Driving Your Auto Insurance Premiums Down
In the last few years, auto insurance premiums have become a major household expense for many families. And despite Proposition 103, the 2-year-old initiative that once promised to drastically lower your rates, it does not seem that overall auto insurance rates are coming down any time soon.
But what Proposition 103 did do was require all insurers to take another look at how they compile insurance rates. That is now resulting in a wide array of new “discounts” for everything from having certain automotive options to being longtime customers.
Although some discounts--like those for good students--have been around for ages, these company-by-company reviews have often resulted in bigger breaks. The Proposition 103-generated rates will soon be applied too, so now might be the ideal time for Southern Californians to look at ways they can reduce the total by more effective use of these discounts.
Notably, there is little that is standard in this area. While premium cuts for so-called good drivers are now universal, nearly every thing else varies company to company.
At least one insurer gives breaks to nonsmokers, for example, while another doesn’t care if you smoke, but will give you a rate cut if you are a scientist. Some companies apply discounts automatically, while others need to be reminded.
The point is, consumers need to be aware of what’s available, and they need to shop around.
It can make a big difference on your insurance bill. For example, Allstate says a Canoga Park couple would pay $1,405 every six months for a policy on a 1990 Ford Taurus if they didn’t take advantage of any discounts. But their premium would drop to $654 if they qualified for all the discounts available. Savings: $751.
What are those discounts?
Good drivers, by law, now qualify for a 20% discount from all California auto insurers. If your car includes passive restraints, such as air bags and automatic seat belts, Allstate will also cut the portion of the premium that relates to medical payments between 10% and 30%--depending on the type of passive restraint.
Allstate also gives discounts for anti-lock brakes--that’s 10% off the bodily injury portion of the premium; and discounts for having more than one car insured with them. If you also insure your home through Allstate, that’s another 15% break.
Persistence counts too. So-called renewal discounts are now relatively common. And all California insurance companies must offer “defensive driver” discounts to those age 55 or older who take a defensive driving class--that’s also the law.
But that’s just the beginning.
Farmers Insurance also offers big discounts to nonsmokers. A run-of-the-mill policy for one two-car family would cost $994.20, for example, but that rate would drop to $906.17 if the couple quit smoking. The rate will drop further if their cars are equipped with anti-lock brakes and passive restraints--and they’ll cut the rate even more for people who car pool. End result: The premium drops to $482.39.
Meanwhile, Twentieth Century gives a special break to scientists, teachers and engineers. (The exact amount of that discount is currently unclear because the company’s rates must be approve by insurance regulators, but in the past this discount amounted to about 8%.)
And many insurers give lower rates to students with good grades.
How do you get the discounts?
Typically, insurers say discounts should be given out automatically. If your insurance application says you are a nonsmoker, for example, you should get the premium break without asking.
But sometimes it just doesn’t work that way.
Why? Some say insurers won’t give any breaks to those who don’t demand them. But insurers maintain there are far less sinister reasons for not getting the discounts.
For one thing, consumers are sometimes hesitant to reveal more information than they think is necessary. In many cases, insurers say the more lines there are on the application, the more lines consumers leave blank. Those blank lines might cost money.
Insurance staffers are also not immune to making mistakes. So it makes a lot of sense to ask if you aren’t sure whether you’ve received some of the discounts you are entitled to.
Moreover, getting some discounts requires planning ahead.
For example, the biggest discount today is that afforded to good drivers. So it makes more sense than ever before to drive carefully, and if you do get a traffic ticket it is worth your while to attend traffic school, which negates the ticket.
You may hate spending eight hours of your time getting a primer on the rules of the road, but consider how much money it will cost you if you don’t. One speeding ticket might mean the difference between a $1,000 insurance premium and an $800 premium. And if there is more than one moving violation on your driving record, your insurance rates are guaranteed to rocket into the stratosphere.
Aside from granting rate cuts to good drivers, insurers now apply massive “surcharges” to bad drivers. Those surcharges have always been around, of course. But insurers say that under new rules spurred by Proposition 103, they are now generally much bigger than ever before.
Insurance is also something to consider when buying a car. Many people think to check with their insurance agent before buying. But it is helpful to know what questions to ask. In the past, things like anti-lock brakes didn’t usually matter. Now you need to find out whether your insurer cares about options in addition to car make and model.
At Farmers Insurance, for example, anti-lock brakes will often result in a much lower premium. In one hypothetical case, the six-month rate dropped from $634 to $578 because of this variable alone. Presumably over a period of time, those anti-lock brakes will pay for themselves.
On the other hand, the rate cut they give for automatic seat belts amounts to only a few dollars. It might be more cost effective to buckle-up on your own.
