Drive auto insurance lower

Compare rates, bundle policies and raise deductible

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The ideal way to save money is to exert effort once and automatically reap savings over and over again, every month. That's why examining your car insurance makes a lot of sense.

Auto insurance prices vary widely. On average, car insurance cost Americans $789 per vehicle annually in 2008, the most recent year of data provided by the National Association of Insurance Commissioners.

But your costs could be far higher or lower because of the state you live in. For example, Florida, New Jersey and New York were among states where the average was more than $1,000 annually. North Dakota's average expenditure was $503.

"In an age when people are cutting out cable television, it pays to look at car insurance," said Des Toups, managing editor of CarInsurance.com.

Here are ways to save on car insurance.

Compare. If you think all auto insurance rates within a state are about the same, you're wrong. Premiums can be very different for the exact same policies, depending on what factors an insurer chooses to emphasize in its rate formula.

"It's a calculated bet," Toups said. "The insurer asks, 'What's the least amount of risk we can take to make the most amount of money?' That's why the numbers are so different."

For the youngest drivers, comparison shopping could save about $1,100 a year, according to a study by CarInsurance.com. You might think you get better service from higher-priced insurers, but there seems to be no correlation, according to a study by the Consumer Federation of America.

"Many people stick with the same insurance carrier year after year without ever shopping for a better deal," Consumer Reports says in its guide to car insurance. "Blind loyalty to one insurer can cost you dearly."

You can request quotes by phone or online. For online quotes, you might want to set up a separate, free email account at Hotmail, Gmail or Yahoo to receive them so they don't litter your regular email inbox.

Check your state insurance department website for comparative information on insurers in your state. You can check on the financial health of an insurer at such rating agency websites as moodys.com and standardandpoors.com.

Bundling. Choosing an auto insurer is important, too, because you might want to get your home insurance through the same carrier. Auto rates vary more and probably are more expensive, so let that be the insurance that, well, drives your decision.

Like bundling your pay-TV, phone and Internet access with one company, you can get discounts for bundling your insurance with a single insurer, said Jim Fults, associate vice president of auto and personal insurance at Fireman's Fund Insurance. At Fireman's, he said, customers can save $400 to $600 a year by bundling auto and home insurance.

If you have multiple vehicles with the same company, your most expensive driver will be assigned, by default, to the most expensive car. So, if your teenager will drive the Honda far more than the Lexus, make sure the teen is listed as primary driver of the cheaper vehicle, Toups said.

Deductibles. A deductible is the part of the bill you pay out-of-pocket before insurance kicks in. The higher deductible you're willing to accept, the lower your premiums will be. Changing from a $200 deductible to $1,000 could save you 40 percent, says the Insurance Information Institute.

Fults suggests examining several different deductibles to see how they affect premiums.

"I think people would be really surprised, when they looked at changing a deductible of just $500 or $1,000, by what that does to the price (of premiums)," he said. "For some vehicles, it might move it considerably. In other cases, it might not."

Personal finance experts typically advise choosing the highest deductible you can financially stomach if it will give you big price breaks on premiums.

Big Brother devices. There are some new high-tech devices that insurers are starting to offer. For example, some devices will block the use of cellphones in a moving car, often used for teenage drivers, Fults said.

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