Consider Minimizing Auto Insurance to Save Money

Cash-strapped consumers looking to save money, dropping coverage on a second or third vehicle might be the way to go.

But auto insurance industry officials and consumer advocates say there are other ways to save money on insurance without scrapping the vehicle or leaving it unused altogether.

With the economic slowdown, some consumers are having a tougher time paying their auto insurance bills, said John Asmussen, an agent with Farmers Insurance in Bend.

"The cash crunch is certainly hitting all kinds of people," Asmussen said. "We are processing a few more extensions than in the past. People are more conscious of their rates when they get their renewal bills."

In some cases, people with multiple cars are dropping coverage on some of their vehicles to save money, Asmussen said. Others are postponing when their teenage children get their license so they can save money, he said.

Insurance companies that cover commercial businesses also are seeing drop-offs in auto insurance coverage from companies when they reduce payroll, said Kathy Wuest, a partner in Lumberman's Insurance, an independent insurance company in Bend.

Commercial coverage is driven largely by gross payrolls, some of which have taken a hit by a marked slowdown in the real estate industry, Wuest said.

Commercial contractors who have 15 employees would pay potentially thousands of dollars more on their liability insurance than employers with only five employees, Wuest said.

"There's a ripple effect," Wuest said. "There is hardly a commercial account that is not impacted in some phase."

Lumberman's has not seen a noticeable drop in insurance coverage among residential accounts, Wuest said.

"We have not seen any mass cancellations," she said. "Everyone has to have auto insurance. Whatever limits they had prior, they are sticking with them."

In Oregon, drivers can save up to 25 percent on their auto insurance by subscribing to a pay-as-you-drive program only offered in the state - so far - by The Progressive Group of Insurance Cos..

Progressive's program, called MyRate, converts a portion of a customer's annual insurance premium into a per-mile fee. The program was introduced in January 2007 in Oregon, said Leah Knapp, Progressive's Cleveland-based spokeswoman.

In order to be eligible, drivers must own a vehicle that is 1996 or newer and sign up directly through Progressive, Knapp said. Drivers who sign up for the voluntary program get a tracking device installed in their vehicles that measures mileage and time-of-day driving for determining rates, Knapp said.

Progressive cited National Highway Traffic Safety Administration data in measuring time-of-day driving.

"We know that more accidents occur at certain times of the day, so we can reward drivers who do not drive their vehicle as many miles during these times," Knapp wrote in an e-mail.

They can save an estimated $ 188 on a $ 750 policy, according to Progressive.

"It's not for everybody," said Knapp, responding to concerns about privacy raised by some consumers. "It's strictly a voluntary program. The device is not tracking where you are."

So far, about one-third of eligible Progressive customers have signed up for the program in the eight states, including Oregon, where it is offered, Knapp said.

So far, only Progressive has implemented the program, although many companies offer discounts for driving less, said Chris Hagerbaumer, deputy director for the Oregon Environmental Council, based in Portland.

Oregon is one of a handful of states to offer tax incentives for auto insurance companies that implement pay-as-you-drive programs, Hagerbaumer said.

An extension of an existing pay-as-you-drive incentive is part of Gov..

Ted Kulongoski's 2009 transportation plan, which would provide research and development tax credits to companies to help pay the costs of implementing the new program, according to the Oregon Insurance Division.

"Some other companies are in the late stages of research and development work that will take advantage of the tax credit," Hagerbaumer said. "It is our hope that the tax credit will be extended because it could help reduce mileage and accidents in the state."

Drivers who want to save money on their auto insurance should take a look at their coverage every year, said Ron Fredrickson, manager of consumer advocacy for the insurance division of the state's Department of Consumer Business Services, based in Salem.

Dropping collision coverage on older cars and dropping some coverage’s makes sense when it comes to saving costs, Fredrickson said.

"As cars get older, it does not always make sense to pay significant premiums for collision coverage because you're not going to collect as much," Fredrickson said.

Some cars, such as high-performance or "turbo cars," cost more to insure. Their costs of coverage are determined by typical losses experienced on them by insurance companies, he said.

INSURANCE TIPS:

- Talk with your agent or insurance company about insurance costs before you buy a car. Certain makes and models, especially sports cars, are higher risks for insurance companies and cost more to insure.

- Ask several companies for quotes. By shopping around, you may find several hundred dollars' difference between quotes. Be sure to compare identical coverages when comparing policies.

- Drop collision coverage on cars that cost more to repair than they are worth. For example, consider carrying only liability coverage for cars valued at less than $ 1000 Increase your deductible. Take the highest deductible you can afford on collision and comprehensive coverage.

- You can save money on auto insurance by taking advantage of discounts, such as: two or more cars on a policy, combined auto and home insurance on the same policy, and child younger than 25 and has good grades in school.

- Discounts also are available for drivers who have completed a defensive-driving course, are between ages 50 and 65, and have a vehicle with air bags, an anti-lock braking system, other safety equipment, or anti-theft devices.

- Under Oregon law, an insurance company can use only the last three years of your driving record when deciding whether to issue or renew a policy or determining your premium. If you've had an accident or a violation, and your rates have gone up or your policy has been assigned to a nonstandard insurer, talk with your insurance agent or company.

- If your teenagers do not own cars, make sure your insurer understands cars which they are going to be driving and whether it will be occasional or principal use. If they do own cars, consider covering them under your policy. Otherwise, they'll probably have to pay higher premiums.

- Avoid performance or "turbo cars." A turbo engine can add more than 10 percent to your premium.

People with questions or problems with their coverage can contact the Oregon Insurance Division's Consumer Advocacy Unit toll free for help: 888-877-4894.

Source: Oregon Insurance Division's Consumer Advocacy Unit