Less driving may mean insurance savings
NEW YORK (6/25/08)--As the price of gasoline reaches record highs across the country, millions of Americans are finding ways to cut back on driving to save money. What drivers may not know is they may be eligible for lower insurance rates as a result of driving less (The Wall Street Journal June 12). Whether it’s from combining errands, biking or carpooling, a recent study by the Consumer Federation of America (CFA) found that Americans who cut back on driving can save up to 15% on auto insurance. According to the study, the average auto insurance premium in the U.S. is $830, so a savings of 15% could mean more than $120 back in your wallet. Insurance rates are based on several factors, one of which is the number of miles you drive. If you’ve stopped driving to work, CFA estimates your insurance costs may drop 10% to 15%. If you now only drive partway to school or work, your savings may average 5% to 10%. And even if you’ve simply cut back on errands or consolidated your driving, you still may be eligible for a rate cut. J. Robert Hunter, director of insurance for CFA, recommends you call your insurance company and ask if you qualify for an immediate rate reduction (consumerfed.org June 10). Savings will vary depending on your coverage, but it never hurts to check on it. If you call your auto insurance agent, be prepared to make your case. Explain what you’re doing to drive less, and estimate the number of miles you save each month. For more information, read “Finding Extra Savings on Auto Insurance” in Home & Family Finance Resource Center.