Shop and Save: How Comparison Shopping Can Slash Your Auto Insurance Premiums

Shh! Auto insurance companies have a secret, and not many of us know it: all car insurance is not the same, and comparison-shopping can slash your rates.

Nearly half of consumers aren't aware of all the discounts that can lower your premiums, according to a survey by LowerMyBills.com, a free online service that lets consumers compare rates on monthly bills and lower monthly expenses. The survey found that 79% of consumers feel they're paying too much for car insurance -- yet 45% don't know how to find the best coverage for their coverage and budget needs.

Kevin P. Foley, owner of PFT&K Insurance Brokers in Milltown, New Jersey, says he's not surprised that so many consumers pay too much for car coverage, or that few cash in on discounts. "Failing to shop around is the no. 1 mistake people make when buying insurance," he says, "and that can cost a consumer a lot of money."

Super-Sized Savings

Donna Johnson, once a devoted State Farm customer in Austin, Texas, had never considered shopping around for car insurance. Like most policyholders, Johnson says she didn't realize how much a few calls could save on her bottom line, and that she had no idea she'd save so much money without sacrificing coverage.

But once she did investigate other carriers, Johnson chopped her annual premiums down. "I priced three companies, and in one day, I saved $70 per month -- $840 a year," she says. Johnson says comparison-shopping alerted her to discounts that she hadn't been receiving. "I received a multi-car discount, one for safety features on my cars, and one for being accident- and ticket-free for a certain period of time."

Comparing rates can also give you peace of mind. It gave Gail Berg of Mountain View, California, a pleasant surprise: "I found out that my current carrier was cheapest of them all," she says. "It was nice to know for sure."

The Tricks of the Trade

In addition to double- and triple-checking about discounts, Foley suggests a few other tricks for pricing other carriers. "Some companies quote semi-annual -- not annual -- rates," he says. "Do your homework and get annual pricing, to make sure you're getting the best deal."

When you start comparing prices, Foley cautions against looking at just dollars and cents. "Use your current policy, limits, and deductible -- not your invoice -- to compare quotes."

He says you should also keep "underwriting information handy." That information includes the year, make, and model of each vehicle you want to insure, along with each Vehicle Identification Number; and driver's-license numbers for all drivers in the household.

Also know that there's no point in concealing any flaws in an applicant's driving record. "The accuracy of the quote depends on consumers being honest," Foley says. An agent will have to pull a detailed copy of your driving record before finalizing a policy, so trying to hide speeding tickets or accident claims will only slow down the process.

And bear in mind that a rate quote is only an estimate of what the insurance will cost. If an agent misquotes the premium and understates the rate, you'll still be charged the amount figured by the insurance company. To ensure that your bill will match your quote, ask the agent or carrier representative to submit a non-bound application for you before you commit to a policy. That will indicate the true cost of the proposed coverage.

Where to Look?

Asking family members and friends for recommendations is one way to find carriers to compare, but there are others. "You should also check your state's insurance department, to see if they produce an annual survey of insurance premiums for different scenarios, or to make sure the company is licensed to do business in your state," Foley says.

It's also smart to compare at least three different carriers, Foley says. "That will increase the odds you'll get the lowest rate possible."