DES MOINES, Iowa — The news of millions of car recalls is alarming. It has drivers across the country asking whether their cars are safe. Yet the inquiry shouldn't stop there. Drivers should take a look at their insurance policies to make sure they're adequately covered in case of an accident, whether it's caused by a mechanical failure or their own fault.
Then, with a clear sense of what's needed, a key question to ask is how they can save some money.
So before you renew your current policy, it's best to start by taking stock of your personal circumstances. Life changes - marriage, a divorce, a move or a new job that changes your commuting distance - will influence your decision.
Perhaps an adult child has come back home and needs to drive one of your cars. It's happening frequently according to a recent Pew Research Center study in which 13 percent of parents reported at least one of their adult children moved back home in the past year. That likely means adding them to the family's auto policy and paying higher premiums.
Absent a major life change, it's a good idea to review your auto insurance needs at least every year when you get the renewal notice, said Jeanne Salvatore, a spokeswoman for the Insurance Information Institute, a trade group.
"At that point, you want to consider whether or not to renew that policy or look around to see if you can get a better deal," she said.
Keep in mind insurers have their own methods of computing premiums, and the differences can result in one company charging hundreds of dollars more a year. It pays to shop around.
Some of the factors they use are essentially out of your control. Such as your age and where you decide to live. Drivers in rural states like South Dakota and Iowa pay on average just over $500 a year, while those in New York or Washington, D.C., can pay double that amount. So, if there's a move in your future, consider whether you might have to shell out more.
Still, you can retain some control. Here are five steps to contain costs:
Keep your driving record clean. Accidents and moving violations, such as speeding tickets, increase rates. An accident may increase premiums 10 to 40 percent depending on the insurance company and where you live. It's a good idea to ask an insurance company for its policy on accident surcharges, because they vary widely.
Drive less. The more you drive, the more you'll pay. If you drive less than 10,000 miles a year, you often get a break.
Research before buying a car. Some cars cost more to insure because they're stolen more often, they cost more to fix or their safety records are worse than others. Bankrate.com offers a list: www.bankrate.com/ finance/insurance/10-most-and -least-expensive-cars-to-insure -1.aspx .
Keep your credit record clean. Some insurance companies use your credit report to determine how much risk you represent. They may use payment history, bankruptcies or outstanding debt to come up with a credit-based insurance score. Methods differ by company, so this score is one area where premiums may vary. Ask any company you're researching how it uses this information.
Assess how much insurance you need. You may be wasting money with excess coverage. This could include whether you want to carry collision or comprehensive insurance or just basic liability coverage on an older car.
Finding a provider
Car insurance is a competitive business, with coverage on passenger cars exceeding $164 billion in 2008. The industry is dominated by some major players who fight for market share through high profile television and magazine ads.
State Farm holds more than 18 percent of the car insurance market share in the United States, followed by Allstate, with nearly 11 percent.
The insurance group owned by billionaire Warren Buffett's Berkshire Hathaway is third with a nearly 8 percent market share. Among the companies Berkshire holds is Geico, the company famous for its spokes-gecko.
Shopping for car insurance should involve not just the cost but the reliability and responsiveness of the provider.
Consider starting with a list of companies at the Insurance Information Institute's Web site. You can find out which ones operate in your state at www2.iii.org/companies.cfm.
Narrow the search by asking friends and family what company they use, said Bob Passmore of the Property Casualty Insurers Association of America. Especially those who might be able to recommend an insurance company that handled a claim well.
"That's the moment of truth, you want [an insurance company] to be there for you when you need them," he said.
Another comparison tool you can use is the insurance ratings by J.D. Power and Associates, a market research company. It surveys thousands of policyholders to come up with a rating on several criteria including pricing, policy offerings, billing and overall satisfaction. The 2009 survey results are at: www .jdpower.com/Autos/ratings/Auto-Insurance-Provider-Ratings .
Another organization, the National Association of Insurance Commissioners, allows you to search companies to find complaint reports and financial information on its Consumer Information Source page: https://eapps.naic.org/cis.