Tess Vigeland: Some insurance companies now have apps for auto coverage. Experts say it’s best to compare quotes from at least four companies before making a decision. Amy Danise is senior managing editor at Insure.com. She joins us with some more money-saving car insurance tips. Thanks for being here.
Amy Danise: Thank you.
Vigeland: How much does the type of car you drive have an effect on your rate?
Danise: It affects your rate a lot if you’re buying collision and comprehensive coverage. But if you’re only buying liability, then it doesn’t affect you.
Vigeland: Can you expand on that?
Danise: Well, sure. Liability is the damage that you do into other people when you crash into them, so that’s not based on your car model. But collision and comprehensive are for damage to your own vehicle, like say you hit a tree, or side swipe a guardrail, or hit a deer. So now your model is an important part of your price because then you’re looking at how much it costs to repair or replace your particular vehicle.
Vigeland: Why does my zip code make any difference at all?
Danise: It make a huge difference because the rates you pay are, to some extent, based on the other drivers in your community.
Vigeland: But that’s not fair!
Danise: It’s not fair at all.
Vigeland: I have nothing to do with how my neighbor drives!
Danise: It does to insurance companies. So if there are a lot of people crashing frequently where you live, or even if they don’t crash frequently, but they have very expensive claims because perhaps they are driving expensive cars, then that does affect your own premium.
Vigeland: But why?
Danise: Well, it’s all about risk. So essentially, insurance companies will say that you live in a risky place and your own risk of a crash if higher because those around you are filing more claims.
Vigeland: Wow. OK, I guess it’s just one of those facts of life. Now what about bundling your insurance, so that you’re with the same company for your car, your house, perhaps your apartment rental insurance. Will that generally get you a better rate?
Danise: It will. And that’s a common way to get a discount. Also, ask for safety discounts, anti-theft devices in your vehicle. If you’re 55 or older, you can probably get a discount for taking a defensive driving class.
Vigeland: You know, my car insurance company — with whom I also have my home insurance — told me some time ago that I needed to boost my car insurance up quite a bit because I was a home owner. I guess the theory being that if I were sued over an accident, I would want to make sure that they wouldn’t be able to take my house. What’s your advice on that?
Danise: I would agree with that. The more assets you have to protect, the higher liability limits you should be carrying or else you’re really opening yourself up to a lawsuit that’s not covered by insurance.
Vigeland: I’ve seen this pay-as-you-drive insurance all over the place recently. Can you tell us what that is and does it save you money?
Danise: So this is usage-based insurance, meaning that your insurance rate is based on exactly how much you drive. So in order to do this, the insurance company sends you a device that plugs into your car and it records how many miles you’re driving, if you’re breaking suddenly, and the time of day you drive. Because even night-time driving is riskier. And all this goes into creating your own personalized car insurance rate.
Vigeland: So it’s basically like having mom in the back seat.
Danise: It is a little bit, yes.
Vigeland: Well can you share perhaps the top three most expensive cars to insure and maybe the least expensive cars?
Danise: Sure. So for 2011 models, the least expensive vehicles to insure are the Chrysler Town & Country, the Toyota Sienna, and the Honda Odyssey. And the most expensive, at the other end of the spectrum, are the Mercedes SL65 Convertible, the BMW 750 hybrids, and the Mercedes SL63 Convertible.
Vigeland: All right. Amy Danise is a senior managing editor at Insure.com. Thanks so much.
Danise: Thank you.
Vigeland: We’re talking about cars all week as part of our preparation to go on the road for an entire show about you, your cars, and all the money you spend on them.
Find more tips from Amy about how to save money on your auto insurance at our Makin’ Money blog.
We’re here to help you navigate this changed world and economy.
Our mission at Marketplace is to raise the economic intelligence of the country. It’s a tough task, but it’s never been more important.
In the past year, we’ve seen record unemployment, stimulus bills, and reddit users influencing the stock market. Marketplace helps you understand it all, will fact-based, approachable, and unbiased reporting.
Generous support from listeners and readers is what powers our nonprofit news—and your donation today will help provide this essential service. For just $5/month, you can sustain independent journalism that keeps you and thousands of others informed.