Car Insurance

Ten basic steps you can take to reduce cost of car insurance

Reduce your car insurance premiums by parking in a garage.

The simplest way to knock as much as 20% off your premium is to put your car in a garage, either your own or a commercial establishment. Most thieves won't try to steal a garaged car, and of course, your chances of being sideswiped are dramatically reduced. "If you regularly park on the street or a parking lot, the best I can get for you is a standard rate," says Rick Longueira, an agent at Petrocelli Group in Flushing, N.Y. "A garage can mean the difference between a preferred and a standard rate: 20%."

>Reduce your car insurance premiums by stop smoking.

Insurers often consider smoking a dangerous activity when it comes to driving. First off, it's an indication that you have a penchant for high-risk activity. But there's another reason contends J. Robert Hunter, director of insurance for the Consumer Federation of America. "If an ash falls in a driver's lap while they're driving, they'll be looking at their lap instead of the road," Hunter says. Several insurers, including Geico and American Express, offer discounts for nonsmoking drivers in some states.

Reduce your car insurance premiums by spreading your risk between two cars.

Often, insuring more than one car with the same insurer can result in big discounts. Peter Daigle, an agent in Darien, Conn., gives the example of a pair of newlyweds he recently took on as clients. Before the wedding, the husband and wife each had their own auto policy, though both were covered by Nationwide Insurance. Daigle promptly shifted them into Nationwide's Multi-Car Discount Plan and now they're paying 20% less. "The husband was paying $1,546 a year for a Toyota Land Cruiser and the wife was paying $1,198," says Daigle. "Now, he pays $1,238 and she pays $956." Daigle notes, however, that it behooves you to ask about such discounts. Never assume the insurer will tell you about them unbidden.

Reduce your car insurance premiums by buying a conservative car.

You're in the market for a new car and you've got your heart set on a 1997 Infiniti J30. Well, keep this in mind before you make your final decision: The Infiniti, along with more than 100 other cars, including the Dodge Shadow, the four-door Honda Civic and the BMW 325i, is considered by insurance companies to be easily damaged or expensive to repair, and therefore is going to cost more to insure -- as much as 15% more. And for many companies, some cars are too racy to insure at any price. AmEx usually won't write a policy for a Porsche. State Farm and Allstate both publish rankings of cars by their risk category.

Reduce your car insurance premiums by loading up on safety equipment.

Insurance companies bestow big discounts on drivers of cars with some or all of the latest safety features. Some states, including Florida and New York, require discounts on collision coverage for cars equipped with antilock brakes or other safety features. Geico offers 30% off the injury-coverage premium for an airbag, and 10% off the injury-coverage premium for automatic seatbelts. A word of warning: Several recent studies indicate that, contrary to all expectations, airbags and automatic seatbelts may not significantly reduce injuries, and antilock brakes may not cut the collision rate.

Reduce your car insurance premiums by raise your deductible.

When an insurance salesperson asks you how big a deductible you want, your first instinct may be to say, "The lowest possible." That way, you pay the least out of pocket if something happens to your car. But raising deductibles is one of the easiest ways to cut your bill substantially.

For example, Geico's premium on a 1989 Saab 9000 Turbo in suburban Connecticut goes from $915 for a $50 deductible to $709 for a $500 deductible, a savings of $206 a year. In general, increasing your deductible from $250 to $500 reduces your premium by 15% to 25%. If saving on your monthly payments is worth more to you than the possibility of high out-of-pocket expenses in case of an accident, raise your deductible.

Reduce your car insurance premiums by take a defensive driving course.

Most insurance companies offer up to 10% off for drivers who volunteer to take a state-approved defensive-driving course. But before you sign up, check with your insurer. In some states, the discount applies only to drivers over age 55.

Reduce your car insurance premiums by retiring early.

Did you recently mark your 55th birthday by retiring? If so, operators are standing by for your call. In the never-ending search for drivers who are mature, who don't spend too much time on the road, and who pay their premiums promptly, insurers have discovered early retirees. And they're offering big discounts to sign them up. "Young retirees are better risks," says IDS actuary Bill Kocken. "They're not in a hurry. They're stable, and they tend not to change carriers." Allstate was one of the first to offer young retirees a 10% discount, and other companies have followed suit.

Reduce your car insurance premiums by drop some coverage.

If you have an old car worth less than $1,000 that you use to haul the recycling on weekends, your premiums are likely to cost more than the book value of the car. So consider dropping collision or comprehensive coverage. Since collision can account for 50% or more of the cost of your premium -- and covers only the car's replacement value -- the savings could be significant.

Reduce your car insurance premiums by insuring your car and home through the same company.

Most insurers offer discounts to customers who combine their home and auto policies. AmEx not so long ago quoted a suburban New York couple a home-and-auto rate of $1,582 per year. Purchased separately, the coverage would have cost $1,686. Allstate quoted the same couple a combined annual rate of $1,733 for policies that would cost $1,792 if purchased separately. And had the couple been ticket -- and accident -- free for the past five years, they would have saved an additional $236.

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