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A look at auto insurance
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May 4, 2001: 9:55 a.m. ET
Choosing the right insurance coverage that fits your financial condition
By Staff Writer Julie Vallese
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NEW YORK (CNNfn) - If there's one ugly side of auto insurance, it's the grueling complicated details. How can you select the right insurance coverage and access the correct information to fit your needs? And as your personal financial situation evolves, how would that affect you?
Consumer safety affects us all. Unfortunately, it can be tough to track down information on product recalls, crash tests and government warnings. CNNfn is here to help. Send us your questions at consumer@cnnfn.com and we'll do our best to get them answered. The Q&A appears weekly on this page.
Question: How can I fairly access what I need in various categories of auto insurance? As my financial condition has changed, I don't know how that may affect the insurance I need.
- Massachusetts
Answer: Different states require different levels of coverage. So you will need to know what the minimum is in your state. The kind of car you drive may also determine the coverage you should choose. For example, is it a new car still holding value? Or is it an old car with very a low replacement cost? We checked with the American Automobile Association for some tips on how to determine the level of coverage you need.
- Shop around for both price and service. This may take some time, but talk to friends, surf the net and interview different agencies. You should get quotes from at least three companies before making a decision.
- Ask for a higher deductible. If you are willing to pay more out of pocket in the event there is damage to your vehicle then your deductible will be lower. For example, increasing your deductible from $200-to-$500 could reduce your collision and comprehensive cost by 15-to-30 percent.
- Drop collision and/or comprehensive coverage on older cars. If your car is worth less than $1,000, it probably doesn't pay to have this kind of insurance. Any claim you make wouldn't add up to much more than what you are paying as a deductible. Are you paying for use of a rental car in the event of a collision, towing or an uninsured motorist fee? These may be things you can drop to lower your upfront costs. But before doing this know what this will mean in the event you are in a crash.
- Know what it costs to insure a car before you buy it. If you are not tied to a particular make and model, and are in the market for a new car, then buy what the industry calls a "low profile" car. A car that is less expensive to repair and not likely to be a favorite for thieves will cost less to insure.
- Know how much you drive. If you drive less than the average predetermined miles per year (this is usually somewhere between 12,000 and 15,000 miles per year), ask your insurance company if they offer a discount.
- Rural versus Urban -- You may not think insurance prices can help you decide where to live. But if you are contemplating a move, keep in mind prices are usually lower in areas with low traffic congestion.
- Your car's equipment can make a difference. If your vehicle has airbags and automatic seat belts insurance companies will sometimes offer a discount. Anti-lock brakes are also equipment some companies have a discount for.
- Ask what they offer. Most companies don't advertise additional discounts, so don't be afraid to ask. Some offer discounts for a clean driving record, drivers over 50, students with good grades, and any additional training you may have to make you a safer driver.
Keep in mind you can usually change your coverage at any time. So if your financial situation has changed you can call your insurance company and discuss what changes can be made to your policy. If you haven't asked these question before be sure to ask now. 
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