David Bach The Automatic Millionaire

You'd probably tell me I was wrong. That's what my assistant, Liz, said when she was looking over my shoulder as I wrote this column. "OK," I said. "You'll be the test case. Follow my tips and tell me what you find."

Just 10 minutes later, she told me she'd saved $800 on what she was currently paying -- for identical coverage. Read on to find out how she did it.

Who Doesn't Want to Save Money?

According to a study by Insurance.com, the average cost of car insurance in the U.S. is $2,302 per car per year. Typically, some savvy shopping will save you 5 to 10 percent or more on your premiums. Some, like Liz, will save even more.

I don't care how much money you make -- $800 for 10 minutes of work is a pretty good return. And that's just this year's savings: If you save $800 every year for 30 years and invest the money in your retirement, with an 8 percent return you could have over $100,000 from that savings alone. Some of you will save even more -- perhaps even twice as much.

So go ahead. The most you have to lose is a few minutes of your time. The most you have to gain is a six-figure nest egg. It's one of the little things you can do to help make yourself a millionaire -- automatically!

Here are my five tips on how to get the best deal on your car insurance.

1. Go online.

There are lots of web sites that give you insurance quotes online, saving you the time of calling an agent. Some of them even give quotes from multiple companies. Be prepared to fill in some electronic forms with information about your car, the coverage you want, where you live, and other information.

Some of the sites generate a quote on the spot; some of them have an agent call you with the results. Some of the quotes you get may be higher than what you're already paying. That was Liz's experience with her first response. "Don't give up," I told her. "Go on to the next site. Get as many quotes as you can."

Here are 10 web sites to get you started:

2. Talk to your agent.

"OK, David," some of you might be saying, "I went online and I saved lots of money, but I like my friendly neighborhood agent. I don't want to switch." Well, you may not have to. Take the best quote you got online to your current agent and see if he or she can match or beat it.

Insurance companies come out with new products, new rate structures, and new discounts all the time. You may be able to get just as good a rate from your current insurer as you could by switching. "That's great," you say, "but why didn't my agent tell me about these new rates before?" Simple: Because you didn't ask.

3. Take advantage of other ways to save money.

There are lots of them:

• Buy home and car insurance from one source. Some companies that sell both homeowners and auto insurance give you a 5 to 15 percent discount if you buy at least two policies from them. This not only saves you money, it simplifies your life: You pay one bill to one company every month instead of two separate ones, and you deal with just one agent for claims.
  
  
• Increase your deductible. Increasing your deductible from $200 to $500 can reduce the cost of your premium by 15 to 30 percent; a $1,000 deductible could save you up to 40 percent or more.

• Don't over-insure. Many experts suggest that liability limits of $50,000 for one person injured in an accident, $100,000 for all people injured in an accident, and $25,000 for property damage liability (called 50/100/25) is sufficient. And before you buy other add-ons such as medical coverage, check to make sure you're not just duplicating coverage you already have.
  
  
• Ask about discounts. If you've taken driver's education, have had no accidents or tickets for three years or more, or own cars with advanced safety devices or antitheft alarms, you may be eligible for a discount. Your kids might, too, if they have B averages or better in school and are students under the age of 21.
  
  There's even a discount for people who drive less than 7,500 miles per year. If you belong to certain organizations -- college sororities, credit unions, or motoring clubs, for example -- you may be eligible for special rates. Some companies even offer discounts to certain professionals, including engineers and teachers.
  
  
• Keep your credit record clean. A low credit score can raise your insurance premiums.
  
  
• Pay automatically. Some insurance companies charge $5 or more per payment for mailed payments, but nothing for automatically deducted payments.

4. Before buying a new car, see what it'll cost to insure.

Some of you are paying more per month for your car insurance than you are for your car payment. That's because many of us spend 100 hours buying a car -- researching prices, options, discounts, and rebates -- but no time at all buying car insurance. We just call up our agent after we've already bought the car and pay whatever they quote us.

The fact is, some cars cost a lot more to insure than others because they're more likely to be stolen, are more expensive to repair, are statistically more likely to be involved in accidents, or a combination of the three.

Muscle and luxury cars typically cost the most to insure: the hyper-powerful Dodge Viper was the most expensive mass-market production car to insure in 2004, according to Progressive; the Cadillac Escalade tops the list of cars most likely to be stolen -- a fact also reflected by high premiums.

So before you buy your next car, get informed. Go to Insurance.com for a list of the vehicles with the highest and lowest claims rates, which can serve as a guide for the vehicles that may cost more to insure. Or visit the web site for the Highway Loss Data Institute for information on virtually all makes and models. Then get a quote from your insurance agent on any car you're thinking of buying before you close the deal.

5. Keep your driving record clean.

Whether you're a brand-new driver or have years of experience, your driving record has a huge effect on your insurance. Having just one accident can increase your rates by up to 40 percent! Moving violations, and in some cases even parking tickets, can also have an adverse effect, and the higher rate typically lasts for three years.

Conversely, if you're a safe driver with a clean record for the past three to six years, you may qualify for an additional 5 to 10 percent discount. So drive carefully -- it pays!