Slash Insurance Costs

Barring costly mistakes, simply shopping around, getting the right amount of coverage and implementing a few strategies can save you hundreds or even thousands of dollars.

Kimberly Lankford, author of "The Insurance Maze: How You Can Save Money on Insurance -- and Still Get the Coverage You Need," reveals concrete steps you can take to cut insurance costs.

How to cut costs on auto insurance

Shopping Tips
You can save as much as $1,500 on auto insurance for the same coverage simply by picking a different company, says Lankford. With that much cash at stake, this is one area where it really pays to shop around.

Begin your shopping online to get a feel for what's out there. Compare auto insurance rates on Bankrate to get started. Of course, the downside of shopping around on your own is that it takes time, so that's where independent agents come in handy -- they're familiar with many different companies' offerings and can help with strategies to get the lowest rates. Web sites let you compare premiums but not strategies, for the most part. Find an independent agent near you through the Independent Insurance Agents & Brokers of America at iiaba.org.

Round out your search with a quick visit to the Web sites of a few large companies who don't sell through independent agents. "They have a lot of good information to take advantage of as well, on Statefarm.com or Progressive.com," Lankford says. "You should check out Allstate too," she adds, "because they have a really good quote service."

Now is a good time to shop because most companies are changing pricing policies, Lankford reports. They are using computers to run new risk formulas and the result is a sea change in pricing.

Rightsizing
Make sure you have enough liability coverage. These days, $50,000 coverage is not enough, Lankford says, "I recommend $500,000 to $1 million, especially if you have a young driver." Raise your deductible to offset the costs of an increased liability limit.

If you drive a clunker, check out its value at Edmunds or Kelley Blue Book's site to find out if it makes sense to drop collision and comprehensive altogether. Instead, save for the day it's finally ready for the scrap heap.

Strategies
Credit scores are gaining importance on the insurance pricing scene, but not all companies are giving those digits the same weighting ... yet. It might be time to pay more attention to your credit score. Bankrate's story on credit scores tells you what to do.

Various discounts for car insurance are available, so ask for a list. Usually policyholders with young drivers need to follow this the most closely, but everyone should take advantage of as many discounts as possible.

If you are considered high risk or have a teenager, ask your agent to recommend strategies for saving. If your child has a clean driving record, it may be a good idea to title the car that he drives in his own name and get his own policy for liability purposes. "In many cases, the only way you can get coverage on the child is if he remains on the parents' policy," cautions Lankford. This strategy can be cheaper, too, because of the availability of multiple car and other discounts. Lankford suggests getting an umbrella policy to enhance liability protection.

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