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Shop around for better rates on homeowners, auto insurance

Posted: Friday, August 08, 2003

NEW YORK (AP) With the cost of auto and homeowners insurance rising rapidly, it's a good idea to review policies to see if there are ways to reduce premiums.

The reason to look at them together is that many insurance companies will give consumers a discount if they buy both auto and homeowners coverage from the same company.

The average consumer will spend $855 on auto insurance this year, up about 18 percent since 2001, according to the Insurance Information Institute in New York. And consumers are expected to spend about $603 for homeowners insurance, up more than 17 percent in the past two years, the institute estimates.

The reasons for the premium increases range from higher medical costs for accident victims and more-costly car repairs on the auto side to an unusually high number of storms and the emergence of expensive mold claims on the homeowners side.

Still, families facing increases can take some steps to try to lower their costs, experts say.

The most important thing to do is comparison shop, because premiums vary widely from company to company.

One place to begin looking for companies and agents is www.naic.org, maintained by the National Association of Insurance Commissioners, which represents state insurance officials. State insurance departments also keep lists of approved companies, and some provide lists of standard rates.

When it comes to auto insurance, ''you get the biggest bang from raising your deductible,'' said Carolyn Gorman, a vice president at the Insurance Information Institute's office in Washington, D.C.

The deductible is the amount a consumer has to pay on a claim before insurance coverage kicks in.

Gorman said increasing the deductible to $500 from $200 on an auto policy will reduce the cost of collision and comprehensive coverage by 15 percent to 30 percent.

Some auto insurance companies also give discounts, which can lower costs even more, according to the institute, which offers a variety of tips on insurance at www.insurance.info.

Ask about possible discounts if you're 50 or older, if you haven't had an accident or moving violation in the past three years, if you or your teenage drivers have taken a defensive driving course, or if you've installed anti-theft devices in your car.

Sometimes families can get a better auto insurance rate if they apply through a professional organization or other group, such as AARP.

When it comes to homeowners insurance, raising the deductible can reduce the premium, said Alan Snyder, chief executive of Answer Financial Inc. in Los Angeles.

''Most people, if they have a small claim, don't file it,'' Snyder said. ''They're right. It will make the premium go up. Then it's silly to have a very low deductible.''

The company's Web site at www.answerfinancial.com has calculators that let insurance shoppers plug in different deductibles, as well as add or subtract auto insurance, to see the impact on premiums.

As with auto insurance, discounts can be available for a variety of reasons, including installation of a home security system. Some companies give discounts to long-term policy holders who have not filed many claims, while others will give price breaks to retirees on grounds they're more likely to spend a lot of time at home and keep their property up.

Snyder worries that many homeowners may be underinsured because they don't understand the difference between actual cash value and replacement costs.

Actual cash value is the replacement cost of lost or damaged property, minus depreciation. Policies that pay actual cash value are less expensive than those that cover replacement cost, which is the cost of replacing property without a reduction for depreciation.

''People tend to underestimate what it would cost to rebuild, so they don't get enough coverage,'' Snyder said.

Home buyers should be aware that insurance companies are keeping a closer watch on the number of claims filed on a particular property and raising premiums accordingly.

Consumers can check the so-called CLUE score, or Comprehensive Loss Underwriting Exchange score, for a primary residence for a fee of $12.95 at www.choicetrust.com.



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