- The Washington Times - Friday, August 2, 2002

A little time shopping for auto insurance could save you money and anguish.
Auto insurance is considered by many to be one of the necessary evils of modern life. From Alabama to Wyoming, every state requires a minimum level of automotive insurance before a vehicle can be operated on the highway. One of the hidden troubles of these requirements may be they are set far too low. Most insurance companies recommend vehicle owners carry additional or higher-than-average limits to compensate for these shortcomings.
State minimums tend to range from a low level of $10/$20/$5 (these are explained later) to a high of $50/$100/$15. Even the higher scale is considered far too low for anyone with a home or a business. If you have assets to protect, or perhaps a larger-than-average earning potential, you would be wise to set your limits as high as reasonably possible, to help protect those assets.
Allstate Insurance Field Vice President Phil Lawson stresses, "Forget about the state minimums, look at your particular situation. It is important to choose a company based on their availability around the country, on their responsiveness in handling claims, and their ability to pay those claims."
Every insurance industry spokesperson I talked with stressed the importance of understanding what the terms used by the industry mean before making a decision. For example, the most common coverage is generally displayed with three amounts ($100/$300/$50). These demonstrate the dollar amounts for which an insurance company is liable in certain categories.
Looking closely at this example; if you were involved in a collision you would be covered for a maximum of $100,000 of bodily injury per person, $300,000 of bodily injury per incident and $50,000 of property damage per incident. What is important here is to understand you are covered up to a limit per incident. If the bodily injury expenses cost $100,000 each for four individuals ($400,000) you would be liable for $100,000 out of pocket. This is the amount over your $300,000 limit per incident. Granted, the chances of this occurring are slight, but your liability is there nonetheless.
According to industry spokespeople, the second wisest thing to do is to spend the time to shop around. Look at different companies; do not make a rash decision signing with the first company you contact. Also, be forewarned, the cheapest may not be the best.
The Insurance Information Institute (III), a nonprofit organization, is an excellent consumer information source. Though funded by insurance industry members, III offers information to assist in making a wise decision about nearly all types of insurance. Jeanne Salvatore, the III's vice president of consumer affairs, offers this advice: "The first thing you want to do is ask your friends and relatives if they are satisfied with their insurance company. Have they had any claims and how were they treated?"
Though most of us do not consider insurance when we are shopping for a new vehicle, we should. According to Miss Salvatore, "A big mistake people make is not thinking about their insurance costs when they go out looking to purchase a vehicle." There can be substantial differences in the cost of insurance depending on the type of vehicle.
"The National Insurance Consumer Helpline (800/942-4242) offers insurance experts who can answer virtually any question you might have about insurance," Miss Salvatore says.
There are four main factors that influence rates, some of which you have control over, others you do not. You are one of the most critical factors, your age, gender, marital status, driving record, claims record or whether you are a smoker or not.
Where you live is another major factor. Living in an urban area can signal higher rates because of higher incidents of claims.
Additionally, the type of vehicle you insure may trigger higher rates. A sports car, an expensive luxury car or a sport utility vehicle may be subject to higher premiums. The cost of collision repair is also a factor companies use to determine the premiums for certain vehicles.
How you use your vehicle can also determine rates. Driving your vehicle for pleasure or running errands may lower rates as opposed to using your car for commuting long distances. As the insurance companies see it, if you travel more than the average driver, your exposure to claims is statistically higher.
Auto insurance isn't as complicated as it may seem if you take the time to understand a few terms and do your homework. Before selecting a company, investigate its financial stability through a rating service such as AM Best, and check with your state's insurance commissioner's office. Above all, talk with your family, friends and co-workers to see how they would rate the company that carries their insurance.
You can glean information from many different sources, but ultimately you must make the decision on a company and coverage for yourself. The one thing I heard from virtually every insurance representative was: Make sure you evaluate your individual risks and obtain the coverage you need accordingly.

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