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July 10, 2009

Save money on auto insurance

My last column was a look at how to save money on homeowners insurance. Now, let’s review how to save money on your auto insurance since there has never been a better time to save rather than to spend money.

The business of providing insurance is based essentially on the premise of sharing the risk to insure you, your vehicle and your passengers in the event of a traffic crash. There are direct and indirect ways to save money related to how that risk is calculated.

It’s really all about your vehicle and you from the beginning. Insurers must know what type of vehicle you drive, your age, your address and your driving record for starters.

• Vehicle: The more expensive it is to repair a vehicle or to total it after a crash, the more the policy costs. How you use your vehicle is a factor, as in to and from work, to school and home or for your business. Of course, a more expensive vehicle may also have more safety features, which could be a mitigating factor for assessing risk and its cost.

• Age: Statistics show that different age groups present different levels of risk and claims experience. Drivers under 21 and over 75 as a group generally have more accidents, compared to other age groups.

• Address: What about the statistics for accidents in your geographic area? Do you live (and is your vehicle “garaged”) in the city with bumper-to-bumper traffic or in the country where hazards may include farm equipment and deer?

• Driving record: Beginning drivers, of course, have no driving record, so that is why the risk they present is calculated to be more costly. But from the time one gets behind the wheel, the driving record begins to build. Teens often miss the importance of not obeying traffic laws because they cannot see the long-term effects of a bad driving record, but the insurers most certainly can.

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