When it comes to shopping for auto insurance, 49 percent of Americans cite price as the deciding factor when buying policies, according to comScore’s 2010 Online Auto Insurance Report. Here are seven tips to help price-conscious shoppers save money on auto insurance.

1. Assess your needs
Before you even look for a policy, you need to evaluate your needs. With too little coverage, you could be putting your assets — such as cash or investments — at risk. But with too much coverage, you could be throwing money away on high premiums.

Auto insurance has a number of components, the most common being liability (bodily injury and property damage), comprehensive and collision. At the very least, you’ll need liability coverage meeting the limits that are required by your state. Then there’s collision, which covers the cost of repairs or replacement of your car after an accident. Comprehensive coverage covers your vehicle damage or loss follow natural disasters, theft or vandalism.

Grouping auto insurance, homeowner’s insurance and life insurance policies with the same company can result in premium discounts.

Go over each element of your policy and evaluate what you really need.

2. Drop collision, comprehensive on older vehicles

The older your vehicle is, the less comprehensive and collision coverage pays off. In general, you should carry only comprehensive and collision if the annual premium is no more than 10 percent of your car’s Blue Book value.

Dan Burghardt, an independent insurance agent in New Orleans, says that if a car is more than 10 years old and paid off, you might consider uninsured motorist coverage instead of collision coverage.

Uninsured motorist coverage “is a good alternative to full coverage when your car is old. It can save you a fair amount in premiums,” Burghardt says. That amount depends on factors such as your vehicle, driving record and location.

3. Raise your deductible

The higher your deductible, the lower your premium. Deductibles can be as low as zero and as high as $1,000 for most auto insurance policies. Susan Beukema, an agent with Farmers Insurance in West Des Moines, Iowa, says that raising your deductible can reduce your rate. Depending on the driver and their vehicle, boosting it from $250 to $1,000 could save as much as 20 percent on your premiums.

You should carry only comprehensive and collision coverage if the annual auto insurance premium is no more than 10 percent of your car’s Blue Book value.

“If you are not prone to accidents, then I would suggest a higher deductible. You’ll save more by paying lower premiums, and you’ll only come out of pocket (for expenses) if you have a claim,” Beukema says.

The riskier the driver or the higher the value of the vehicle, the more of an effect that raising deductibles can have on lowering rates. The trade-off is that you, the driver, assume more of the risk.

4. Ask for discounts

Insurance companies offer all sorts of discounts but they don’t always roll out a list of what they’re offering. You often have to know what to ask for. Discounts typically are offered for such things as anti-lock brakes, antitheft devices, daytime running lights, air bags, high student GPAs and spotless driving records.

Some companies also offer discounts to motorists who drive less than 7,500 miles a year. Burghardt, the New Orleans agent, says auto insurance companies like Progressive are offering policies that base rates on your driving habits, including how you drive and how much you drive.

“It can take up to 50 percent off the rate. If you’re only driving to the grocery once a week or have a third car you barely use, consider it,” Burghardt says.

5. Combine policies

The biggest savings can come from combining two or more policies. This includes not only merging the policies of two or more drivers, but grouping auto insurance, homeowner’s insurance and life insurance with the same company. Many companies also offer multipolicy discounts for unmarried couples who live together.

“The merging of two auto policies can save a lot of money, sometimes up to 20 percent for each person. Most people think you have to be married, but that doesn’t apply anymore with many companies,” Burghardt says.

6. Do some shopping

Andrew Rauch, an agent with Kevin Kane State Farm Insurance in San Diego, says drivers always should shop around for the best rates. Insurers generally reward their customers for loyalty but the market forces that determine rates can change frequently. While one auto insurance company may offer the best rate this month, that could change dramatically six months from now.

Maintaining a good driving record can earn you a thumbs-up from your auto insurer in the form of lower premiums.

“I’d say you should shop around about two times per year, although you don’t want to bounce around too much because you could lose that loyalty discount,” Rauch says.

7. Maintain good credit and driving records

Beukema, the Farmers agent, says drivers should maintain good credit scores by paying their bills on time, minimizing their debt ratios and managing their credit responsibly. Many insurers use credit scores to help gauge risk. The thinking is that if you don’t pay others on time, you won’t pay them on time. Insurers also argue that financially stressed people tend to be involved in more accidents and are, therefore, a greater risk.

Maintaining a clean driving record also can have a major effect on premiums. Because drivers with moving violations tend to be involved in more accidents, insurers can charge significantly higher liability premiums for less-than-perfect drivers. In some cases, just one ticket could cause your premium to jump by 20 percent.

“You should always practice safe driving because it’s going to save you money. Getting tickets or getting in an accident will all come back to you in higher insurance premiums,” Beukema says.

–Craig Guillot

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