There's nothing sexy about auto insurance.
But a few tips, and the right outlook, can help you shop around, understand the value before you buy and maximize what you're getting for those premiums. Here's how:
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1. Pinpoint your financial weak spots
While most people could cover a $500 deductible, a $500,000 lawsuit would be a different matter. So why do so many consumers pay extra for low deductibles and carry close to the minimum on liability coverage?
"Shift the money around to the things that could wipe you out," says Jack Hungelmann, author of "Insurance for Dummies" and an agent/consultant with Corporate 4 Insurance Agency of Edina, Minn.
Raise your deductible (bank that amount for emergencies) and increase your liability coverage, he says. Your premiums should remain roughly the same.
Hungelmann's rule of thumb: In a society where critical care bills can easily cost six digits, "nobody should carry less than $500,000 per person" in liability coverage, he says. (To compare insurance policies and quotes, visit Insureme.com, a Bankrate company.)
The good news: Taking your total liability coverage from the standard $300,000 to $500,000 will only cost about $60 more a year for two cars (or for one car if you're a younger driver).
"But younger people who have a fairly low net worth don't need hundreds of thousands in liability coverage," says Bill Feldhaus, associate professor of risk management and insurance at Georgia State University.
Best bet: Talk with an insurance professional you trust and come to a decision on deductibles and liability coverage that works for you.
"You always want to look at the trade-offs -- what do I save in premiums vs. how much risk do I take on?" Feldhaus says.
Another place to shave some money from the premium, says Hungelmann: personal injury protection, also known as medical payments coverage. If you already have health insurance for yourself and your family, that would cover your medical bills after an accident, he says.
Some states mandate some medical payments coverage, but if you have health coverage, "don't buy any more than you have to," says Hungelmann.
2. Don't just consider your total liability
Many insurance policies specify that the company will pay up to $300,000 in total liability coverage if you are found liable for an accident, but only $100,000 for each person injured. That means if you are at fault in an accident that leaves one person with a $200,000 lawsuit, you will be on the hook for half, even though you thought you had $300,000 worth of coverage.
Instead, says Hungelmann, have your agent write the policy so that the total amount paid per accident and per person are the same. That way $300,000 in coverage means $300,000 in coverage, no matter how you divide it.
3. Consider buying an umbrella policy
If you have considerable assets or are likely to have them in the future, consider an umbrella policy that would cover your home and auto. Umbrella policies usually start at $200 to $300 a year for up to $1 million worth of coverage.
4. Seek out good advice
If you're shopping for an agent, ask about experience. In many places, agents need only a week of training before they can sell insurance, says Hungelmann. His recommendation is to seek out a pro who has gone back to school to earn industry credentials. Designations to look for include: CPCU, or Chartered Property Casualty Underwriters, which requires about 1,000 hours of extra classes; CIC, or Certified Insurance Counselor, which requires about 100 extra hours; and the AAI, or Accredited Adviser in Insurance, which also requires about 100 hours of study.
5. Keep a good credit rating
Many insurance companies use your credit rating to determine whether to insure you and how much to charge.
6. Sign up for rental insurance
If you don't have an extra car in the garage, make sure your policy covers the cost of a similar-sized rental should your car need repairs after an accident. While a week may seem like the blink of an eye to a body shop, a one-week rental could add hundreds to your out-of-pocket costs after an accident.
7. Shop around
"You can pay more than double for the same insurance, so it does pay to shop around," says Bob Hunter, director of insurance for the Consumer Federation of America.
Most states offer price guidelines for various types of coverage in different areas and they put the information online. Or call your state insurance department and ask if they have pricing information available.
If you call around for quotes, include a few brand-name companies as well as a few independent agents who will shop more than one company for you. Be aware that agents represent companies that pay commissions, and sometimes the best deals come from companies that don't pay commissions, says Hunter.
And don't assume that you'll pay more for a well-known entity. "Insurance companies with the best satisfaction often have the best price," he says.
8. Be specific when shopping rates
Don't just ask for a quote. Give the agent exact numbers on the coverage you're comparing.
And beware of the variables, says Dick Luedke, spokesman for the State Farm Insurance Companies. Are you sure that the deductibles, coverage amounts and liability limits are the same? What about provisions for a rental car or roadside assistance?
"There are a lot of little extras you can get on an insurance policy, so make sure you're making that comparison apples to apples as well," he says.
See how Bankrate ranks your insurance and compare insurance rates.
9. Take advantage of every discount
If you store your car in a garage or drive less than a certain number of miles each year, or have gone a certain number of years without an accident or ticket, your company will probably give you a discount. The same is true if your car has safety features like airbags, anti-lock brakes or anti-theft devices like a tracking system or alarm.
You also could get a break if you have more than one car on your policy, if you buy your policy through the same company that insures your home, or if you pay your premium annually.
In addition, an extra class or course could shave dollars off your premiums. Some companies will give senior drivers a discount for taking a defensive-driving course. Likewise, teens often can get better premiums by maintaining good grades or taking drivers' education courses.
10. If your teen is away, notify your insurance
According to industry professionals, teen drivers add anywhere from 50 percent to 500 percent to a premium. However, many insurance companies will discount the rate when a child is away at school. Check yours.
Another option is even cheaper, but also more risky. If children are going to school more than 100 miles from home, you can take them off the policy and save a serious chunk of money, according to Loretta Worters, vice president with the Insurance Information Institute, an industry organization. Two caveats: The kids can't drive at school unless they get their own insurance, and if they come home for a break, don't loan them the car.
11. Do the math before dropping collision
This is one of those cost-saving concepts where getting a good deal means running the numbers and making sure it meets your gut-check test. If you are driving a 12-year-old car worth $2,000 and the car is totaled, the most you'll get from the insurance company is roughly $2,000. Would you rather bank the money you're paying in collision insurance toward a new car? The critical questions to ask: How much of your premium is collision insurance? And could you lay your hands on $2,000 if you needed a new car tomorrow?
12. Shop service, as well as price
The real question with insurance is how does the company treat you when you file a claim?
"Some companies view the policy holder as a member rather than sort of an enemy, and will help you get a claim settled at a reasonable amount (of time), and some don't," says Hunter.
Your state insurance department and the National Association of Insurance Commissioners keep records of the number of complaints and will share the information. And the NAIC Web site has complaint ratios, so you can actually compare the service records of various companies, says Hunter.
You can also ask friends and family what kind of experience they've had with claims with various companies, says Luedke.
After a major claim, a good agent will also act as a coach, says Hungelmann, advising you on the way to present the best case to the adjuster and helping you in a dispute if the adjuster makes a bad call. With an Internet-based company or one you can reach only through an 800-number, you may sacrifice personal service just when you need it most.
Another smart strategy is to make sure the company has the financial resources to honor its promises. You can also check with companies like A.M. Best Company Inc. and Standard & Poor's Insurance Ratings Service to research a company's financial solvency. Cheap coverage does you no good if the company takes your premium and folds.
13. Understand the claims process before you buy
Have your agent walk you through the claims process upfront. Will your insurance pay for brand-name or generic parts to fix your car after an accident? Will you be limited in your choice of mechanics or body shops? If the language in your contract is unclear, have your agent put anything you don't understand in writing.
14. Ask about 'diminished value'
This is a hot button in the insurance industry, and the subject of many lawsuits. The big debate: Is a car worth less after an accident? If so, should the insurance company have to fix the car and pay you the difference? Ask your agent and call your state insurance department to find out about current regulations and rulings.
15. Call your agent soon after an accident
"Most insurance companies have time limits, usually 48 hours," says Worters. If you want to be certain the company will cover your accident, make that call a priority.
16. When you make a claim, start a file
Include a copy of your accident or incident report. Write down your policy number and your claim number. The latter can be the "key to the vault" when it comes to getting information from your insurer, says Hungelmann.
Also vital is the name of your claims adjuster and a cell phone number. Typically, an adjuster is "next to impossible to reach because he's out in the field," says Hungelmann. And get the supervisor's name and number, too. "Every adjuster has a supervisor," says Hungelmann. "They just don't tell the customer that."
Supervisors are "rarely out in the field," he says. So he or she "will be able to help you with your claim."
17. Do your part in furthering the claims process
Every company has its own system, and the amount of damage to your car can impact the process, too.
Some companies could ask you to get a couple of estimates, but most have preferred shops that they work with and trust, says Hungelmann. Usually, you'll have a choice of several in your area, he says.
This can be beneficial if the shop uncovers hidden damage that wasn't included in the estimate. The shop will usually phone the company directly, get an OK, fix it, "and you won't have to get involved," says Hungelmann. Many times, if you go with the recommended shop, you will also get a guarantee on the repairs good for the life of the car, he says.
But you have the option of taking the car wherever you want, he says. "And it's up to the insurance company to work out the price with the shop."
18. Include everything in your loss estimates
For instance, if your car is totaled, you may be entitled to recover the sales tax and registration fees for your replacement car. Contact your agent and your state insurance department to find out what you should include in your estimates.
19. Press for what you need
Adjusters are human. "And like referees, they might make a bad call once in a while," says Hungelmann.
It's more effective to keep your temper in check and work your way up the food chain. If a claim is denied or if you think the amount the company offered is not enough, get the adjuster to put the reasons in writing. Compare the explanation the company gives with what's written in your policy.
Your smartest move is to have your agent intercede on your behalf.
"Normally, if the agent goes to bat for the customer, they can get it resolved," says Hungelmann.
You can also talk to the manager of the claims department and ask to have the matter reviewed, or even file a complaint with the state insurance department.
If the claim question involves property value, you might consider using your policy's appraisal clause, says Hungelmann. You and the insurance company each hire one person to work out an agreement. (For instance, a consumer disputing the value of a totaled car could hire someone familiar with car values, like a local dealer.)
If the two appointed representatives can't reach an agreement, together they select one neutral third party (called an "umpire") to make the decision.
"I've used the appeals clause a handful of times myself in this business," says Hungelmann. "It's pretty helpful."
You can also take a shortcut with the appeals clause. You and the company agree on an umpire, who will make the call alone. "It saves you a bunch of money and a lot of time," says Hungelmann.
20. If you switch, notify your old company
Tell your old company in writing that you've obtained new insurance and are canceling your old auto policy. (Check the fine print beforehand to be sure that the new policy picks up immediately without any gap.)
If your old company goofs and reports to the state that you are driving without insurance, some states begin steps to suspend your driver's license. If you get a warning letter from the state, address the situation immediately. Otherwise, your next routine traffic stop could be anything but routine.
-- Posted: July 14, 2008
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