Saving money on auto insurance can seem to be an arduous task, but there are 2 simple rules to follow which an result in hundreds of dollars saved.

Number one rule is to make sure your insurance company has an accurate picture of your usage of the family cars. For instance if you live in California and commute 1-2 hours each way, this drives the rate up. If you occasionally drive the car on your employers behalf, that is also a rate factor. Many retired folk never re-contact their insurance company to let them know the only usage is for pleasure now that you've retired. When you were younger, it wasn't uncommon for a year of auto usage to rack up 25,000 miles - another driver for higher premiums!

Almost all states require your auto insurance company to put a short statement on the face page of the policy that states who the users are and for what purpose. You need to dig out your policy and insure these statements are correct. If your teenager, graduates from high school and goes into the service, your policy is needlessly rated high - always stay current with who and how your cars are being utilized. A friend showed me her auto policy recently and the company didn't even have her current car listed! You must check the face page of the policy to locate these sort of problems.

Rule number 2: Your driving record is the other major factor for higher premiums. If you have any of the major infractions listed, (speeding, accidents, DUII, reckless driving) it will impact your premium, either now or in the near future. That does not mean you have to settle for a big increase in premiums from your long term insurer. Check about the market place and see if there aren't other insurance companies with different policies toward some of these driving problems.

You should check about for a better premium at least once every 3 years. Many insurance companies have a "lowball" rate on the first year of the new policy, but will slowly inch up the premium totem pole until you are at, or near, the rate which prompted you to leave your last insurer. AND don't be bashful about checking about for a lower rate. Those ads you read that state "I saved $350 on changing to XYZ Ins Co" are true in many cases. I recently hit a website that supplies premium information on 5 insurers if you sign up and tell them what your usage is and what cars you have. I received 5 answers within 2 days. The highest was $2,092 per year and the lowest was $660 per year for approximately the same coverage. A $1,400 difference in premium is a lot of money! You can get your own quotes from www.progressive.com !

Some other factors influencing rate structure in car insurance:
1. You pay more for insurance on your BMW that your Dodge Neon. The value of a car has a huge impact on how much your premium you pay.
2. If you are age 16 plus one day, and have have been driving for 2 days, you pay a higher rate than a 45 yr old who's been driving for 25+ years. Why? Because you are an accident going somewhere to happen! Statistics bear this out.
3. After you get to age 65 your reflexes slow down and your auto insurance premium goes up. If you have tickets, losses, or any indication of loss of physical ability, these can key changes in your premiums.
4. If your state allows it, the auto insurance company will check your credit record. There is a strong correlation between losses and poor credit records.

Always start your search for a new auto insurance company while still insured with your old company. Never, never, drive without auto insurance!

Learn more about this author, Fred Tolleson.
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