Smart Shopper's Guide to Auto Insurance

Are you spending more than necessary to insure your car? The auto insurance premiums you pay can vary significantly based on the insurer, your coverage, and the type of car you drive. Other factors that influence cost are the age, gender and driving records of family members on the policy and your state of residence. Read what the California Society of CPAs (www.calcpa.org) says you should know about auto insurance.

UNDERSTAND THE COVERAGE YOU’RE BUYING
An auto insurance policy actually includes a number of different types of coverage. These include liability, comprehensive and collision insurance.

Liability insurance covers injuries to other people, including medical bills related to bodily injury and lost wages. It also pays for the repair or replacement of property other than your own, damaged in an accident. Liability coverage is often quoted in a series of three numbers, representing thousands of dollars of coverage, such as 50/100/25. The first number represents the bodily injury liability maximum for one person injured in an accident; the second number is the bodily injury liability maximum for all injuries in the accident; and the third number is the property damage liability maximum for an accident. Individual states establish the required minimum level of auto liability insurance.

Comprehensive and collision insurance cover damage to your car due to fire, flood, theft or collision. The medical insurance component pays all or a portion of the medical expenses for injuries to you and other riders in the car.

ASSUME MORE RISK WITH HIGHER DEDUCTIBLES
Your auto insurance deductible represents the amount of the loss you must absorb before the insurer makes a payout. If you are willing to accept a higher deductible, you will pay lower premiums since you are able to absorb the cost of small losses and rely on the insurance company only to cover the larger losses.

DROP COLLISION AND COMPREHENSIVE COVERAGE ON OLDER CARS
It may not be cost effective to have collision or comprehensive coverage on older cars. The amount the insurer would pay for the car’s repair or replacement would be relatively small even if the vehicle were severely damaged in an accident.

CHOOSE YOUR CAR WISELY
The cost of your car and its make and model will affect your insurance premiums. Cars that are expensive to buy and to repair or that are favorite targets for thieves are more costly to insure. This is particularly true of sports cars and other high-performance vehicles. It’s a good idea to call your insurance carrier to check on the cost of coverage for a car you are considering buying.

DISCOUNTS CAN LOWER YOUR INSURANCE COSTS
Many insurers offer discounts for cars with safety features such as automatic seat belts, air bags, and anti-lock brakes, and for installing anti-theft devices. You also may qualify for a discount if you buy both your auto and homeowner’s insurance from the same insurer.

Discounts may also be available for insuring more than one vehicle, for student drivers with good grades, for drivers over 50, for drivers that stay with the same insurance company for a number of years, and for motorists who drive a lower than average number of miles a year. Be sure to check with your insurer.

SHOP AROUND
Auto insurance premiums for the exact same coverage on the same car can vary widely between different insurers, so it pays to shop around. Ask you friends or business associates for recommendations or call your state insurance department. But CPAs caution that you shouldn’t select a policy based on price alone. The insurer you select should be financially sound, offer fair prices and provide excellent service.