Always Shop Around

• Each insurer uses its own formula to determine the rates that different policyholders must pay. Each of the variables in calculating the rates are weighed differently, albeit all with the same goal of assessing the likelihood that the driver will incur a payout. So, it pays for an individual in the market for insurance to approach as many insurers as possible and attempt to determine which insurer is willing to offer him the lowest rates.

Different Cars, Different Rates

• Although the rates for car insurance are based largely on the driver's record, they are also heavily influenced by the car that the driver owns and regularly drives. Statistically, some cars have a greater likelihood of being involved in an accident or, in the event of an accident, incurring a larger payout from insurers. Drivers who drive these cars will generally pay steeper premiums than drivers who driver safer cars.

  
  

  Don't Lie

  • When shopping for a policy, insurers will generally ask you a list of questions regarding your driving history. For example, the insurer may ask if you have been involved in any accidents recently. Some drivers, expecting that revealing an accident will cause their rates to rise, lie and deny previous accidents. This is a bad idea for several reasons. Not only does it constitute fraud, but also if an insurer finds out about the accident later, it may revoke coverage.

  Your Policy May Not Cover Everything

  • Most car insurance policies are written so that, in the event of damage to your vehicle, the insurer is required to bring the car back to the condition it was in prior to incurring the damage. This means that, if the car was used, the insurer will provide a payout sufficient to buy used parts. Also, if the car is totaled, the insurer will not provide you the estimated value of the car---not it's actual market price, which may be higher.