repair it, its overall safety record, and the likelihood of theft. Many insurers offer discounts for features that reduce the risk of injuries or theft. These include daytime running lights and anti-theft devices. To help you decide what car to buy, you can get information from the Insurance Institute for Highway Safety (www.iihs.org).

3. Ask for Higher Deductibles

Deductibles are what you pay before your insurance policy kicks in. By requesting higher deductibles, you can lower your costs substantially. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15 to 30 percent. Going to a $1,000 deductible can save you 40 percent or more. Before choosing a higher deductible, be sure you have enough money set aside to pay it if you have a claim.

4. Reduce Coverage on Older Cars

Consider dropping collision and/or comprehensive coverages on older cars. If your car is worth less than 10 times the premium, purchasing the coverage may not be cost effective. Auto dealers and banks can tell you the worth of cars. Or you can look it up online at Kelley’s Blue Book (http://www.kbb.com). Review your coverage at renewal time to make sure your insurance needs haven’t changed.

5. Buy your Homeowners and Auto Coverage from the Same Insurer

Many insurers will give you a break if you buy two or more types of insurance. You may also get a reduction if you have more than one vehicle insured with the same company. Some insurers reduce the rates for long-time customers. But it still makes sense to shop around! You may save money buying from different insurance companies, compared with a multi-policy discount.

6. Maintain a Good Credit Record

Establishing a solid credit history can cut your insurance costs. Insurers are increasingly using credit information to price auto insurance policies. To protect your credit standing, pay your bills on time, don't obtain more credit than you need and keep your credit balances as low as possible. Check your credit record on a regular basis and have any errors corrected promptly so that your record remains accurate.

7. Take Advantage of Low Mileage Discounts

Some companies offer discounts to motorists who drive a lower than average number of miles a year. Low mileage discounts can also apply to drivers who car pool to work.

8. Ask about Group Insurance

Some companies offer reductions to drivers who get insurance through a group plan from their employers, through professional, business and alumni groups, or other associations. Ask your employer and inquire with groups or clubs you are a member of to see if this is possible.

9. Seek Out Other Discounts

Companies offer discounts to policyholders who have not had any accidents or moving violations for a number of years. You may also get a discount if you take a defensive driving course. If there is a young driver on the policy who is a good student, has taken a drivers education course or is at a college out of the area without a car, you may also qualify for a lower rate.

Tips on Buying the Right Insurance:: Part 1

In India, insurance is broadly divided into life and general insurance. Life insurance covers a family against the financial implications of the death of the insured.

In addition, it may also provide certain survival benefits, in case the policyholder survives the policy term. Life insurance policies are broadly termed as "benefit policies".

General insurance is a broad term encompassing protection in several areas such as health (For some strange reason, it is not treated as a part of the life insurance sector), property, professional liability among others. These are usually "non-benefit" covers. They will only reimburse losses suffered and not confer any additional benefits to the policyholder.

We shall discuss individual heads of insurance and the products therein in greater detail in later articles.

Before deciding whether you require insurance or not (although all of us certainly require it in some form or the other), take the following into consideration:

The probability and impact of an event:

Assess the probability of an event and its financial impact on you, before zeroing in on a policy. Of course, an element of intuitiveness, is contained in the estimation but it is preferable to a random choice.

For instance, a shopowner in Mumbai can consider an earthquake as an event, which will occur infrequently but may still opt to insure against it, as the financial damage in case of an earthquake, could be significant.

Also, if the event occurs infrequently, the premium charged by an insurance company is also low. If an event occurs very frequently (like earthquakes in Japan), the premium will be high. Of course in the case of life insurance, although death is a certainty, the financial impact of death will vary with age, and the number of dependents.

Will I be adequately insured?

Merely having a cover is not enough. Take care to ensure that the cover is adequate for you. Too small a cover is virtually pointless, considering that it will not serve yours or your family's purpose.

Too much insurance will mean wastage of precious money towards payment of premiums. There are certain techniques to help you estimate the right quantum of cover. We will discuss these later.

Tips on Buying the Right Insurance:: Part 2

Can I afford it?

We should take care that insurance premiums do not eat into a huge chunk of our income. This is especially important in case of long-term contracts such as life insurance. This may mean working backwards, and calculating the size of the cover, based on the premium afforded by you.

Beware of agents who try to hard sell you high-priced insurance covers, as they may be detrimental to your long-term finances.

Two of the most common mistakes committed by customers in the case of life insurance are:

Income tax-led decisions:

While contributions towards life insurance premium of up to Rs 100,000 can be reduced from "gross total income" under section 80 C, there is no need to be guided solely by this consideration. Also, do not wake up to the need for insurance only in the final quarter of the year.

By doing so, you are only playing into the hands of agents who will exploit your urgent need to save tax and sell you policies that are not really suited to your needs. Let tax saving be incidental to choosing a cover, not the sole force behind it.

Bundling insurance and investments:

Unfortunately, globally, over the years insurance products has been sold more as an investment tool rather than a 'protection' vehicle. The nomenclatures change (endowment policies, money back policies, and unit-linked plans) but the underlying principle remains similar.

Agents often succeed in their efforts owing to the following factors:

• Providing rosy illustrations of future investment returns, conveniently side-stepping the basic question of whether the coverage amount contained therein is adequate or not.

• Stressing that an insurance-cum-investment policy compels the policy holder to be disciplined in their savings program and this aids in long-term wealth creation.

Several studies have proved that unbundling of the insurance and investment aspects lead to better overall results. Of course this will call for investing discipline on the part of the policyholder, but that is another story altogether.

I feel that apart from insurance agents, consumers too are responsible for the so-called mis-selling. Against this backdrop, we will look into specifics of different policies from the next article onwards.

TOP TIPS FOR HOME INSURANCE

There are several things to remember about insuring your new property:
=> Building insurance - This is usually paid in advance of moving, at contract exchange stage
=> Household contents insurance - The premium for this type of insurance is likely to change when you move - you may have more or less items or may be moving to an area with a different insurance rating. You will need to adjust the coverage before moving.
=> Car insurance - do not forget to inform the insurers of your car of a change of address
Some mortgage company deals tie you into buildings insurance. While this is not common, it is always worth shopping around to find the best insurance deals before making a final choice. The same applies to household and car insurance. You may find that your new area is cheaper with another insurance company than with your current one.