Little-Known but Important Car Insurance Issues

Even though you've done your research and insured your vehicle, there's still more to know when it comes to the wonderful world of car insurance. Below, we look at some not so commonly discussed, but important, issues about insurance that can benefit you tremendously when managing your automotive coverage.

Switching Auto Insurance Companies Relatively Painlessly
You may choose to terminate your auto insurance policy for any number of reasons. Maybe you're moving to another state, getting rid of your car altogether, or maybe you're just dissatisfied with your existing company's service. Beware, however, that if you don't give your insurer sufficient notice, it could end up costing you money, or negatively affecting your credit history.
Standard practice for most insurance companies is to allow you to cancel your policy at any time during the policy term by sending written notice stating the date of cancellation. Your car insurance policy does not necessarily terminate at the end of each policy term, so it isn't safe to assume that you can just cancel by failing to pay your next bill. If you don't send notice of cancellation, your insurance company will automatically bill you in advance for the next term's premium payment. If you don't pay it, they'll cancel your policy and it will go on your credit report.
Don't expect this information to be made explicit in your policy; while insurers are quick to inform you that your coverage will terminate at the end of the policy period if you don't pay your next premium, they don't always inform you of the repercussions you may face for not giving formal notice of your policy termination.
Another thing to keep in mind is that allowing your car insurance policy to be canceled may hurt your chances of obtaining auto coverage in the future. A cancellation in your insurance history may cause other companies to label you a high-risk applicant, thus giving them an excuse to charge you a higher premium. However, you can usually avoid this trap by officially terminating your policy in a timely manner.
Here's what to do: Call your insurer, let them know that you want to cancel your policy and give them an effective date. They will then send you a cancellation request form - review this form carefully before you sign and return it to your insurer.
If you're switching to another insurer, and you plan on driving your car throughout the process, you want to make sure there is no lapse in your car insurance coverage. Therefore, be sure to coordinate the effective starting date of your new policy with the termination date of your old policy. The last thing you want is to get in an accident during an uninsured interim - how stupid would you feel if that happened?
As long as you are considerate about giving your insurance company plenty of notice when you want to cancel your auto policy, and then go through the official termination process, you should avoid any negative repercussions.
Closing the Gap—With Gap Insurance
Just when you thought you knew everything about insurance — along comes gap insurance.
Though it may sound trivial, gap insurance is a must for leasing. And if you made a small down payment when buying a car, a gap policy can be lifesaver as well. But first, let's look at why it exists.
As the name implies, gap insurance covers what traditional auto insurance doesn't. In other words, it closes the gap between what your insurance company pays if your car is stolen or totaled and what you owe the finance company.
Let's take a test case. Say you bought your car two months ago for $25,000. You begin making payments at about $500 a month based on a 6 percent interest rate. Then, disaster strikes: a tree falls on your car and flattens it.
You call the insurance company and it looks into its crystal ball and decides at the time of the accident your car was worth only $20,000. The car may only be a couple of months old, but it has already lost 20 percent of its value. Unfortunately, the finance company still wants the full amount you owe them. With interest, tax and license fees, they figure that to be $27,000.
Yikes! There's a gap of $7,000 between the $20,000 that the insurance company is willing to pay you and the $27,000 the finance company is demanding. Most folks are going to be eating Spam dinners for the next two years, but if you have gap insurance you can safely order steak.
Apply the same scenario to someone who bought their car. If they left the dealer lot without putting several thousand dollars down, they likely owe more than the insurance company will pay if the vehicle gets totaled or stolen in the first few years. Once again, gap coverage can save the day.
And that's why gap insurance is a must for many drivers. In fact, gap insurance is usually mandated by lease contracts or included within them. If a gap policy is required but not included in your contract, you should shop around for this coverage (insurance companies sell it). If gap coverage is included in the lease, check to see how much is offered and how much you're going to be paying for it. (In some cases, lease contracts may include what is known as a gap waiver, which protects you from gap charges in the event that the leased vehicle is declared a total loss — eliminating the need for a gap policy.)
Is gap insurance necessary for people who finance their cars? Well, it depends on your coverage. If your regular insurance policy is written to pay off the fully financed amount, then you don't need gap insurance.
A few things to keep in mind when buying gap insurance:

• Although most people purchase it when a lease is initiated, some insurance companies will sell you a gap policy anytime during the lease term.
• You must be in compliance with all terms of the lease.
• Your gap insurance policy may not be honored if you don't have collision and comprehensive insurance coverage. Further, lease contracts generally require that you carry collision and comprehensive at all times.

If your car is totaled, or stolen, carefully follow all requirements made by your insurance company. For example, some companies require you to continue making loan payments on your totaled car until the money from the gap insurance is paid out.
So when initiating a car loan or lease, always remember to ask your insurance agent or loan officer about gap insurance. If you have an accident you'll be glad you planned ahead.
OEM vs. Aftermarket: Decisions, Decisions... You've been in an accident, you're dealing with the nuisance of getting your car repaired, finding someone to chauffeur you around (unless your insurance covers the cost of a rental, which is always nice), and you've probably had to take some time off from work to recover and take care of the whole mess. Life couldn't get much more complicated, right?
Um...well, wrong.
Oh, did you think you could just turn your car over to the body shop and trust them to do the best job possible to make your car like new again? 'Fraid not, dear friend. You must decide whether or not to mandate that the repair facility use OEM (original equipment manufacturer) replacement parts, as opposed to aftermarket parts. What difference does it make, you ask? The answer is debatable.
According to non-OEM manufacturers and many insurance companies, the difference between OEM and aftermarket parts is negligible. And it's not surprising that insurance companies are such strong advocates of using aftermarket parts, seeing as how they are considerably less expensive than OEM parts. For that reason, many insurance companies will not reimburse 100 percent of your repair costs if OEM parts are used. Most insurers discourage the use of OEM parts by making the policyholder pay for the difference in cost between the non-OEM parts specified in the estimate and the OEM parts used. This can turn into a large sum of money, as OEM parts may cost nearly twice as much as aftermarket parts. For example, an OEM replacement hood for a '96 Ford Contour can cost close to $600, whereas an aftermarket hood can be had for about 300 bones.
A few insurance companies, such as Chubb Insurance Group, actually encourage their policyholders to use OEM repair parts, while not charging them a penalty. It should be noted however, that Chubb is one of the more expensive auto insurers.
The use of aftermarket parts can be called into question for two reasons. First of all, they decrease a vehicle's resale value. This should certainly be taken into consideration if you plan on reselling or trading in your car. Many dealers check the repair history of vehicles to see what kinds of parts were used. The trade-in value of a BMW with non-BMW parts can certainly be adversely affected. By the same token, using non-OEM replacement parts to repair a leased car could cost you all or part of your security deposit, because technically you would not be returning the vehicle in the same condition as when it was leased.
The other concern with aftermarket parts has to do with safety. Advocates of OEM parts claim that non-OEM parts aren't subjected to the same crash-testing procedures as OEM and therefore are not as safe. The Insurance Institute for Highway Safety (IIHS), however, contends that making cosmetic repairs with non-OEM replacement parts does not degrade the safety of a vehicle in a crash.
In the end, it's up to you to decide what type of replacement parts are used in your vehicle's repair. If you opt to save money and use non-OEM parts, you should make sure that they are approved by the Certified Automotive Parts Association (CAPA), which sets the standards that must be met in the manufacturing of non-OEM parts for collision repairs.
Obviously, you want to know your options before you turn your car over to a repair facility. If you are concerned with the depreciation of your car, especially if it's a high-end vehicle, you'll probably be wise to go with OEM parts at repair time, even if you have to foot part of the bill. But if your car's resale value isn't of extreme importance to you, and you'd rather not dig too deeply into your own pocket, you should consider allowing the body shop to use non-OEM parts.
Just make sure that you specify one way or the other with your repair facility - the last thing you want is to end up paying for OEM parts that you weren't concerned with using, or to get aftermarket parts put on the super-rare ride that you intend to keep in tip-top shape for the rest of your life. As long as you play an active role in choosing your body shop and then communicate clearly with both the repair facility and your claims adjuster, you shouldn't be caught off guard.
Deciphering Auto Insurance Lingo
Here's a glossary of commonly used auto policy terms.
Actual Cash Value
The cost to replace property minus the amount it has depreciated since the original purchase date.
Benefit
The amount an insurance company pays to you or your beneficiary when you file a claim.
Bodily Injury Liability
This covers medical expenses for injuries the policyholder causes to someone else.
Claim
The policyholder's request for the reimbursement of a loss covered by their insurance policy.
Collision
This covers damage to the policyholder's car from any collision. The collision could be with another car, a light post, parking curb, garage wall, etc.
Comprehensive
For damage to the policyholder's car that doesn't involve hitting another car. Covers damage resulting from fire, theft, falling objects, missiles, explosion, earthquake, flood, riot and civil commotion.
Deductible
The portion of losses that you agree to pay in the event of an accident. Higher deductibles lower premiums significantly, but will come back to haunt you in the case of an accident, especially if you're at fault.
Endorsements
These are changes to the original insurance contract, such as a different deductible or an additional car or driver.
Exclusions
Situations that are not covered by a given insurance policy; specific exclusions are listed on your insurance policy.
Extraordinary Medical Coverage
Sometimes included in Personal Injury Protection, this coverage protects you if you suffer accident-related injuries that require serious and/or long-term medical care and begins once you have exhausted the limit on your standard medical benefitscoverage.
Full Coverage
This indicates that you have all the minimum coverage for your state of residence; it does not necessarily mean you will always be fully covered.
Income Loss Coverage
Sometimes a part of Personal Injury Protection, income loss coverage takes care of you if you're unable to work due to accident-related injuries.
Indemnity
A predetermined sum paid for a covered loss.
Limits
The maximum amount of money your insurance company will pay out for your losses; many states have minimum required limits.
Medical Payments or Personal Injury Protection (PIP)
Covers the treatment of injuries to the driver and passengers of the policyholder's vehicle. At its most extensive, PIP can cover medical payments and the lost wages of those injured in an accident. It may also extend to covering the policyholder if he/she is injured while in another vehicle or is hit by a car while on foot.
No-Fault Insurance
A no-fault policy usually will not require that someone be assigned the blame in order for the policyholder to receive his/her money. In no-fault states, insurance companies are required to have this type of policy.
Property Damage Liability
Pays for damage the policyholder causes to someone else's property.
SR-22
A document that shows proof of financial responsibility in the case of a traffic violation.
Tort
A legal term that describes circumstances when someone is deemed legally responsible for injuring another person or damaging his/her property. Some states encourage you to make a tort provision, thereby reducing the cost of your premium by limiting your right to sue for non-monetary damages.
Uninsured/Underinsured Motorist Coverage
This is to pay for treatment and/or property damages of the policyholder in the event that he/she is injured in a collision with an uninsured driver. Underinsured motorist coverage is another policy option; it kicks in when an at-fault driver has auto liability insurance, but the limit of insurance is insufficient to pay for the victim's damages.
To delve even more deeply into the wonderful world of car insurance and find out your own minimum policy requirements, see the state-by-state table in our feature "How Much Auto Insurance Do You Really Need?"

How to Shop for Car Insurance

The word shopping brings a feeling of immediate excitement to most people. But if you combine the word shopping with car insurance — as in "shopping for car insurance" — it produces the opposite effect. The thought of shopping for auto insurance makes the eyes glaze over and the heart rate drop to the pace of a slumbering couch potato. Couch potato? Indeed. Doug Heller, a consumer advocate at The Foundation for Taxpayer & Consumer Rights (a California-based consumer advocacy group) and a recognized insurance issues specialist, told us that too often "people purchase insurance by calling the number on the screen."
But wait, this is important stuff! You want to be adequately covered if you get in an accident. And you certainly don't want to pay more for car insurance than you should. Maybe waiting for a solution to be beamed into your living room is not the best idea.
How can you stay awake while navigating through this murky subject? Just remember: There is money to be saved. How much? Hundreds, even thousands, per year. For example, one of the authors typed all of his insurance information into a comparative insurance service. The quotes (for very basic coverage on two old cars) ranged from $1,006 to $1,807 — a difference of $801 a year. If you're currently dumping thousands into your insurance company's coffers because of a couple of tickets, an accident or a questionable credit rating, shopping your policy against others may be well worth the effort.
Look at it this way — you can convert the money you save into the purchase of something you've lusted after for a long time. Hold that goal in your mind. Now, let's begin.
Before you can shop for something, you have to decide what you need. The first step in finding the right auto insurance for you is to figure out the amount of coverage you need. This varies from state to state. So take a moment to find out what coverage is required where you live. Make a list of the different types of coverage and then return for the next step. (You will find a list of each state's requirements and an explanation of the various types of insurance in "How Much Auto Insurance Do You Really Need?". Also, check out "Little-Known But Important Insurance Issues" as it has a glossary of basic insurance terminology.)
Now that you know what is required, you can decide what — if anything — you need in addition to that. Some people are quite cautious. They base their lives on worst-case scenarios. Insurance companies love these people. That's because insurance companies know what your chances are of being killed or maimed, and how likely it is for your car to be damaged or stolen. The information the insurance company has collected over previous decades is crunched into "actuarial tables" that give insurance adjustors a quick look at the probability of just about any occurrence.
It is important to keep in mind that the basis of insurance is a difference of opinion between you (the insured) and them (the insurance company). You believe you will, at some point, probably get in an auto accident. The car insurance company believes you probably won't. And the insurance company is willing to take your money to prove you wrong.
So how much auto insurance should you buy beyond your state's minimums?
"Look at your personal financial situation," Dennis Howard, director of the Insurance Consumer Advocate Network (I-CAN) and former insurance adjuster, advised. "If you have assets to protect — and that is all insurance is doing — get enough liability coverage." For instance, if you purchase $50,000 of bodily injury liability coverage but have $100,000 in assets, attorneys could go after your treasures in the event of an accident in which you're at-fault and the other party's medical bills exceed $50,000.
Howard noted that his general recommendation for liability limits are $50,000 bodily injury liability for one person injured in an accident, $100,000 for all people injured in an accident and $25,000 property damage liability (that is, 50/100/25) given that half of the cars on the road are worth more than $20,000. Here again, though, let your financial situation be your guide. If you have no assets, don't buy excess coverage.
Another issue Howard mentioned is that the limits of any uninsured and/or underinsured motorist coverage that you purchase cannot exceed the limits of your liability coverage. Such coverage, he said, can be valuable, as it will cover lost income if you're out of work for several months after being injured in a major accident.
Your driving habits may also be a consideration. If your past is filled with crumpled fenders, if you have a lead foot or a long commute on a treacherous winding road, then you should get more comprehensive coverage.
"Consumers should also be aware that they don't have to buy the package [of collision and comprehensive coverage]," Howard said. "If your vehicle is older, if you have a good driving record and if there is a low likelihood that it would be totaled in an accident, but a high likelihood of it being stolen, you could buy comprehensive but not collision." Seems like good advice for all of the 1989 Toyota Camry owners reading this article — this has been the most stolen car in the nation for several years (it's often stolen for parts). But we would expect that most of them on the road have well over 100,000 miles.
At this time, a rather sobering point needs to be interjected. Just having car insurance doesn't protect you from absolutely anything bad that might happen. First, the insurance company needs to back up the claims that they make in the fine details of the contract. TV ads show folksy adjustors at the scenes of natural disasters passing out claims checks like coupons for cocktail wieners at a supermarket. But, in case you haven't noticed, real life is a bit different from TV ads. If you have an accident, your car insurance company will take a close look at your claim before mailing you a check. And the check may be written for an amount much smaller than you had hoped. For this reason, you should be intimately familiar with the terms of your policy and call the company with any questions you might have.
Now that you have made several practical and philosophical decisions, it's time to start shopping. Begin by setting aside about an hour for this task. Bring all your records — your current insurance policy, your driver license number and your vehicle registration. Drink plenty of coffee. Have a phone at your elbow. And, of course, power up your computer.
Begin with the online services. If you go to Netquote.com or other insurance quote sites, you can type in your information and get a list of comparative quotes. The form takes about 15 minutes to complete. If this bores you, just remind yourself that you are saving money and you can use that money to buy something nice for yourself. If the entire shopping process takes you two hours to complete, and you save $800, you're effectively earning $400 an hour.
A few things to keep in mind: (1) When you use quote sites, you may not get instant insurance quotes. Some companies may contact you later by e-mail, and some that are not "direct providers" may put you in touch with a local agent, who will then calculate a quote for you. (A "direct provider," like Geico, sells an insurance policy to you directly; other companies like State Farm sell insurance through local agents. We'll discuss the pros and cons of each later.) (2) It's not easy to get quotes from these sites in all states — if you live in New Jersey, for instance, you'll probably find it faster to pick up the phone, since most insurers currently don't provide online quotes for this state.
You can also try getting insurance quotes from some of the insurance companies listed on the Edmunds.com Web site — Geico, InsWeb, or Insurance.com. The forms will take about 10 minutes each to complete.
Of course, there are many other insurers that you can contact online. But remember, while you're researching companies, make notes in a separate computer file or on a piece of paper divided into categories. This will keep you from duplicating your efforts. When you visit the different online insurance sites you should take note of several things:

• Annual and monthly rates for the different types of coverage — make sure to keep the coverage limits the same so that you can make "apples-to-apples" comparisons
• An 800 number to call for questions you can't get answered online
• The insurance company's payment policy (When is your payment due? What happens if you're late in making a payment?)
• Discounts offered by the insurance company that pertain to you
• The insurance company's consumer complaint ratio from your state's department of insurance Web site (more on this below)
• The insurance company's A.M. Best and Standard & Poor's ratings (more on this below)

Once you have exhausted your online options, it's time to work the phones. Those companies you haven't been able to get an online quote from should be contacted. Surprisingly, doing this process verbally can actually go faster than the online counterpart, providing you have all the information regarding your driver license and vehicle registration close at hand. When you get a quote, be sure to confirm the price. Also, ask them to fax or e-mail the quote to you as a record.
While talking to the insurance companies' telephone salespeople, make sure you explore all options relating to discounts. Insurance companies give discounts for a good driving record, favorable credit score, safety equipment (for example, antilock brakes), certain occupations or professional affiliations, and more.
Always bear in mind that your mission isn't just to buy the cheapest car insurance out there; it is to buy the cheapest insurance and still receive adequate coverage and service. "You don't want to pay to get a great deal on insurance and then not get your car repaired after an accident," Heller noted.
Your final selection should depend on two things:
a. the reliability of the insurance company based on the criteria above;
b. the price of the quote.
We can all find the lowest premium, but it may not be immediately obvious how to determine whether a company is reliable. When we say "reliable," we're talking about how the insurer treats you, the customer. Particularly, how will the company deal with you when you file a claim? Will you be paid the full amount to which you are entitled? And will you be paid promptly?
While there are never any guarantees, we've come up with several ways of seeking out the most reliable insurance companies:

1. Visit your state's department of insurance Web site. Although you may not be familiar with it due to lack of marketing, your state, and every state, has a department of insurance. Most departments have Web sites, and many publish "consumer complaint ratios" for all of the insurance companies that sell policies in their state. This ratio tells you how many complaints an insurance company received per 1,000 claims. All of the experts we interviewed recommended that consumers use complaint ratios as a resource before making a decision. "Just because they're a big name doesn't mean that they'll be a 'good neighbor' or that you'll be 'in their hands,'" Heller noted. If you can't get complaint ratios for your state, he said that you can often get a good idea of how a company treats its customers by comparing the complaint ratios published by other states (this obviously shouldn't be the only deciding factor since a single insurance company often varies significantly from state to state — consistently favorable or unfavorable ratios may be revealing, though). Another consideration: "High-risk insurers come out the worst [in the consumer complaint ratios]," said Brian Sullivan, a recognized insurance expert and editor of Auto Insurance Report, a weekly insurance industry publication. "Whenever you have a really big claim, it's more complicated.... And these companies tend to insure people who get into big accidents." Regardless, a high number of complaints should give you pause, even if the company is financially appealing. Similarly, be sure to jot down those companies with favorable ratios. Howard's Web site provides links and contact information for every state's department of insurance. Additionally, the department of insurance sites often provide basic rate comparison surveys. These can give you a rough idea of which insurers might interest you on a financial basis without the hassle of typing in all your personal information (as you must when you use one of the quote sites described above). This may be particularly useful if you're going to use the phone, rather than the Web, to shop.
2. Find out which companies body shops would recommend. Howard offered another idea that you may never have considered: "Contact the local body shops of dealerships or others that you trust. See which companies they would recommend." You can compare the consumer complaint ratios with what the body shop managers say. Clearly, this kind of research is more time-consuming than simply finding the lowest premium rate, but if you have a claim, you want to make sure that your vehicle is repaired correctly and completely with minimal hassle and that OEM (original equipment manufacturer) parts are used. Howard, who is involved in an effort to create guidelines for the use of aftermarket parts, said that consumers should avoid them for the time being. "Right now, these parts are so incredibly inferior. Body shop managers will tell you which insurers are pushing aftermarket parts." A March 12, 2001, I-CAN press release explains the protections consumers currently have in each state — it's rather fortuitous to live in Minnesota, the only state that prohibits insurers from requiring the use of aftermarket parts.
3. Consider working with an insurance agent. It used to be that everyone purchased their auto insurance from an agent, but now, companies like Amica, Esurance, Geico and others allow you to purchase insurance directly — over the phone from a customer service representative or online. Still, many of the major players have preserved their national networks of local agents — even if you use State Farm's or Allstate's Web site, you will still be assigned a local agent. Before we delve further, you should be aware there are two kinds of agents: (1) the captive agent who represents only one insurance company (AAA, Allstate, State Farm, and the like); and (2) the independent agent, also known as a broker, who represents several insurance companies (for example, Erie and Progressive are both sold through independent agents) and therefore does not have a vested interest in selling you a policy from one particular company. Experts say that consumers who sign on with agents generally have an advantage during the claims process. "The agent has a vested interest in you being happy," Sullivan said. "The claims representative has a general desire to keep you happy, but it's not the same." Further, an agent can become familiar with your situation and guide you toward a suitable policy, Howard said. "Don't rule out direct providers, but my personal preference is to have an agent, preferably an independent agent, write your policy for you.... An independent agent would become aware of less advantageous conditions with one company [and help you move to another]. You can change carriers without changing your agent. I encourage consumers to develop a relationship with their agent." The prospect of good working relations with an agent may help you to make a decision: When Heller purchased auto insurance for the first time, two insurers gave him similar quotes but he went for the slightly higher one because the agent had been highly recommended by a friend. "You shouldn't go direct without always checking out other options," he said. "[...But] never feel pressured by a broker or an agent. Take the time to talk with an agent or a broker as well as do your online research. You may not need an agent — you may find a better deal with a company that operates direct." Independent agents may charge a fee for their services, but you may be able to negotiate. You should agree upon any fee in writing before making a purchase. Look for agents who are certified by Independent Insurance Agents of America (Big "I") or PIA (Professional Insurance Agents).
4. Check out the financial strength ratings for the companies that interest you. Refer to the A.M. Best and Standard & Poor's ratings. Both companies publish financial strength ratings for all insurance companies — these "measure" an insurance company's ability to pay out a claim. The A.M. Best rating is expressed as a letter grade from A++ (the highest) to D. Some companies may be assigned ratings of E (indicating regulatory action regarding the company's solvency), F (in liquidation) and S (suspended). In any case, you should only work with companies that have at least a B+ rating. The Standard & Poor's ratings range from AAA (the highest) to CC. Additionally, some companies receive ratings of R (under regulatory supervision) and NR, which means 'not rated'. The letter grades might be modified by a + or - mark. Consider only those companies that have at least a BBB rating. Insurance companies often provide this information on their Web sites, but if not, you can run a search at the A.M. Best and Standard & Poor's sites. Keep in mind that these ratings have nothing to do with the way an insurance company treats its customers.
5. Skim J.D. Power and Associates' auto insurance ratings. Another basic resource is J.D. Power and Associates' auto insurance ratings. Two of the top insurers in the study, Amica and Erie, are also companies that Howard recommends: "Erie is sold by independent agents, who are very knowledgeable about the product. I like their claims handling approach. Almost all other companies look at a claim and find a way to not pay it. Erie and Amica will look at it and try to find a way to cover it."
6. Don't assume that affinity programs have your best interests at heart. Sometimes auto insurers will team up with an auto manufacturer, union, trade association, or other entity to offer a select group of people insurance policies at a discounted rate — this is known as an "affinity program." For instance, Ford owners can get a special rate through The Hartford. Don't assume that such an insurance company will provide superior customer service — research these as rigorously as you would an unaffiliated company. "You do get a bit of a premium break, but I would still say go to consumer complaint ratios at your state's department of insurance Web site," Howard advised. "It has been my experience that insurance companies that enter into third-party mass-marketing programs are lacking when it comes to service."
7. If insurers won't treat you right, contact your legislators. It's not always easy to find affordable, reliable car insurance, particularly if you don't make a lot of money and live in an urban area. Your state's legislators, of course, are the people who require you to purchase insurance in the first place (unless you live in New Hampshire, Tennessee or Wisconsin). Contact these officials if you can't find a policy that you can afford or if your current insurer has treated you unfairly during the claims process. "Particularly for low-income consumers," Heller noted, "auto insurance is too expensive relative to their income to even think about.... We urge motorists to get some coverage but also to let their elected officials know that they're having trouble finding affordable insurance." Heller was the leading advocate behind the implementation of the Lifeline Auto Insurance Plan, a pilot program in California that makes affordable auto insurance available to low-income residents of Los Angeles and San Francisco counties (areas that typically have astronomical insurance rates) with good driving records. The program was possible only because "low-income motorists let lawmakers know that 80 percent of the people in their neighborhood were uninsured," he said.

So, you've done your research, and you've decided on a company. Before you sign, though, read the policy. In addition to verifying that it contains the coverage you want, there are two clauses that you should look for in the contract:

1. Retain your right to sue. "Find out if you are giving up your right to go to court and will be forced into arbitration if there is a disagreement [between you and the insurance company]," Heller advised. "You're much better off if you don't give up this right.... It makes it easier for [insurers] to take advantage of you." If you find a clause to this effect, all isn't necessarily lost. "At least in theory, a contract is a mutual agreement, so you should be able to cross out that line in the policy," Heller said. If the company won't agree to the policy sans clause, then you should probably take your business elsewhere.
2. Avoid aftermarket parts requirements. "If an insurance company has written in the policy that 'new factory', 'like kind and quality', or 'aftermarket parts' [may be used for body shop repairs], ...go on to the next company," Howard said. If you own a relatively new car that you plan to keep for a while, you will probably be much happier if you spend a little more time researching companies on the front end rather than try to fight the company when you have a claim.

After you lock in the insurance policy you want with the company you select, you have two more things to do. The first is to cancel coverage with your existing insurance company. Second, if your state requires you to carry proof of insurance, make sure you either have it in your wallet or the glove compartment of your car (some experts discourage this, however — if your car is stolen, the thief has everything he needs to prove the vehicle is his).
Now, there's one last thing to do: reward yourself for saving so much money on your car insurance.