Nowadays, auto insurance is really expensive. A typical

insurance policy can cost a few hundred dollars to a few

thousand dollars a year. And the insurance rates you pay are

hugely dependent on the insurance company or agent, your age,

your car type, your driving record, and even the area you

reside in!

You should never go without auto insurance though, despite the

costs. Almost all the states require you to protect yourself

with a minimum amount of liability coverage. Naturally, the

bare minimum is not adequate enough for the average car owner.

And as you add in additional coverage for your car, you realize

that you will be paying a fairly large sum annually.

So, understanding auto insurance can actually help you to

decide on a suitable insurance policy that won't vacuum clean

your wallet! Here, we have gathered 10 of the best tips for

lowering your auto insurance, by as much as 40%!

Always compare insurance policies. There are states which

regulate auto insurance rates, but the insurance premiums can

vary by hundreds of dollars for the exact same coverage. It is

definitely worthwhile to shop around. The first thing you can

do is to check with your state insurance department. They often

provide information about the coverage you need, as well as

sample rates from the biggest companies. You can also ask your

friends or look up the yellow pages. Checking consumer guides

and asking insurance agents can pay off as well. You can easily

find out the price range for your insurance policy, as well as

discover the lowest prices in town.

However, you should not be shopping based on price along. The

insurance company should provide good service at the best

price. Excellent personal service is available as well, and

they provide added conveniences, although they cost a fair bit

more. Ask the company how you can lower your costs, and also

check their financial ratings. The rule of thumb is always to

get three price quotes from three different companies, and pick

the one with the best value.

It can also be a good idea to increase your deductibles. When

you file a claim, the deductible is the amount you pay before

the insurance company pays for the rest of the damage. A higher

deductible on collision and comprehensive coverage can lead to a

much lower premium. For example, increasing your deductible from

$200 to $400 can reduce your premiums by up to 25%. However, you

must ensure that you have the financial resources to handle the

largest deductible when the time comes.

Remove certain types of coverage from your policy. Almost all

the states require liability coverage for your car, but the

rest of the coverage is probably dispensable. However, you do

not want to be underinsured if you're in an accident, so it

isn't advisable to remove all of your additional coverage.

Optional coverage includes medical payments, uninsured

motorist, collision, and comprehensive coverage.

Drop collision and comprehensive coverage for older cars. If

you drive an older car that's worth less than $2,000, it's

probably more cost-effective to drop collision and

comprehensive coverage since you'll probably pay more for the

coverage than you'll collect for a claim. You can find out the

worth of your car by asking auto dealers and banks.

Make sure your credit report looks good. Car insurance

companies often look at your credit history as there is a

correlation between the risk to the company and your credit

history. If you pay your bills on time and maintain a good

credit history, you can enjoy lower insurance rates.

Drive less. Insurance companies often offer low-mileage

discounts to motorists who drive less than a predetermined

number of miles each year. You can use public transportation

more often, car-pool with friends, and take the train or a

plane instead of driving to another state. And you'll save on

more than your coverage as you'll need to spend less on

gasoline (of which prices are incredibly high).

Maintain a clean driving record. The company will give you a

price break and you can save on your insurance policy after a

specified period of a clean driving record. This means that you

have no accidents, no serious driving violations etc, during

this period of time. The simplest and surefire way to qualify

for this discount is to drive carefully and defensively all the

time.

Choose a low-profile car. Insurance rates vary among difference

models of vehicles. Generally, sports cars and high-performance

cars tend to cost more to insure, mainly because they represent

more risk of theft and the drivers are often the people who

drive more recklessly. Newer cars will cost more to repair or

replace than older ones, so naturally they can more to insure.

Low-risk vehicles include station wagons and sedans.

Ask about safety and security discounts. The insurance

companies sometimes offer discounts on your insurance if your

car is equipped with the following: anti-lock brakes, air bags,

automatic seat belts, car alarms, tracking systems. These reduce

the injury risk to you, as well as the chances of your car being

vandalized or stolen.

Finally, ask about other discounts. You may receive a discount

if you buy more than one type of insurance from the same

company or if you insure multiple cars under the same policy or

company. You may also receive discounts for taking a defensive

driving course, staying with the same company for a few years,

being a driver over 50, good-student discounts, and being an

AAA member. If you already have adequate health insurance, you

can also eliminate paying for duplicate medical coverage, thus

lowering your personal injury protection costs by a substantial

amount.