Insurance is one of the most fluid and complex economic markets. You can find hundreds of companies (from biggies such as State Farm all the way to Danny's Qwik Klaims) willing to insure your car in many thousands of combinations of ways. The experience can seem daunting. But always remember that, if you need to find an efficient, inexpensive solution to a complex, fluid market question, nothing beats the Internet.

Whatever else it may be, the Internet is surely a great research tool. In this chapter, I show you how to get an insurance quote online and how to get the most for your insurance dollar.

Saving Money on Insurance

The Internet is the perfect place to drive down your costs on everything from travel to TV sets, and insurance is no exception. Fill out a few forms and get quotes from at least three or four online insurance companies. You're likely to find that the annual cost of the same auto coverage can vary by $500 or more.

What You Need to Know

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This chapter can't provide comprehensive coverage of the topic of car insurance. If you want a really thorough discussion, take a look at the book Buying a Car For Dummies, by Deanna Sclar (IDG Books Worldwide, Inc.). That book goes into detail about premiums, shopping for insurance, and what you need to know about the policy and its components. It even explains such things as how to file a claim — topics that this book can't cover in detail. Our topic is merely car insurance online.

Nevertheless, the following sections cover some basic points for you to con-sider whenever you're shopping on the Internet for vehicle insurance.

The big three insurance types

Auto insurance consists of three primary components, and how much you want to purchase of each component is generally up to you. (But we strongly suggest that you purchase a good chunk of liability insurance — unless, of course, you have nothing left to lose.) The following list describes these components of auto insurance:

- Comprehensive coverage: This type of insurance provides coverage for all kinds of damages that don't result from an actual crash, up to the value of the car. Your car may or may not be repaired or replaced, depending on the type of claim you have.

- Collision coverage: This insurance coverage repairs or gives you the value of your car (in case of a total loss) if you damage it in a collision (either via collision with another vehicle or hitting something stationar such as a building). This coverage is no-fault — meaning that it doesn't matter if you lit someone or if they hit you — assuming that you haven't violated the terms of your policy. Some policies won't cover your loss if you deliver pizzas, for example, or if you let an unauthorized driver drive your car. The damage to your car will be repaired if you fulfill the terms of your policy. Of course, fault may come in to play in deciding how a claim affects your premiums.

- Liability coverage: This type of insurance provides coverage if you're at fault in an accident. Hitting somebody after you run a red light may open a can of worms you can't believe. You can face a seemingly endless supply of lawyers and a myriad of complaints from the victims of your carelessness: doctor bills; inability to work; newfound failure to enjoy personal pleasures; lost wages; emotional distress; lack of consortium; pain and suffering; hot flashes; cold flashes; and so on.

We could fill the rest of this book by continuing the sorry list of liability griev-ances that make lawyers rich and have all too often caused otherwise moral people to exaggerate their problems and whimper, whine, and lie at trials. This nasty factor costs all the rest of us as well in the form of higher insurance premiums.

Fair is fair. Many people actually deserve compensation in liability lawsuits, of course. Others, however, don't. In the final analysis, how deserving someone is simply doesn't matter to you if you're the target of a liability lawsuit. All too often, the sky's the limit in such suits, and you can lose much of what you own as a result. You do need liability insurance, Bunky.

How Much Do You Need to Spend?

Hundreds of combinations of auto-insurance options exist. How much coverage do you need? How much money do you have? If your net worth is more than $100,000, you need to think about the potential of being sued. You want to buy liability coverage for your house and your car to protect yourself.

For the car, consider getting at least $500,000 per accident and $200,000 per injured person. Go for $50,000 or more in property damage insurance per accident. That amount may sound like a lot, but a car such as a BMW or Lexus can cost a lot to repair. And even if your current net worth isn't huge, factor in your earning potential. If you expect to prosper, do you want to share it with a stranger just because you forget to get enough liability insurance? Sometimes a judgment can attack your future earnings in a liability case.

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As is true of most purchases, you can get a quantity discount on insurance, If you buy both your auto and homeowners insurance from the same company, you can usually get a discount on the rates for those policies.

Lowering your costs

Another way to lower your auto insurance costs is to remove both collision and comprehensive insurance. Don't live in a dream world, though. If you don't carry collision insurance on your car, and then you have an accident that's your fault, chances are good that your auto insurance company won't pay out anything for your damage.

Considering a higher deductible

A deductible is the money that you pay for repairs before the insurance kicks in. If, for example, you have an accident that results in $1,000 damage to your vehicle and you have a $500 deductible, you pay $500, and the insurance company pays $500. As is the case with health insurance, you may want to consider boosting the deductible that you must pay in any insurance claim. The usual default deductible is around $500, but you can ask your insurance agent to determine what happens to your rates if you raise the deductible to, say, $1,000.

Can Your Car Choice Boost Insurance Costs?

You can reduce the cost of your insurance in several ways. For starters, you can base your choice of make and model partly on its effect on your insurance payments. How? If a certain model of car is frequently stolen or costs quite a bit to repair, insurance companies jack up the premiums accordingly.

If, on the other hand, you purchase a vehicle that thieves don't seem to want (think station wagon here) or that you can repair for less money, your insurance rates are going to cost you much less.

Checking various car risks

If you want data on how likely your particular car is to attract crooks in your local area, your odds of a drunk smashing into your vehicle, and other risks where you live, you can get some great stats online from Quicken. Quicken is a leading maker of personal finance software and a great source of information about issues that impact your financial situation, such as how likely your car is to get ripped off.

To get information from Quicken, follow these steps:

1. Go to the Quicken site's Auto Risk Evaluator by typing www.insuremarket.com/nisks/auto/q.sfa?form=intro into your
Web browser's Address text box.
2. Type your ZIP code In the ZIP Code text box.
3. Select your car's make from the drop-down list box.
4. Click any (or all) the check boxes next to each of the following categories of risk:
- How likely are you to be injured by an uninsured motorist?
- How well does your car protect you and your family in a crash?
- How well does your car hold up in a crash?
- How common are hit and runs in my area?
- How likely are you to be hit by a drunk driver?
- Are thieves in love with your car?
5. Click the Show My Risks button.
You next see a page asking you to specify which model you drive.
6. Choose your car model from the drop-down list box.
7. Click the Next button.
You see the results — a lengthy and highly helpful description of the relative risks in your area, including solid advice on what kind of automobile coverage you need, based on the statistics.

Following is the excellent advice that we received from the Auto Risk Evaluator about what kind of uninsured motorist coverage, for example, makes sense for someone who lives in North Carolina:

In North Carolina, 7.7 percent of all accidents resulting in injury involved an uninsured motorist.

North Carolina ranks number 42 in the nation among all states surveyed in injury-related accidents involving an uninsured motorist.

In North Carolina, your risk of being injured by an uninsured motorist is comparatively LOW. So when you specify your limits and deductibles, you may want to consider no more than an average amount of uninsured/ underinsured motorist coverage. (However, if you do a lot of interstate travel, think about obtaining a high level of uninsured/underinsured motorist coverage.)

Determining which cars cost more

For another good place to check out which cars are more expensive to insure, go to CarPoint's finance and insurance page (at www.carpoint.msn.com/finance_ insurance on theWeb) and select your car from the drop-down list under the heading Insurance Ratings.

The results for the Infiniti model we looked up were average on a scale of seven ratings that range from significantly better than average to significantly worse than average.

Stopping and thinking for a minute about that Porsche

WARNING!
Before you purchase that great car you've always dreamed of, determine just how much the insurance premiums are going to cost. Finding out how many people buy a Porsche or some other lovely, ideal car and then must sell It soon after buying it may shock you.

Why must such people sell their dream cars? Because they can't keep up the car payments plus the insurance payments. Insurance for fabulous luxury and sports cars is higher than for more everyday vehicles. What you pay for your old clunker isn't what you're going to pay for that Porsche. Taking a big depreciation hit only a short time after buying the car you've always wanted is both costly and embarrassing.

Using Cars.com (It Has the Name!)

One of the most popular automotive sites on the Internet is Cars.com (at www.cars.com). (Now that was a good Internet address to register!) As do most other large commercial sites devoted to vehicles, Cars.com includes a section on insurance. Cars.com partners with Ins Web to enable you to compare free quotes from several insurers. InsWeb is a good source for such information; it ranks high among more than one online rating service, including a rating as one of the 50 Most Incredibly Useful Sites by Yahoo/Internet Life.

To get free insurance quotes from InsWeb, follow these steps:

1. Go to the Cars.com home page by typing www.cars.coM into the Address text box of your Web browser.

2. Click the Insurance link on the Cars.com home page.

3. Click the InsWeb link at the bottom of the shaded Get A Quote area in the middle of the page.

4. Click the New User button in the upper left portion of the page. You see the first page, where you start filling in data about yourself.

5. Choose your state from the drop-down list box on the first page of the set of forms and then click the Begin button.

You can fill in the forms faster if you get out your car's registration card and your current auto-insurance policy.

6. Fill in all the information on the next several pages, clicking the Continue button as you finish each form.

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This site is well-designed. The thoughtful Save button stores the infor-mation you enter up to that point so that if something happens, you don't need to re-enter all the data. (How often "something" can happen may surprise you. All you need to do, for example, is to click your browser's Back button to crash an entire series of forms-entry pages.)

After you finish filling in all the forms (the entire process taking about 15 minutes), you see a list of companies that can provide you with quotes.

7. Select an insurance agent if you see a list box offering you that option.

8. Fill in your address and phone number on the final page and then click the Quote Me button.

The page that appears tells that you your quote(s) is probably going to arrive within 3-5 days. The page also provides the following information: Since you've saved your information, you can retrieve it the next time you return to InsWeb. This will make comparison shopping the next time quick and easy. Nowthat'sa nice feature.

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InsWeb also provides homeowners, renters, medical, and term life insurance quotes. After you register, you can ask for future quotes without needing to fill in as much information about yourself. InsWeb saves your data for use any time that you want another quote. And the site is very well thought out. After you provide the year, make, and model of your car, for example, it automatically fills in such data as airbags, braking system, and other suc information.

Rating the Companies

You want a reliable insurance company, don't you? No government insurance exists for insurance companies the way that FDIC does for bank accounts. You can, however, find insurance company ratings at several Internet sites. Of those we've seen, the one that we recommend is Insure.com (at www.insure.com/ratings), which gives you free rankings from the following two sources:

- Standard & Poor's ratings of a company's financial strength

- Duff & Phelps' ratings of the company's claims-paying capabilities

Getting a Discount

Insurance companies offer many special discounts on auto insurance. If you have a car alarm, for example, you usually qualify for a discount. The following list describes some of the typical springboards to paying less. Check with your insurer to see whether they offer the following reductions to determine whether you're getting as low a rate as you deserve:

- Safe driver: The biggest discount of all is the one that you get from simply driving safely. If you had no accidents or tickets (parking tickets don't matter) in the past three years, your discount can run as high as 40 percent! Some companies (notably GEICO) accept only people who fall in this category — usually known as preferred customers. If you've had accidents or tickets, you must pay the higher costs until you're clean for at least three (or more) years. If you've had a very serious arrest, such as reckless driving or driving under the influence, you're likely to receive the rating of an assigned risk driver, and you can expect to pay even more.

- Anti-theft devices: An alarm can reduce your costs by as much as 10 percent.

- Good grades at school: This measurement correlates with superior reaction times and good impulse control. (And sucking up to teachers is good practice for sucking up to cops.)

- Graduating from special driving courses: (This discount goes to teenagers who take driver's education or seniors who take defensive driving courses.) This one can give you another 10 percent discount.

- Good citizenship: Having no misdemeanors in the past three years and no felonies in the past ten years are typical requirements for this deduction.

- Having the right address: If you live in an urban area, your auto rates are higher than they are if you live in rural areas because of the greater likelihood of theft and accidents in cities. Rural homeowner insurance, however, can run higher than that of urban homeowners because of the less-efficient fire protection that rural areas enjoy.

You may find that this tradeoff is a wash, however, as Richard did after he quit smoking. He called the health insurance lady and she said, "How wonderful! That reduces your premiums with us by 20 percent. Now, uh, have you gained any weight?" "Yes," I answered, "about 35 pounds actually." "Oh dear," she responded, "We need to boost your premiums back up by 20 percent because of that gain... sorry."

- Buying the right car: Ordinary sedans are good. But buying SUVs or luxury cars results in higher repair costs, and sports cars generate more insurance claims on average, also costing you more.

- Buying multiple policies: Agreeing to consolidate your life, home, and personal liability or other insurance with the same insurer can save you up to 15 percent on the overall costs.

- A strong credit rating: As does success in school, good credit correlates with low accident rates. People who act responsibly in academia and personal finance are - not surprisingly - also usually responsible behind the wheel. Macho, hot-tempered ex-cons, on the other hand....

- Good personal hygiene, short hair, glasses: Just kidding. But who knows what the future holds? A correlation's probably in there somewhere.

Further Questions? Contact the DOI

Each state has its own Department of Insurance, and you can likely find answers to questions about such issues as no-fault insurance if you contact them. Use a search engine to look up the Web site for your state's DOI.

No-fault insurance, by the way, was invented about 30 years ago as a way to, in theory, reduce the costs of insurance by reducing lawsuits. Currently only 13 states still participate in this experiment. (Statistics show that insurance costs generally haven't, as hoped, come down.) The no-fault states, in order of livability, are: Colorado, Florida, Hawaii, Kansas, Kentucky, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Dakota, Pennsylvania, and Utah. (Just kidding; we put them in alphabetical order, not livability. But come to think of it, if you look over this list..

Your Online Insurance Checklist

So you're all fired up and ready to comparison shop for insurance on the Internet and maybe save yourself a bundle. Before you start serious surfing, however, look over the following checklist as a tool to remind you of some of the important points that we cover in this chapter:

- If your current insurer raises your rates, use that as an excuse to go cyber-shopping for a better deal.

- Make sure that you get the kind of coverage that you need: no more, no less.

- Always check exclusions. If you're in the media, for example, you may want to find out whether your liability coverage includes lawsuits for libel. Usual exclusions (war and things such as that) are almost always spelled out, but you may want to make sure that you have coverage appropriate to your occupation or location. Sometimes, as is the case with flooding, you may need to apply for separate insurance.

- In general, stick with well-known, strong companies such as Allstate or Nationwide places you've heard of or check out by using the tips in the section "Rating the Companies," earlier in this chapter. You don't want your insurance company going belly-up just as you face a $290,000 lawsuit.

- Get enough coverage to protect your net worth and consider also your future earning potential.

- Determine whether you want to raise your deductibles to lower your premiums, as we describe in the section "Considering a higher deductible," earlier in this chapter.

- If you drive an old car worth less than, say, $3,000, consider dropping your comprehensive and collision coverage to lower your premiums.

- If you frequently rent cars, you want to get personal auto insurance that also covers you whenever you're renting. That way, you can refuse the rental agencies' extra-cost insurance.

- If you have good, strong medical insurance, make sure that you don't duplicate such coverage in an auto policy.

- Be honest when applying for insurance. If you make up any information, the insurance company can deny you benefits if you submit a fraudulent claim. And if a check reveals that's it's a deliberate falsification (and the companies do check), the company can deny you insurance completely. (Then you need to go to the next insurance company and fill in its form, which asks whether any other company has ever denied you insurance.)

- If someone living with you is going to drive your vehicle, but you don't list that person on your policy, you can get in real trouble. By not declaring this driver, you really expose yourself. If that person has an accident with no coverage, guess who pays? You. Remember that the reason you buy insurance is not only because the law requires it, but also because it safeguards your savings, your house, your future income, and your fabulous collection of diamonds and pearls.)