How to Cut Your Insurance Premiums

The biggest difference you can make is to buy a vehicle that qualifies for a discount or at least doesn't carry a surcharge. Ask your insurance agent about the cost of insuring vehicles you are interested in before you make your purchase decision. Here are several other ways that you can save money on your car insurance:

• Most companies give a break to those who drive less than 7500 miles a year. If you take public transportation instead of driving to work, your premium will go down. Out of the question? Try carpooling.

• Make sure you get all the discounts you are entitled to. You might qualify if your vehicle has an alarm, for example. Discounts used to be given for such safety features as airbags, but they're fading away as those items become more commonplace. Discounts might also be available if you insure your vehicles and your home with the same company. People who pass a defensive-driving course or don't smoke or drink often get discounts.

• Review the status of all the drivers in your family with your agent. Most discounts apply only to one portion of the policy, so don't expect dramatic savings.

• Increase your deductible for collision and comprehensive. Switching from a $100 deductible to $1000 can reduce the collision portion of your premium by 30 percent, said Luedke. You'll still be covered for catastrophes, but you foot the bill for fender-benders. Also, think twice about filing small claims with your insurance: Why risk a premium increase?

• Shop around. Instead of just renewing, study the fine print of your policy to see if its terms -- or your situation -- have changed. Another company might have better rates, but you won't know unless you shop. Most insurers give rates over the phone and many via online computer services, making it easy to compare premiums.

• Drop collision coverage on older cars. Claims are limited to "book" value, so you're not likely to get much anyway if you car is more than seven years old. A good rule of thumb is to drop collision when the annual premium reaches 10 percent of your car's value.

• Be a good driver. Avoid accidents and traffic violations and you will be rewarded with good-driver discounts. Bad driving is expensive. The "safer you can be" on the road, Luedke said, "the lower your premiums."

• Drop coverage for such extras as towing costs or the expense of renting a car while yours is in the shop. The savings are probably small, but your new-car warranty's roadside assistance provision may provide them at no cost.

• Have your teenager share the family car instead of owning his or her own. Be sure to tell your agent if your son or daughter makes the honor roll or moves away to college. Both qualify for discounts with most companies.

• If your group health insurance provides generous coverage, consider dropping the medical-payments portion of your policy.
• Keep your credit rating healthy. A growing number of insurers are considering a person's credit score when setting rates.