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It’s important to understand that auto insurance premiums
can increase, even in the absence of a claim. Costs associated with
auto repairs, labor, medical costs, fraud and theft continue to
rise. Subsequently, additional premium may be needed to cover such
claims-related expenses.
The good news for consumers is that auto insurance premiums have
stabilized in recent years. According to the Ohio Department of
Insurance, the top 10 auto insurance writers in the Buckeye state
(about 72% of the Ohio market) averaged a .2% increase in premiums
in 2004, translating to less than $2.00 per insured vehicle in the
state. Ohio’s auto insurance premium increases were 4.6% in
2003 and 4% in 2002.
Cutting your costs
There are ways to save on your auto insurance without compromising
your insurance needs.
- Comparison shop. Check with several insurance
companies and agents. Service, claims handling and company stability
should be a major considerations. Ask questions regarding the
claims handling process; how long they’ve been in business;
and the company’s financial stability or rating. Company
information is readily accessible on the Web. For mor information
on rating services, go to www.ohioinsurance.org/factbook/2005/chapter7/chapter7_n.shtml.
Ask family and friends for recommended insurance carriers.
- Raise your deductibles. You can reduce your
premiums if you shoulder the smaller losses. Increasing deductibles
from $200 to $500 could reduce your collision and comprehensive
premiums by 15–30%. A $1,000 deductible can save you even
more.
- Choose the right car. Before buying a car,
compare insurance premiums of similar makes and models. Premiums
are usually higher for luxury, sport and four-wheel drive models
because of repair costs and auto theft experience. Characteristics
such as vehicle size, weight and body type (two-door vs. four,
convertible, etc.) play a role in determining premiums. Vehicle
loss information is available online from the Insurance Institute
for Highway Safety at www.iihs.org/brochures/ictl/pdf/ictl_0905.pdf
- Contact the Ohio Department of Insurance for an auto
insurance shoppers’ guide. It provides all types
of information, including average Ohio auto premiums by company.
Download it from www.ohioinsurance.gov/consumserv/ocs/ocspub.htm.
- Eliminate collision and comprehensive coverages on
older cars with significant depreciation. A general rule
is to eliminate these coverages if your car is worth less than
$1,000, as it may cost more to insure it than what you’d
collect after a crash. Check on your vehicle’s value with
an auto dealer, bank or through Kelley’s Blue Book (www.kbb.com).
Be sure to maintain auto liability coverage.
- Ask about discounts. Many companies offer
a multiple-car discount or one for carrying homeowners or another
type of insurance with them. Some provide good student discounts
or a credit if a young driver is away at school more than 100
miles, with or without a car. Some companies provide discounts
for safety equipment or devices. There’s also a discount
for seniors completing a defensive driver course. (Click
here for a list of state-approved programs and for a list
of available discounts.)
- Eliminate duplication of coverages. If you
belong to an auto club that provides towing services or the auto
manufacturer provides it, avoid coverage duplication on your policy.
- Reduce your daily driving. The more you drive,
the more likely you are to be involved in a crash—and the
more you’ll pay for insurance. Some insurers offer discounts
for driving fewer than a predetermined number of miles annually.
- Drive defensively. An at-fault accident or
major traffic violation can affect future increase premiums. In
some cases it can place you in a high-risk category. Some companies
reward policyholders for remaining accident-free for a certain
period of time.
- Double-check how and where you park. Often
the cost of vandalism and auto theft is overlooked.
- Avoid filing excessive or fraudulent claims.
Claims occur on average every 11–12 years, according to
the Insurance Information Institute. The more claims you file,
especially small ones that you can cover yourself, the greater
the likelihood that future premiums will reflect this. Padding
claims also affects premiums.
- Keep tabs on your credit. An insurance score
is a snapshot of your insurance risk based on information in your
credit report. It reflects your credit payment patterns over time,
with more emphasis on recent information. Many companies take
insurance scores into account when assessing a potential auto
insurance risk. You can keep tabs on your insurance score via
the Web on www.choicetrust.com
for $12.95. To improve a score: Pay bills on time, keep balances
low on credit cards, and apply for and open new credit accounts
only as needed. Review your credit reports annually to check for
inaccuracies. If you find errors, notify the corresponding credit
bureau. Click
here for more information on credit bureaus and insurance
scoring.
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