LOW RATES ON CAR INSURANCE

If you haven't comparison shopped for auto insurance lately, do it now. In fact, do it even if you looked around as recently as a year ago. Price wars are raging in many states and among many companies, especially for drivers with clean records. In 1998, the average cost of auto insurance declined for the first time in more than 20 years, according to the Insurance Information Institute in New York City.

What's bringing rates down? Cars have gotten safer. More people are using seat belts and air bags. States have passed tougher drunk-driving laws.The number of ante thefts is down. Medical costs are rising more slowly. Demographically, there's a bulge of middle-age drivers, who have fewer accidents than younger ones. All these changes reduce the number and severity of accident claims. Not surprisingly, insurance-company profits have soared. Now competition is forcing many premiums down.

"Ho hum," you may be saying. "My company already dropped my premium by five percent." Or maybe it refunded part of your money. But so what? A competitor might sell you a similar policy for 15 to 30 percent less, with better customer service. Generally speaking, you get the largest savings when you find a different insurer with lower prices across the board.

In some parts of the country, average prices haven't declined yet-and in those places, it's even more important to comparison shop. Everywhere, some insurer is offering policies for less.

There's something else you have to shop for besides a rate: That's a risk classification. The best rates go to drivers with good records, generally known as preferred risks--but in recent years, it has been tough to make the grade. Insurers were demoting drivers with minor violations To the standard-risk category, where coverage can cost 30 to 60 percent more. Drivers formerly slotted as low-standard risks were tossed into the nonstandard pool. Dropping people down in class meant higher profits for insurers, even when rates stayed the same.

Insurers use elaborate computer programs to calculate risk, factoring in not only a driver's age, driving record, type of ear, and number of past accidents, but also her credit history and whether she has a cell phone in her car. (To paraphrase the old saying, Stay alive, don't phone and drive.)

Many insurers are starting to reclassify people back up, says Robert Wallach, head of The Robert Plan Corporation in Bethpage, NY. Here's how he describes the risk categories today: preferred--no underage drivers in the family, no high-performance vehicles (like sports cars), no accidents, maybe one violation; standard--a young driver in the family, a slightly higher-performance car, maybe a single accident, one other violation; nonstandard--teenage driver, tickets, accidents.

But insurers differ in how they evaluate risk. Always ask how you're classified. A good driver offered a standard-risk policy should look elsewhere. Some other insurer might put you on its preferred list.

Those identified as nonstandard risks, including people in state high-risk pools, should also shop around. In past years, you might have landed in this category after a couple of accidents, or even just a couple of speeding tickets. Now you're more likely to be accepted as a standard risk. Your premium will still be relatively high, but not as high as before.

To find lower rates, call an independent insurance agent and ask her to shop for you; check with companies like State Farm that sell through their own agents; or call insurers that sell by phone and mail (such as Geico Direct at 800-8413000, in all states except Massachusetts and New Jersey; Progressive at 800-AUTO PRO, in all states except Massachusetts, New Jersey, and South Carolina; or Reliance-Direct, 800-619-1600, in a number of states). If you apply for new insurance, hang on to your current policy until you're sure the new company has accepted you (up to 60 days).

Also ask the insurer about any discounts you might qualify for. There might be price breaks for: nonsmokers, graduates of defensive-driving courses, senior citizens, students with good grades, families whose teenage drivers attend school more than 100 miles away (so they can't get at the car!), low-mileage cars, cars with air bags or scat belts that wrap around automatically, cars with four-wheel antilock-braking systems, and cars with built-in antitheft devices.

Some other ways to lower your rate:

• Tell your insurance company or agent about any changes in your life that affect risk. You should pay less when the young driver in your family graduates and leaves home, or when you retire and stop using your car for commuting.
• Raise the deductible on your collision insurance from $250 to $500, or from $500 to $1,000. Odds are, you'll save more in premiums than you'll ever pay out of pocket for collision costs.
• Buy a car that's cheap to repair. Your insurance agent can tell you which cars are money-eaters and which aren't.
• Insure all your cars with the same company, and buy your homeowner's or tenant's insurance there too.
• Share your car with your teenager. When teens have their own cars, or drive yours more than half the time, they're considered principal drivers and cost more to insure.

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By Jane Bryant Quinn and Kate O''Brien Ahlers

TRILOGY SPINS EMPLOYEE IDEAS INTO GOLD

The start-up factory at Trilogy Software is set to churn out another Internet business this week, this time aimed at the multi-billion-dollar insurance industry.

Trilogy will announce the launch of insuranceOrder.com, a Web site that will allow consumers and businesses to compare car insurance offerings and make purchases online. While the site is initially limited to car insurance, the firm plans to quickly expand into other areas, such as home, life and health insurance.

The start-up will be in direct competition with several other established players, most notably InsWeb (www.insweb.com), but Trilogy (www.trilogy.com) is looking to leverage its experience at operating large-scale electronic commerce marketplaces.

"The key advantage that our site will provide is the ability to offer consumers a binding price quote based on their personal information and credit histories," said insuranceOrder President Andy Weitz. "Other [insurance] sites act like referral services: They pass your information along, or provide you with an estimated quote and tell you someone will get back to you. The rate we give buyers at the end of the process is a binding offer."

Encouraging new ideas

Trilogy is well known for its policy of encouraging employees to dream up business ideas, and then providing them with the financing and resources to bring them to fruition. Some of the companies already launched by the Austin, Texas-based company, include PcOrder.com, applianceOrder.com and carOrder.com. PcOrder was spun off a little more than a year ago, and now has a market cap of about $362 million, although in December 1999 it was valued at more than $1 billion.

Weitz is another product of Trilogy's entrepreneurial spirit. He joined the company out of college just nine months ago, and a few months into the job, proposed launching a dot com for purchasing insurance. He got the idea after moving to Texas and trying unsuccessfully to use the Internet to purchase his own car insurance.

Now, at only 23 years old, he is the head of his own venture.

"It's been an amazing experience," Weitz said. "But that's what attracted me to Trilogy in the first place."

InsuranceOrder has initially signed on two insurance providers to launch the service: Atlanta Casualty Insurance and Reliance Personal Insurance.

Paul Wilmore, vice president of marketing at Cleveland, Ohio-based Reliance, said the company spent a lot of time working with Trilogy to make sure that adequate checks were being used to qualify applicants. The software automatically runs a credit check against the applicant, and plugs into Reliance's own back-end systems to check the applicant's driving record.

Wilmore acknowledged that consumers have been slow to use the Internet to purchase insurance, but he believes it's only a matter of time before it becomes a big sales channel. "We really believe it's the delivery method of the future," he said.

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By Mel Duvall

INSURANCE BY THE MINUTE

One of the nation's biggest auto insurers is using satellites to track its customers at the wheel. Is this the future of auto insurance?

IF DRIVERS PAID FOR gasoline the way they pay for auto insurance, they would pay a flat fee to a gas station every few months. After that they could pump all the gas they wanted. Sound silly? Of course. Under such a system, low-mileage drivers would subsidize high-mileage drivers. Everyone would spend more time on the road since the added cost of doing so would be zero.

All-you-can-pump gas isn't about to catch on. But all-you-can-drive auto insurance is here. It's the norm. An experiment by Ohio-based Progressive Corp., however, could eventually change that.

Progressive has fitted the cars of some of its Texas drivers with videocassette-size Global Positioning Satellite (GPS) devices. The devices, which sit behind the dashboard, track the number of minutes customers drive, as well as where they drive and when. The insurer then uses this information to set each customer's premium. If this doesn't prove too costly-and if regulators don't block it-it could reshape the auto insurance industry.

For Progressive, the nation's fourth-largest auto insurer, with revenue of $6 billion, the benefits are clear. If it can assess the risks of different drivers more precisely than the next insurer, it will be in a position to price coverage in a way to attract low-risk customers and chase away high-risk ones. The Progressive rating system doesn't displace traditional criteria (like age, address, vehicle model and accident history) but rather supplements them. You pay more in the Progressive GPS plan for driving a lot, driving at night or driving in cities.

While other insurers typically ask their drivers about mileage, the answers don't have much effect on premiums, says James Barrett of the Economic Policy Institute in Washington, D.C. "They assume that you lie, because it is in your interest to do so," he says. "And so they give very little weight to those insurance forms that you fill out."

Progressive's experiment avoids this problem. And it's not just the insurer, which can charge drivers more accurately, that sees benefits. So, too, do drivers and possibly society at large.

According to Progressive, customers in Houston, where tests of the program began in 1998, have saved an average of 25%, with some saving 50% or more. Just how much of that savings is due to people altering their driving habits is .unclear. But transportation experts say that making premiums fully variable-Progressive makes them mostly variable-would lower the number of miles people drive by 10% or more.

Liberals are going to be twisted into knots trying to decide whether to oppose this kind of insurance. On one hand Progressive is discriminating among customers far more than most insurers do, and discrimination sounds bad. On the other hand the reduction in miles driven would make the air cleaner. The U.S. Environmental Protection Agency has signed an agreement with Progressive to monitor the program's environmental benefits.

A big drop in miles driven would, of course, also lower the number of traffic jams and accidents. Progressive's program could also help women-who drive about 40% less than men-and the poor, who drive only about half as much as the better-off. Then there are the losers: people who drive a great many miles or who drive late at night or in areas that are heavily congested. If Progressive's program grows in popularity, such drivers could end up paying more even if they don't sign up for GPS monitoring. Why? Because simply by declining to sign up, they reveal they ought to be paying more.

You can imagine the squawks that will come from people who believe that prices ought to be set by government decree rather than by the free market. Listen to former Texas insurance commissioner Robert Hunter, now insurance director at the Consumer Federation of America. "For example, the swing-shift guy who may be a laborer or the lady who cleans the offices who's probably driving home at 2:00 A.M. Are you going to start charging her for that? That doesn't seem fair," he says.

Hunter also raises another big worry: privacy. "With GPS you can tell where people are stopping and going," Hunter says. "So if I stop on a corner and do that every night on the way home from work, am I going into the bar or across the street to the health club? Will they use that kind of information?"

Progressive promises that it won't. Todd Litman of the Victoria Transport Policy Institute says that any privacy concern can be solved. "You could have it structured so that the data are not retained one day to the next," he says. "So the only thing the computer does is track your bill. It's impossible for somebody to come back later and demand the information."

What about Progressive's competitors? Will they want the regulators to outlaw GPS pricing? Not necessarily. If the plan tends to keep Progressive's customers off the road, it will leave fewer targets for other cars to collide with. "Progressive is going to reduce the accident costs for all the other insurance companies in Texas by a lot," says Aaron Edlin, an economist and law professor at the University of California at Berkeley.

Competitors probably won't copycat Progressive right away. Not even Progressive has the data in hand that will enable it to accurately price a minute of driving by a given customer. Should the company get the pricing wrong, say, by charging good drivers too much, it will create opportunities for the competition.

Another issue is the cost of the GPS technology. Buying and then installing GPS devices in cars once they're on the road costs several hundred dollars. But costs should drop over the next couple of years as GPS devices grow more popular and as automakers begin installing them at the factory. Despite the obstacles, Progressive seems dead serious about making this system work. "Innovating is really part of our culture," says Glenn Renwick, Progressive's boss of insurance operations. While the company isn't enrolling new per-minute drivers right now in Texas, it has talked to regulators in other states, including Ohio, Illinois and California. It has also obtained two patents.

Is Progressive's high-tech pricing the future of auto insurance? Could be. "Automobile-insurance pricing has hardly changed at all in the past 50 years," says transportation expert Litman. "And it's astounding, because there is every reason that it should be priced differently."

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By Ira Carnahan

AUTO INSURANCE/BE PREPARED

YOU'LL REPLY TO A BOATLOAD OF QUESTIONS BEFORE GETTING ANY QUOTES

WE FILLED OUT quote forms at more than a dozen sites for a variety of hypothetical people in a variety of places: a 30-year-old single woman with a 1997 Jaguar XK8 coupe, in Ohio and California; a 40- and 41-year-old couple who drive a 1999 Volvo S70 and a 1997 Toyota Corolla, in Maryland and California; and the same family with a 16-year-old son.

We quickly noted a problem: The company that offered the lowest quotes for one family offered some of the highest for the others. And the site with the lowest quote also produced the highest quote for the same family. The leaders change if you live in a different city, have a different car, or have a record of accidents and tickets. And the number of quotes you can get varies a lot from . state to state.

The two major on-line marketplaces, QuickenInsurance and InsWeb, give you the greatest number of accurate quotes in the least amount of time. But be prepared: You can't get accurate auto-insurance quotes without answering a boatload of questions.

QuickenInsurance makes it as painless as possible. After spending about 15 minutes typing in information about your cars, your driving record and the amount of coverage you want--helped by excellent "advice" buttons, which explain how each variable can affect your rate--you'll get immediate quotes from up to five insurance companies.

One of the best things about QuickenInsurance is the accuracy of its quotes. Its information comes directly from the insurance' companies, so you'll get the price you were quoted, as long as everything about your motor-vehicle and claims records checks out. Click on the "compare details" button for a table that shows how each insurer stacks up in terms of claims-processing time, financial-strength ratings, which discounts are included in your quote and other details. It's easy to fiddle around with different variations to see how much your rates will change if you raise your deductible or increase your liability coverage.

You remain anonymous until you apply for a policy, which you can also do online. Several companies even activate your coverage immediately if you submit your credit card number.

QuickenInsurance's biggest weakness is the limited number of companies it quotes. In some states, you'll go through the entire process and get prices from only one.

So if you still have energy left and want more quotes, you should also go to InsWeb and see how many companies it offers in your area (click on the "quoting companies in your state" link at the bottom of the state page). In some states, InsWeb came up with almost the same results as QuickenInsurance did. But in others, such as California, it included immediate quotes from 12 companies and emailed a 13th within minutes. (InsWeb insurance quotes are offered through many partner Web sites, including Kiplinger.com.)

The biggest annoyance with InsWeb is the lack of anonymity. After you spend about a half-hour filling out all the forms, you must type in your name, address and phone number before you're allowed to see any quotes. And you can't buy a policy online--an agent will contact you.

A few of the biggest providers don't appear on either site. Check out Geico, and call USAA (800-365-8722) if you're in the military or a dependent. You can get a State Farm quote at the company's own site.

Also take a look at eCoverage, an online-only auto-insurance company that offers low rates because its brand-new technology cuts down on administrative costs (and on your time answering questions). The company sells policies in fewer than 20 states right now but is quickly adding more. You can buy a policy immediately, and even submit claims online.

By Kimberly Landlord

SIGNING UP UNINSURED DRIVERS

States have tried many tactics to reduce the number of uninsured drivers-vehicle impoundment, jail terms, and laws limiting the rights of the uninsured to make claims against insured drivers. And while the rate of drivers with no car insurance has declined, there is still up to a one-in-three chance, depending on where you live, that a car that collides with yours will be driven by an uninsured motorist, according to a study last year by the Insurance Research Council. When that happens, of course, accidents can turn into nightmares. The full cost of your medical bills and property damage can be unrecoverable.

California, which is among states with the most expensive auto insurance and whose rate of uninsured motorists is among the highest, is trying to solve its problem in a new way. In Los Angeles and San Francisco counties, low-income residents with good driving records are now eligible for bare-bones auto insurance costing $450 per year in Los Angeles and $410 per year in San Francisco. (Unmarried men between 19 and 24 pay a 25 percent surcharge.) Up to now, these same drivers were reportedly charged double or triple those rates. The four-year pilot program began this summer.

"This landmark program was sparked by the dilemma faced by hundreds of thousands of uninsured low-income drivers who are required by law to carry auto insurance but who cannot afford to do so," says Norma P. Garcia, a senior attorney in Consumers Union's West Coast Regional Office, which strongly supported the state legislation that created the program. "This opens the door for safe low-income drivers to buy affordable auto insurance, allowing them to drive legally."

Fewer than 300 motorists had signed up as of early September, a number that officials are hoping to boost with a billboard campaign and streamlined registration. Consumers Union is also trying to promote the low-cost policies. With the help of a $20,000 grant from the nonprofit California Consumer Protection Foundation, Garcia and other advocates will be targeting community groups and other institutions in San Francisco County to get the word out to eligible consumers.

Ultimately, low-cost insurance could be a boon to all insured California motorists. With fewer uninsured drivers on the road and in accidents, the cost of uninsured-motorist coverage would likely decrease. That's one intent of the program. And success of the pilot could help more than California, where slightly more than one in four vehicles is )uninsured. States including Connecticut, Kentucky, Louisiana, and Washington are watching the initiative to gauge its effectiveness, says Richard Manning, regional director of the nonprofit California Automobile Assigned Risk Plan, a group supported by the insurance industry that administers the program.