Sunday, December 30, 2007


You could be paying hundreds of dollars too much in premiums. It's time to shop for a new policy.

For the past 39 years, Thomas Healey has been loyal to his wife, Joan, to his six kids - and to State Farm insurance, the company that's written his auto-insurance policy since Dwight D. Eisenhower was president. A lot has changed in Toom's life over the intervenin decades: His children learned to drive, moved away from home, bought their own cars, and got their own auto policies. Tom has moved cross-country from San Francisco to Long Island, and he gave up commuting when he retired from his job at American Airlines. He's owned new and used cars; two were stolen, and one was totaled in an accident. Each time State Farm was there.

On autopilot. Despite big changes in his family life and driving patterns, Tom Healey has stuck with the same insurer for nearly four decades

Like Healey, you too may have let your auto policy coast on cruise control for a long time. The more than 145,000 Consumer Reports readers who responded to our Annual Questionnaire told us they had been insured by the same carrier for a median period of 11 years. More than one-fourth have stuck with their insurer for 21 years or longer, and three-fourths said they regularly renew their coverage without shopping around.

Loyalty and steadfastness pay big dividends in family life and careers, but they can cost you dearly in today's fast-changing auto-insurance marketplace. No one can say how much, or even whether, Healey could have saved over those four decades. But if it's been awhile since you last shopped for an auto policy, you may be surprised by how much the industry has changed - and by how much you may be overpaying for your policy. Insurers change their rates regularly, so last year's decent price may be uncompetitive this year. When we examined premiums charged in major markets across the U.S., we found that the median-priced policy can cost twice as much the one with the least expensive premium. Over the past two years, moreover, policy premiums have been declining for the first time since 1974. Robert Hunter, who directs the insurance program for the Consumer Federation of America in Washington, D.C., predicts that rates will fall another 4 to 5 percent this year.

What's powering the decline in premiums? The aging of baby boomers, for one thing; today's more mature drivers have fewer accidents. Consumers are also buying safer cars equipped with air bags, antilock brakes, and daytime running lights. Safety-belt use is up, and fewer people are driving while intoxicated. Better cars and better drivers translate into fewer claims, and insurers have passed some of those savings on to policyholders.

But you can save even more by learning how to shop smart. This report will tell you how. Working with InsurQuote, a rating-information provider in Provo, Utah, that monitors auto premiums charged by 2,200 insurance-company plans in 37 states, we analyzed more than 25,000 price quotes to find out which factors have the biggest influence on what you'd pay to insure your car. The amount insurance companies charge is determined by scores of details they gather about you, your driving record, the vehicles your own, and even your credit history. A change in any of these variables can create opportunities for you to save money or to overpay significantly. (For the factors that are likely to influence your rates, see the "Factors that drive up premiums.")

You'll also learn about the new ways of shopping for auto coverage that put the technology of the World Wiide Web and telephone service at your disposal to compare quotes quickly and accurately; see "In Search of Savings." For help in deciding what coverage you need - and where you can safely cut back - see "We've Got You Covered."

Finally, for information about which of the biggest insurers are likeliest to provide the best claims service. Our Annual Questionnaire gathered information from 32,000 readers who told us about any problems they've had settling claims with their carrier, and their overall satisfaction with the result.