The Smiths Shop for Auto Insurance

Home Home and Auto Automobiles Insurance The Smiths Shop for Auto Insurance

"That does it! I've had it with these people!" The words fairly exploded from John. Just a quick glance at his red face confirmed his anger. Mary knew that her husband would calm down, but she wondered which piece of mail had caused this outburst.

"They want to raise our car insurance by 20%! That's nuts!" Now Mary, too, was a bit perturbed. They had been with the same company for years without a claim. Yet, every time their renewal came due the rates seemed to climb to ever higher levels.

Once John calmed down, he and Mary decided that they would take the time and effort to see what could be done to bring this expense back to an affordable level. John would call their agent and Mary would do some library research.

The next morning John did call their insurance agent Russ. It wasn't the first time that Russ had an irate client on the phone. He explained that auto coverage wasn't as simple as some people thought. The insurance could be used to cover both property and medical bills. In some cases it would insure the owner of the car for damage he caused and in others it would cover damage caused by someone else.

Liability insurance covers you for losses caused that are your fault. Your error could have caused property damage or medical bills to be incurred. Liability insurance covers those costs.

Collision and comprehensive coverage pays for damage to your car. Collision covers the cost of repairing your car up to it's depreciated value. Unlike some other insurance, it will not replace your car. Comprehensive coverage is for damage to your car that's not caused by a traffic accident. Together these coverages are the most expensive part of your insurance bill.

Medical coverage is for people who are injured either inside or outside your car or someone else's car you are driving when you are involved in an accident. The payments are made even if you aren't liable for the accident.

Uninsured Motorist coverage is to pay for damages caused by another driver who does not have insurance. As insurance costs go up, more and more drivers are electing to go without insurance. Naturally your chances of meeting one of them by accident increases, too.

One of Russ' suggestions that John did think had merit was to either raise their deductible or drop collision coverage altogether. He explained that by increasing the deductible from $200 to $500 the cost of collision coverage could be reduced by up to 30%. In fact, on the Smith's older car he suggested that they consider going without collision insurance. The car had a book value of about $2,000. Even if the car were a total loss, the insurance payout wouldn't be very big after the deductible were subtracted.

After their conversation John still felt that it would be wise to compare rates from different companies. He was also curious to see what his wife would find with her research.

Mary did learn some interesting facts about auto insurance. According to the National Association of Insurance Commissioners, the average car in the United States costs $650.17 to insure each year. They assumed that all cars carried liability insurance, but not necessarily collision or comprehensive coverage.

She was glad that they didn't live in New Jersey where the average insurance cost $963 or Hawaii at $961. Curiosity caused Mary to check out which state was the least expensive. South Dakota won the award with an average cost of $396.

Her reading suggested that she contact a number of agents to compare rates. Costs can vary significantly from company to company even in the same city.

That evening Mary was pleased to show John the list of possible discounts she had found. "Hey Hon, think you could qualify for this 'mature driver' discount? It's for drivers over 50."

John ignored the obvious baiting. He did peak over Mary's shoulder to look at her list. "No, but I could make the good driver, car-pool and multi-car discounts." Mary's research indicated that car-pooling was worth about 10% and the multi-car discount subtracted another 15%.

They scanned the list together. There were discounts for anti-theft devices (10%), seatbelts and airbags (up to 30% on medical portions) and anti-lock brakes. They were already benefiting from the discount that comes from insuring both your car and house with the same company.

The discount for nonsmoking drivers caught John's attention. "I wonder if they'll have one soon for non-cellular phone drivers!"

They saw that some insurers will offer a discount if you haven't had an accident in more than three years or have passed a driver training course. Mary made a mental note to remind Junior that good grades could translate into a discount when he turned 16 and started driving.

John and Mary decided that they would talk to friends and neighbors until they found four companies to provide quotes. They would give each a list of possible discounts that they qualified for and see who could provide the lowest cost.

They weren't sure how much they would save. But they wanted to have the satisfaction of knowing that they were getting the best possible deal in auto insurance coverage. After all, that's what being a wise consumer was all about.

Gary Foreman is a former financial planner and purchasing manager who currently edits The Dollar Stretcher.com website and newsletters. You can also follow Gary on Twitter or on his blog.

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