You Can Still Get Auto Insurance and Pay Less

With the fate of Proposition 103 in the hands of the California Supreme Court, you may be wondering if you will ever get the 20%-plus rollbacks in auto insurance rates mandated under the sweeping initiative.

But there are many ways you can cut your auto insurance bills anyway, regardless of whether Proposition 103 is upheld.

Shopping around for low rates, increasing deductibles, eliminating unnecessary coverage and taking advantage of all discounts could save your family hundreds of dollars, insurance experts say.

Here are some time-honored tips to help you cut your auto insurance bills:

- Shop around.

Since the passage of Proposition 103, some companies are no longer selling new policies, while others are still selling but are not very aggressive in seeking new business.

Nonetheless, insurance is still widely available. At least 53 insurance groups, representing about 87% of the state auto insurance market, are still selling policies, according to the Independent Insurance Agents and Brokers of California.

Shopping around clearly can pay off, since prices vary greatly. A May survey by the state Insurance Department showed, for example, that a married couple in Alhambra in their mid-40s with no accidents or citations could pay as much as $1,511 a year at Progressive or as little as $810 at Mercury Casualty. Bay Area Consumers’ Checkbook, a San Francisco consumer magazine, found that the average difference between the highest and lowest quotes it received in a 1986 survey for 42 different sample policyholders was $999.

Such savings can easily offset the value of staying with the same high-premium company, even if the company you have been with for a while might be more hesitant to boost your rates if you have an accident.

“It’s never going to hurt anyone to shop around,” says Joe Annotti, spokesman for the agents and brokers group. If you can’t find lower rates--perhaps because of a reluctance by some companies to sell or quote low rates since Proposition 103--you can always renew with your present firm, he argues.

J. Robert Hunter, president of the National Insurance Consumer Organization in Alexandria, Va., argues that if Proposition 103 is upheld, there may be even more incentive to shop around. First, you are likely to have better price information, since rates under 103 must be filed at the state Insurance Department. Also, he argues, if you switch companies under 103, your new insurer won’t be able to cancel your policy for no reason in the first 60 days, as it can do now.

Also, firms with the lowest rates often offer the best claims service and receive the fewest consumer complaints, says Ellen Griffin, a spokeswoman for the state Insurance Department. However, that can be somewhat misleading, because companies such as 20th Century that consistently offer the lowest rates also insure the safest drivers. So they will tend to have lower claims and thus fewer complaints, Griffin says.

To help you in shopping, call several agents and firms selling directly (20th Century and Allstate, for example) for price quotes. Make out a standard list of questions that you will ask each.

Also, get the state Insurance Department’s May survey, which lists premiums of the 15 insurance firms with the biggest market shares. You also can get the agency’s survey of consumer complaints, released in June. For free copies of both, call the department’s consumer hot line at (800) 233-9045.

The October, 1988, issue of Consumer Reports magazine also contains a survey of premiums and complaint ratios.

- Re-evaluate your collision coverage.

You may be among many consumers that set deductibles on collision coverage as low as $50 or $100. You can cut your insurance bills considerably--and save money in the long run, even with accidents--by taking higher deductibles.

If you increase your deductible from $50 to $500, you can cut your collision premium by as much as half, from about $350 to $175 on average, says Robert M. Krughoff, president of the Center for the Study of Services, which publishes Bay Area Consumers’ Checkbook. “Why pay $175 extra in premiums every year” when if you don’t have an accident in three years, you will have saved enough to pay the $500 deductible anyway, he argues.

“You should insure for a catastrophe, not a nuisance,” agent spokesman Annott says in arguing for higher deductibles. He and others note that many people don’t make claims for accidents where damage is less than $200 or $300 anyway, for fear their rates will be boosted.

Also, you may want to review whether you really need collision coverage at all. If you car is at least five years old, and is not an expensive make like a Mercedes or BMW, you should start thinking about dropping collision coverage altogether, advises Hunter of the National Insurance Consumer Organization. If your collision premium is equal to 10% or more of your car’s value, you definitely should drop collision coverage, Hunter says. So if your collision premium is $200, and your car is worth $2,000 or less, drop collision, he says.

- Re-evaluate your medical coverage.

You may find you don’t really need medical coverage at all because health insurance you already have may cover any injuries you sustain in an accident, Hunter argues.

One possible risk in dropping medical coverage may be if passengers in your car are hurt in an accident, Hunter says. But they may be able to use their own health insurance, or lacking that, they can sue you and obtain medical expenses under your liability coverage, he says. The advantage of medical coverage is really convenience--being able to reimburse your passengers faster, Hunter says.

Accordingly, consumer advocate Krughoff suggests, get minimal health coverage to fill in possible gaps in your health insurance or to cover medical expenses for passengers who may not have health insurance. Beyond that, he argues, spend your money to boost your liability coverage or obtain a more comprehensive health insurance policy that covers more than just auto accidents.

- Ask about discounts.

You could be missing an opportunity to save 20% or more on your insurance rates simply because you haven’t asked about all discounts available to you.

Discounts are offered at many firms for good drivers, good students, senior citizens, nonsmokers, nondrinkers or members of car pools. Rate cuts also may be available if your car has anti-theft devices, air bags or automatic seat belts, or if your car is not used for commuting or just for short commutes.

Also, you may get a break if you buy homeowners’ or other insurance with the same company or if you have more than one car insured with the same firm, consumer advocate Krughoff says. You may also get a break if you drive less than 12,000 miles each year, he says.

Your insurance agent, if you use one, should be telling you about such discounts to find you the lowest possible rate. “If your agent is not doing that, it is time to switch agents,” says Annotti of the state agents and brokers group.

One word of caution, however: Don’t skimp on liability or uninsured motorist coverage. Liability coverage will protect your assets and wages in a catastrophic accident, while uninsured motorist coverage is necessary in urban areas such as Los Angeles, where many drivers simply can’t afford insurance.

Judith Bell, director of special projects in the San Francisco office of Consumers Union, publisher of Consumer Reports magazine, says you should strive for minimum bodily injury liability coverage of $100,000 per person, $300,000 per accident and $25,000 for property damage liability.

Homeowners, particularly in areas such as Los Angeles with high home prices, should consider even higher liability limits, Bell argues. Or you could consider getting so-called umbrella policies that cover liability for your home and cars. Many homeowners that opt for umbrella policies of, say, $1 million, may save money on liability coverage overall, she says.

Bill Sing welcomes readers’ comments and suggestions for columns but regrets that he cannot respond individually to letters. Write to Bill Sing, Personal Finance, Los Angeles Times, Times Mirror Square, Los Angeles, Calif. 90053.