IN THIS ARTICLE: Key Points The Full Story Choosing Your Coverage Liability Coverage Medical Payments and Personal Injury Protection Coverage Collision and Comprehensive Coverage Uninsured and Underinsured Motorist Coverage Towing and Road Service Rental Reimbursement The Whole Package Factors Behind the Rates Accidents and Traffic Convictions Age, Sex, and Marital Status Special Treatment of Youthful Drivers Where You Live What Car You Drive How Much You Drive Length of Time Insured by the Company Dual-Policy Deals Credit History Selecting the Right Company Shopping for Price Finding Good Service Shopping For Security Checking For Solvency What If No One Will Insure You? What To Do If You Are In An Auto Accident

Return to the ratings of auto insurance Key Points  Here are our main messages on auto insurance, starting with advice on choosing a company.  Many consumers will save $300 or more a year by switching auto insurance companies. Some will save more than $3,000. Our premium comparison tables show you how companies’ rates compared for several different policyholder types for whom we shopped at a number of locations around the Delaware Valley area.  Some of the winners and losers, shown on our premium comparison tables, for policyholders with clean driving records in the three states were the following—  In Pennsylvania, GEICO, Liberty Mutual, and Harleysville had consistently low rates across all three locations and both policyholder profiles for which we shopped; Nationwide and Travelers had low rates for most; and Erie, Progressive, AARP/Hartford, and AIG had low rates for some. For one illustrative policyholder profile, annual premiums ranged from less than $3,400 with Liberty Mutual and GEICO to more than $4,600 with a number of companies, including State Farm and Allstate, two of the state’s largest insurers.  In New Jersey, New Jersey Manufacturers, USAA, and Teachers’/Lancer had consistently low rates across all four locations and all three policyholder profiles for which we shopped, and Amica Mutual, Chubb, Electric, and AIG had low rates for many of the locations and profiles. For one illustrative policyholder profile, annual premiums ranged from less than $1,550 with New Jersey Manufacturers, USAA, Electric, and AIG to more than $2,150 with First Trenton and Allstate, two of the state’s largest insurers.  In Delaware, Hartford/AARP, Liberty Mutual, and AIG had consistently low rates across both locations and both policyholder profiles for which we shopped, and Harleysville and GEICO had low rates for some of the locations and profiles. Again, the differences in premiums were large, with some of the state’s largest insurers charging much more than lower priced competitors—for example, for one illustrative policyholder, a range from less than $2,200 with Hartford/AARP and Harleysville to more than $4,300 with Allstate and Progressive.  You can shop for price without consigning yourself to poor service. Most companies, even those that are not the standouts for service, seem to provide most customers satisfactory claims handling and other services. About 93 percent of the policy-holders we surveyed rated all aspects of the claims services they received at least “adequate.”  Our Ratings Tables show how companies were rated for service in our survey of policyholders who had filed claims. At the time of our last full, published report, the companies that rated highest for their claims service were Electric, USAA, Amica Mutual, and New Jersey Manufacturers.  You will want a company that will stand by you if you have a few accidents or violations. Our Ratings Tables show substantial differences among companies. Some companies were rated “inferior” by more than 10 percent of surveyed policyholders when we asked about “not unreasonably cutting coverage” and some were rated “inferior” by more than 20 percent of surveyed policyholders when we asked about “not unreasonably raising premiums.”  You can use our Ratings Tables as a starting point in deciding which companies to check for rates, but be sure to check several companies, since no company wins for all drivers. You can check rates on many companies’ websites, or you can find agents in the Yellow Pages and call.  You might find it helpful to check premium-comparison websites like insweb.com, insurance.com, and answerfinancial.com. But be wary of these sites. You will have to put in time entering information and they will generally give you rates from only a few companies with which they have business relationships. On the other hand, we have found that they sometimes identify companies with very good rates. (Unfortunately, none of these sites are able to provide quotes on policies in New Jersey when we checked.)  It makes sense to check competitive rates every few years. Although some companies tend to be consistent price winners, many companies do change their ranking substantially over the period of several years.  When you shop for premiums, you’ll have to push hard to get reliable information. Agents frequently fail to mention the most attractive available plans and sometimes quote inaccurate rates for the plans they do offer. Always ask an agent whether he or she has any other plans with better rates.  Even if you are an inexperienced driver or have a poor driving record, you have the right to get insurance with your state’s “assigned risk” plan. But don’t turn to this “high risk” arrangement quickly. Shop several regular companies. Keep trying even if you are turned down by the first; each company’s standards are different and they change continually. Be sure to remind the agent if you or a family member has insurance for your house or another car with the agent’s company. If you must join an assigned risk plan, try again to get regular insurance coverage after a year of good driving. Many of the policyholders in these plans get out after a year.  Don’t terminate your insurance with one company until you have arranged coverage with another. You might even consider starting your new coverage about 60 days before your old coverage expires because the new company can reject you fairly easily in the first 60 days of your coverage.  Whatever company you choose, be careful to select just the coverage you need and to explore any available price breaks.  Consider purchasing a policy with high “deductibles.” By agreeing to pay small losses out of your own pocket, you can avoid paying the company to do a lot of paperwork. You may not want to collect from the company on losses of less than $500 or so anyway—for fear the company will refuse to renew your policy or will raise your rates.  Consider dropping collision coverage when your car’s value drops to a level that you could lose totally without serious disruption to your life. Although your company would not pay you much for the loss of an old car, it won’t continue to lower your rates significantly once the car’s value drops below a few thousand dollars.  Try to take at least as high dollar limits on the coverage that protects you if you are a victim of an uninsured motorist as you take on the coverage you buy to pay other people’s claims. Increased limits on “uninsured motorist” coverage cost relatively little.  Before purchasing more than $2,000 or so in “medical payments” coverage or personal injury protection (PIP)coverage, consider whether you could spend the money more wisely improving your family’s general health insurance coverage. (In New Jersey, you can designate your health insurance plan as your required PIP coverage.)  Keep your agent or broker informed of any change in your circumstances if that change might make you eligible for a premium discount under your company’s rating plan. Be sure to inquire about price breaks if—  You have, or will consider, other insurance with the same company (homeowners, for example);  More than one car is insured by the same company;  No one in the family has had a serious accident or traffic violation in the past three, four, or five years;  You drive a car less than 12,000 miles or, better still, less than 7,500 miles each year;  Your car is parked in a garage or off the street;  Your car has air bags, anti-lock brakes, or antitheft devices;  Your car is not used to commute to work or for business;  Your commute is short, or you work less than a five-day work week;  You are a member of a car pool;  You are driving a relatively inexpensive car and/or one with a relatively good “loss experience” (the loss experience reflects how frequently a car is involved in accidents and how much it costs to repair if it is damaged);  You’ve moved to a less urbanized area;  You are insuring no regular driver under 25 years old;  Insured drivers under 25 have completed driver training, have good grades, are students at a school over 100 miles away, or are restricted to a less expensive car;  You are 55 or over and have completed a defensive driving class within the last three years;  You are a nonsmoker.  Consider the cost of insurance along with the cost of gas and parking when you are deciding how to commute to work. A car pool or public transportation might save you $250 or more in insurance per year.  Consider the cost of insurance when you are buying a new or used car. Most companies have discounts (or surcharges) on certain makes and models of cars based on the loss experience of each car.  Maintain a strong credit record. Insurance companies may use information on your bill-paying habits as a factor in setting premiums. A bad credit record might cost you $500 or more per year in higher insurance premiums.  You pay dearly for auto insurance. Be sure you get what you have coming if you have a claim.  Report claims promptly. But don’t sign any settlement until all your bills are in or you know definitely how much you have lost. For auto body repairs, insist on using a repair shop you can trust—as long as it charges reasonable rates.  Be sure not to overlook available claims. For example, your “medical payments” coverage might pay for the deductible amount under your health insurance. Also, you can claim under your comprehensive coverage for some losses that are often overlooked—such as accidentally damaged upholstery.  The Full Story  For one illustrative Pennsylvania couple for whom we shopped, the annual premium for automobile insurance coverage was $2,983 with AIG and $6,490 with Allstate—a difference of more than $3,500.  It takes a little effort to shop for insurance. But it is easier these days than it once was to get at least a reasonably competitive rate using rate-comparison websites and websites maintained by many of the companies. Even if you have to request quotes by phone from companies and agents, the effort is small compared to the potential year-after-year savings.  You won’t want to give up having a company that will deliver quality service, financial soundness, and a willingness to stick with you if you have an accident or violation or two. But you don’t have to. Such concerns are not a reason to stand pat.  In this article, we will give you the background you need to shop successfully and comparisons of individual companies to help you focus your shopping efforts on the best prospects.  Choosing Your Coverage  The first step in shopping is to decide on the types and levels of coverage that will keep your risk to an acceptable level at a reasonable cost. You must decide among a broad range of available auto insurance coverage options.  Liability Coverage  When you injure someone else or someone else’s property, you may be required by law to pay for the loss. Your home, your savings, and even your future wages are vulnerable.  “Liability” coverage pays the amount of money for which you may be liable for bodily injury and property damage to others, up to certain limits, and covers legal fees incurred in your defense. Bodily injury claims can include wage losses, medical expenses, rehabilitation costs, and “pain and suffering.” Property damage can include damages to someone else’s car, building, or other property.  Your liability coverage will generally protect you, your spouse, other members of your household, and anyone else who drives your car with your expressed or implied permission. If the damages for which you are found liable exceed the limits specified in your policy, you’ll have to pay out of your own pocket.  The limits your insurance company will pay are usually specified in the policy as a set of three numbers divided by diagonal lines. For example, a 100/300/50 policy pays a maximum of $100,000 for bodily injury to one person, a maximum of $300,000 for total bodily injuries when more than one person is hurt in an accident, and a maximum of $50,000 for property damage in a single accident. Some policies are simply written with a single limit, say, $300,000, and will pay up to this limit even if only one person is injured or if only property is damaged. Because of its greater flexibility, single-limit $300,000 coverage is worth somewhat more than 100/300/50 split-limit coverage.  Since your insurance not only protects your assets but also assures financial relief for anyone you may injure, Delaware, New Jersey, and Pennsylvania laws require you to buy at least a minimum level of liability insurance. The minimums are 15/30/10 in Delaware and 15/30/5 in Pennsylvania. New Jersey has minimum options because there are two types of insurance policies in New Jersey: “Basic” and “Standard.” The Basic policy is bare bones, requiring only $5,000 in property damage liability coverage and $15,000 Personal Injury Protection coverage (see below); other coverages available with the Basic policy are extremely limited. The Standard policy requires liability limits of at least 15/30/5.  If you are considering driving without liability insurance, you should realize that once you have driven without insurance and have had an accident, you may be treated by the insurance industry as a person who takes risks; you may have to purchase insurance at a higher rate or under an “assigned risk” plan.  Most drivers buy liability insurance even when it is not required and insure beyond the legal minimum—perhaps out of a social concern for the possible victims of their negligence or perhaps out of a personal concern to protect their assets from catastrophe. Individuals with substantial assets (or with expectations of substantial assets in the future) have the strongest reasons to purchase sizable liability coverage: they have the most to lose; they are the most attractive targets for suit; and they may get the least sympathy from juries.  If you are prepared to pay for even a modest 25/50 bodily injury liability coverage level, the cost of much fuller coverage may not be large. As this figure shows, a policyholder with 100/300 bodily injury liability coverage (and $500 collision and comprehensive deductibles) might expect to increase his or her total annual premium by only about four percent by moving up to 250/500 coverage and might expect to save only about 18 percent by moving down to 25/50 coverage.  You may also want to consider “umbrella” liability coverage. Although the terms of such coverage vary from company to company, umbrella policies generally take over above your basic auto and homeowners liability insurance to cover injuries you might be liable for in connection with your car, your home, a boat, or other property, and your liability for other injuries you might cause, for instance, through libel or slander. When you purchase an umbrella policy, you must first raise the liability limits on your auto and homeowners policies to the maximum offered by the company.  Medical Payments and Personal Injury Protection Coverage  Pennsylvania  In Pennsylvania, you are required to purchase at least $5,000 of “medical payments” coverage. This coverage takes care of medical bills if any member of your family is injured in an auto accident. Whether a family member is driving your family’s car, driving a rented or borrowed vehicle, riding as a passenger, or walking and struck by a car, you can collect these payments. Moreover, medical payments coverage protects passengers who ride in your car. Most important, payment is regardless of fault.  In Pennsylvania, you can choose more than the minimum $5,000 level of medical payments coverage if you wish, and you can purchase related coverages, if you wish, for income loss, accidental death benefits, and funeral expenses. As an alternative to choosing all of these related coverages separately, you can purchase “combined first party benefits” coverage, which includes medical payments, income loss, accidental death, and funeral expenses.   Pennsylvania is called a “choice” no-fault state. “No-fault” refers to the fact that your coverage provides protection to you no matter who is at fault in an accident. No-fault laws were established to help ensure timely medical attention for all parties involved in an accident, and to reduce the incidence of lawsuits related to automobile accidents. The coverages you purchase for medical payments and loss of income will provide benefits to you and your passengers regardless of fault in an accident. In many states that have no-fault laws, the guarantee of benefits regardless of fault is accompanied by a requirement that you give up some portion of your rights to sue the other party. In Pennsylvania, you have a choice as to whether you will give up such rights. When you purchase an auto insurance policy in Pennsylvania, you may choose “full tort” or “limited tort” coverage. With full tort coverage, you retain your unlimited right to sue the at-fault party in an accident. With limited tort coverage, your rights to sue for certain damages (“pain and suffering”) are restricted unless your injuries reach a dollar threshold of severity. Choosing limited tort coverage, rather than full tort coverage, might save more than 25 percent on your total premium.  Delaware  Delaware also has a “no-fault” law governing auto insurance coverage. In Delaware, you are required to purchase “personal injury protection” coverage (PIP), with a limit of at least $15,000 per person involved in an accident and $30,000 per accident. Under this coverage, whether you are responsible for the accident or not, your insurance company will pay medical expenses and loss of wages for you and your passengers. Delaware is what is known as an “add-on” no-fault state. That is, no-fault coverage is added on to traditional tort coverage; your rights to sue another party involved in an auto accident (or another party’s right to sue you) are not limited.  New Jersey  New Jersey has still another “no-fault” variant. In New Jersey, like Delaware, you are required to purchase “personal injury protection” coverage. If you elect to take the “Basic” policy authorized by the state, you are required to take PIP coverage for $15,000 per person per accident and PIP coverage that goes up to $250,000 for “permanent or significant injury.”  If you take the “Standard” policy in New Jersey, you have a number of choices. You can take coverage limits as low as $15,000 or much higher, up to $250,000 regardless of whether there is “permanent or significant injury” (there is always additional mandatory coverage if there is “permanent or significant injury”). With the Standard policy, you also have the option of taking a deductible, which will mean that you won’t be able to collect on your PIP coverage until expenses exceed the deductible amount.  New Jersey, like Pennsylvania, is what is called a “choice” no-fault state; you can choose whether your coverage will be traditional tort (“zero threshold/unlimited right to sue”) or no-fault (“verbal threshold/limited right to sue”). (Any limitations on the right to sue apply only to lawsuits for “pain and suffering,” or non-economic losses, not to medical costs.) Regardless of your choice, your own policy will pay for your, and your passengers’, injuries through your PIP coverage (up to your policy’s maximum limits); the other driver’s PIP coverage will pay for his or her injuries. If you choose zero threshold coverage, you may sue the at-fault party for any injury. If you choose verbal threshold coverage, you may sue the other party for pain and suffering only if your injuries reach a certain level of severity (for example, loss of a limb or significant disfigurement). The term “verbal” is used since the level of damage is described in terms of injury instead of dollars.   How Much Makes Sense  Most of the medical expenses that would be paid by medical payments coverage or PIP coverage would be covered by the injured party’s regular health insurance. The value of medical payments coverage or PIP coverage is in filling in gaps in health insurance (deductibles, copayments, etc.) and in covering medical expenses for your passengers who may not have their own health insurance. Because its utility is so limited, you probably will not want to buy a very high level of medical payments coverage or PIP coverage. You will probably be better off to spend your money on a more comprehensive health insurance policy—to protect you and your family from any disease or injury that might befall you, not merely to cover those injuries that involve automobiles. In New Jersey you may designate your health insurance plan as your required PIP coverage. It is true that PIP coverage will cover lost income, but even that may not be very important to you if you have a disability insurance policy that provides similar coverage.  Collision and Comprehensive Coverage  “Collision” and “comprehensive” coverage are often referred to jointly as “physical damage” insurance. They pay for repair or replacement of your car, regardless of who is at fault. This coverage is not required by state law, but if your vehicle is financed, your lender may require you to purchase it.  Collision coverage pays if your car rolls over or collides with an object, including another car. Comprehensive coverage pays for damage to your car from almost all other causes—including vandalism, explosion, fire, wind, and collision with animals. It will even pay if your pet chews the upholstery. Comprehensive also pays if your car is stolen.  Both collision and comprehensive pay only up to the “actual cash value” of your car. If you expect compensation for a special paint job or other unique feature, you will have to arrange in advance for special coverage—and pay an extra premium.  As the actual cash value of your car diminishes, the cost of physical damage coverage declines—but only declines significantly for the first few years of the car’s life. You pay about the same collision premium for a 10-year-old car, for which your insurance company would pay you almost nothing, as someone else pays to insure a six-year-old car. Accordingly, collision coverage becomes an increasingly wasteful purchase as your car grows old.  Collision and comprehensive coverages are sold with a “deductible,” a specific amount you agree to pay out of your own pocket on a claim before you are entitled to collect from your company. By taking a high deductible, you protect the company from the paperwork of processing small claims and you do so without exposing yourself to the possibility of catastrophic loss. In general, the wisest way to manage your money is to take as a deductible as large an amount as you can afford to lose without seriously disrupting your life.  The considerable savings that can be made in this way are illustrated on this figure. For example, the sample policyholder for which we did the calculations in this figure would probably save about six percent of his total insurance bill by increasing his collision deductible from $500 to $1,000 and would add about 11 percent to his total insurance bill by reducing his collision deductible from $500 to $100.   The virtues of substantial deductibles are more obvious when you consider that you may not even want to file claims with your insurance company unless damages exceed $500 or so. Filing small claims might lead a company not to renew your coverage or might lead to higher premiums.  Uninsured and Underinsured Motorist Coverage  If you are the victim of an accident in which another driver is at fault, you might expect to collect from that driver’s insurance company. But despite mandatory coverage laws, many drivers are uninsured. Also, even an insured driver may be underinsured if your loss is large. If you are the victim of an uninsured or underinsured motorist, you can turn to your collision coverage (if you have it) for repairs to your car, or to your medical payments or personal injury protection coverage for your medical bills. But you will need other coverage if your losses exceed these coverages and to compensate you for “pain and suffering.” “Uninsured/underinsured motorist” coverage fills this gap if you can show that the other driver was at fault or was a hit-and-run driver.  Neither Delaware nor Pennsylvania requires this coverage. New Jersey requires this coverage at the 15/30 level on a Standard policy (it’s not required on a Basic policy). In Pennsylvania, if you choose to buy this coverage and have more than one car on your policy, you may choose to “stack” your coverage. Stacking essentially pools your un/underinsured motorist coverage, increasing your limits for any one car in an accident to the total coverage for all your cars. That is, if you have 100/300 stacked coverage and two cars on your policy, in an accident involving an un/underinsured driver your policy would pay up to $200,000 per person and $600,000 per accident. Stacking 100/300 coverage for two cars might be expected to raise your total annual premium by about 11 percent. All the reasons that argue for higher limits on liability coverage—where you are protecting someone else—also argue for high limits on uninsured/underinsured motorist coverage—where you are protecting yourself. The cost of increasing your limit from 20/40 or 25/50 for the personal injury portion of uninsured/underinsured motorist coverage to 100/300 will generally be relatively small.  Towing and Road Service  “Towing and road service” coverage will pay not only the costs of towing but also labor charges for any repairs that can be made on the road. Most companies offer this coverage for less than $50 per year. Under some policies, your towing and road service coverage will reimburse you only for $25 per claim. But for a few dollars more per year, you can get coverage up to $75 per claim. Though towing and road service coverage is inexpensive, an auto club membership that includes towing and road service might be a better deal for you if you would use other club benefits.  Rental Reimbursement  For a small additional premium (usually $25 to $50), some insurers will broaden your collision or comprehensive coverage to include reimbursement for required car rental while damages to your car are being repaired. The reimbursement may be capped at $20 or even less per day, so take a look at whether this coverage makes sense for you.  The Whole Package  Armed with a knowledge of various possible coverages, you can ask each company you consider to give you a breakdown of its premium by type of coverage and to quote premiums for different liability limits and deductible levels. A typical annual premium quotation for a married couple with clean driving records and two cars in the Philadelphia suburbs might look like the following:  Bodily Injury Liability $100,000 / $300,000 $720 Property Damage Liability $50,000 $365 Medical Payments (First Party Basic) $5,000 $170 Uninsured Motorist Bodily Injury $100,000 / $300,000 $230 Underinsured Motorist $100,000 / $300,000 $235 Comprehensive $500 deductible $135 Collision $500 deductible $680 Emergency Road Service   $40 Rental Reimbursement $25/day, $750 maximum per claim $25 Total $2,600 Factors Behind the Rates  What you’ll pay for insurance depends not only on the coverage limits you select but also on your driving record; your age, sex, and marital status; the kind of driving you do; your credit record; and other factors. Knowing these factors will give you a sense of how warmly you can expect insurance companies to greet your requests for coverage and may also give you some ideas for changes you can make in your life to cut your insurance rates.  Accidents and Traffic Convictions  Your driving record is very important. Industry data indicate that an individual who has had two accidents in the past two years is almost two-and-a-half times more likely to have an accident in the coming year than someone who has had no accidents. Similarly, the accident rate for individuals with two traffic convictions in a three-year period is twice as high as the rate for those with no convictions.  Most companies consider the driving records of everyone who will be driving your car or cars. Therefore, if you have a perfect driving record but your spouse has had violations or accidents, you may not qualify for the “preferred” rate. Different companies treat driving records differently for families with more than one car. Some companies will charge a higher premium only to the car driven by the driver with violations and/or accidents, while others will pool the “points” from the violations and accidents together and spread them out over all the cars, or will assign the driver with the worst record to the highest-cost car.  Age, Sex, and Marital Status  Men under 25 have the most accidents per 100 drivers; after age 30, accident rates are lower and fairly constant right up to age 65; married men generally have better rates than those who are unmarried; and women, especially married women, do best of all.  This does not mean that women or older persons are better drivers than, say, 25-year-old men. Their accident frequency may be lower simply because they tend to drive fewer miles.  Low accident frequencies result, of course, in lower premiums. If a company agrees to insure him at all, a single 17-year-old male can expect to pay about four times as much as a 30-year-old male and twice as much as his 17-year-old twin sister for comparable insurance coverage. Even at 25, he can expect to pay about one-and-a-half times as much as his 30-year-old counterpart.  A few of the common rating guidelines are as follows:  Young drivers will generally find that between the ages of 16 and 20 their rates will be slightly reduced each year, then will remain level between the ages of 21 and 24. But a few companies offer married women “adult” rates (which are relatively low) beginning at age 21.  Rates for 25 to 29-year-old single males are often the same as for 21 to 24-year-olds. But single females in this age bracket may be classified as “adults.”  Married males in the 25 to 29 age bracket are often offered “adult” rates and married females almost always are.  Most companies will classify single males as “adults” at age 30, but some will continue to charge higher premiums up to age 49.  Rates for drivers over 64 are normally either the same as, or slightly lower than, the “adult” rate. Some companies offer a “senior discount” for persons as young as 50.  Special Treatment of Youthful Drivers  Since youthful drivers have especially high accident rates, companies have sought various ways to identify better risks so that better rates can be offered to attract these youths and their parents.  Many companies offer special rates, perhaps four to eight percent lower, for youths who have taken approved driver training courses. Studies have shown that these courses do not make better drivers, but “good risks” simply seem to take the courses; so driver training serves as a convenient screening device for the companies.  Many companies also give a break—often 10 to 20 percent—to youths who have good grades (usually “B” or better). The combination of discounts for driver training and good grades may total 15 to 25 percent of a family’s premium.  Most companies will also cut premiums if a youth goes to school more than 100 miles away from home without taking a car. In addition, by agreeing to restrict a youth’s driving to a single, less-expensive car, a family may be able to cut the rates on other cars it owns.  Where You Live  Some areas present more chances for accidents than others or have higher repair costs or medical and legal charges. These differences sometimes result in auto insurance rates that are twice as high in some areas as in others.  What Car You Drive  Insurance companies charge more for insurance on cars that are relatively expensive to replace, expensive to repair, or prone to damages or theft. Some companies charge extra for, or refuse to insure, high performance cars (Corvettes, for instance) because they think people who drive them are likely to be less responsible than other drivers.  This table shows vehicle-to-vehicle differences for one illustrative driver we checked. For example, comparable coverage from Liberty Mutual might cost $1,990 for a Honda Odyssey and $2,769 for a BMW 530i—a difference of $779 per year. There are some vehicle types that tend to be relatively expensive with all insurers, as you can see by looking at the luxury sedans on the table, but the patterns are not always consistent across companies. For example, the Jeep Grand Cherokee Laredo is the least expensive car to insure with State Farm, while the Odyssey is $100 less expensive to insure than the Laredo with GEICO.  In short, you will want to consider insurance costs when deciding what vehicle to buy, but the impact of your choice may be larger or smaller depending on which insurance company you select. You can find information on relative insurance costs in The Car Book, by Jack Gillis, which can be ordered from Center for Auto Safety, 1825 Connecticut Avenue, NW, Suite 330, Washington, DC 20009-5708.  How Much You Drive  Costs are higher for drivers who use their cars heavily. Compared to a driver who uses his or her car only for pleasure, one who drives to work can expect to pay four to eight percent more for coverage—six to 12 percent more if the commute is more than 15 miles each way—and more still if the car is regularly used for business. You might save more than $200 per year in insurance costs by using public transportation or by joining a car pool.  Companies also look at the number of cars they are insuring for a family. The second car usually costs considerably less than the first because companies assume you will drive each car less than you would drive a single car. If you can show that the total mileage per year is less than, say, 12,000 miles or, better still, 7,500 miles, you might get a further break.  Length of Time Insured by the Company  If you are considering switching insurance companies, and have been “loss free” with your current company for a while, you will want to consider in the calculation any longevity discounts your company will be granting you in the future. Many companies offer discounts of five to 10 percent for three years of coverage without an at-fault accident and may increase the discount at six years and nine years. Another benefit of longevity is that your current company might examine your entire history with it when deciding whether or not to reassign you to a higher risk category (and charge you higher premiums) if you have accidents, whereas any new company might examine only your driving record in the last three years.  Dual-Policy Deals  Many insurance companies offer lower rates if you insure both your car and your home with them. Some knock off five percent, 10 percent, or even more from either the auto rate or the homeowners rate; some knock off a percentage from both.  From a consumer’s point of view, this dual-policy pricing is an undesirable practice because it makes shopping more difficult; to find out the exact savings you might realize by switching companies, you have to shop for both types of coverage at once. But the discounts aren’t usually so large that they have a major effect on the relative rankings of companies.  Credit History  Another way insurance companies attempt to judge what kind of risk you are is by looking at your credit history with one of the credit reporting bureaus—Equifax, Experian, and TransUnion. Many auto insurance companies have concluded that consumers with poor credit histories are also more likely than others to have claims.  Using complicated, secret formulas, insurance companies, or credit bureaus on their behalf, calculate an “insurance score” that may be used to decide what your rates will be, or even whether you will be covered at all. The insurance score formulas are not the same as those used by lenders (such as banks or mortgage companies) to calculate your “credit score,” but they draw on the same types of data. The formulas vary from company to company, since different insurers (or the scoring companies they use) weigh different factors differently.  The appropriateness of using credit histories in making insurance decisions is a hotly debated topic among the insurance industry, consumer groups, and state legislatures. Aware that there is risk of discrimination and unfair treatment under such practices, many states are beginning to pass laws designed to protect consumers by limiting the insurance companies’ use of credit data. The laws in the Delaware Valley area vary in their strictness. In Pennsylvania, currently there are no laws addressing this issue specifically, although there are some under consideration. In Delaware, a relatively new regulation requires auto and homeowners insurance companies to obtain insurance department approval prior to using credit information and puts some restrictions on what credit data they may use. Insurers may not include in the scoring outdated credit information, disputed accounts, inquiries made by insurance companies or those not initiated by the consumer, accounts coded as medical, mortgage inquires that are all made within a 30 day period, or the total amount of credit available to a consumer. In New Jersey, insurers may not use credit history/insurance scoring. (An exception is currently being made for one company, Mercury Insurance, which on an experimental basis is allowed to use credit history in a limited way.)  The impact of your credit history on the rates you might pay can be dramatic. For example, when we shopped for insurance for one sample driver with Progressive, we found a difference of more than $700 in Delaware and more than $2,300 in Pennsylvania between the rate we were given when we told the company to assume that the driver had an “average” credit record versus the rate we were given when we gave the company a Social Security number that it could check to determine that the driver actually had an excellent credit record.  Clearly, saving on insurance is one of many reasons that consumers need to maintain good credit records—for example, by paying bills promptly, not opening too many lines of credit, and keeping balances relatively low on the lines of credit we do have.  Selecting the Right Company  You have two main considerations in choosing among auto insurance companies: how much they charge and how good their service is. You may also want to give some thought to a company’s record on terminating policyholders, its financial stability, and a few other factors.  Shopping for Price  Our premium comparison tables show annual premiums for 16 companies doing business in Pennsylvania, 14 companies in Delaware, and 21 companies in New Jersey. We have also listed four companies in Pennsylvania and three in Delaware that did not provide rate information we requested and for which we were unable to collect rates independently. Our Ratings Tables include all companies for which we had 10 or more ratings from CHECKBOOK‘s survey of policyholders (described here). The listed companies account for a vast majority of the business done in the region. In addition, in New Jersey, we have included several companies for which we did not have 10 customer survey ratings but which do a relatively large volume of business in the state or have relatively low rates as revealed on the New Jersey Department of Banking and Insurance website.  The rates on our premium comparison tables for Pennsylvania and Delaware are rates we collected from the companies’ websites, from insurance rate comparison websites, or from the companies themselves in response to a direct request for information for this article. All companies have had an opportunity to check and correct the rates we collected.  The rates on our premium comparison tables for Pennsylvania and Delaware are for two different policyholder households, a married couple ages 34 and 35 and a married couple ages 61 and 62 with a 19-year-old daughter. We collected rates for three Pennsylvania locations—one in West Chester and two in Philadelphia—and two Wilmington, Delaware locations.  For our premium comparison tables we sought to get the lowest rates offered by each company for the driver types specified.  For New Jersey, the rates on our premium comparison tables are rates companies reported to the New Jersey Department of Banking and Insurance, in response to legal filing requirements. These filings reflect companies’ rates for 2002, the most recent data available at the time we went to press. Our premium comparison tables show the premiums reported for four locations in the Delaware Valley area.  As you can see, the company-to-company rate differences are dramatic—annual differences of hundreds of dollars in many cases, and several thousand dollars in some cases. The rates on our premium comparison tables will probably not apply to you exactly; most readers will differ in location of residence, vehicle usage, vehicle type, or other ways. In addition, the rates on the table may not in all cases be strictly comparable, since it is difficult to tie down precisely all relevant characteristics of the drivers. But the rates give you a good starting point for your own shopping. Companies with low rates on our premium comparison tables are good prospects for you.  When you have identified a few possible companies, you can begin shopping on the Web. Many companies enable you to get quotes directly from their company websites. (This can be difficult in New Jersey since many online sites do not provide quotes in New Jersey.) Or you can check the Yellow Pages to locate an agent or broker. You can then ask each agent or broker for a price quotation for the coverage you want.  You might fill out this worksheet as a guide for talking in person or by phone with several agents, or you might make copies of a completed form to send or fax to a few agents. Some “independent” brokers or agents sell policies offered by many companies; so one of these agents can give you quotes from various companies. But other companies are not available through independent brokers or agents; to get these companies’ rates, which often are the lowest rates available, you have to contact their offices or agents directly.  In addition to seeking out companies based on their relative rankings on our premium comparison tables, you may want to try using one of the insurance comparison websites if you live in Pennsylvania or Delaware. But these sites tend to sound better than they are. Insweb.com, for example, claims it will enable you to “compare quotes from the most trusted companies in insurance” and lists more than 25 participating companies on its website. But when one of our researchers went through the process of entering the detailed information necessary to get a quote from Insweb.com for a Delaware customer, the site returned quotes from only four companies. On the other hand, we have often found that among the few returned quotes, there is at least one quote that is very competitive—especially if you use several of the comparison sites. The sites we found most useful were—  www.insweb.com, www.insurance.com, and www.answerfinancial.com. As you shop, you might find that you don’t qualify for a company’s best rates if you don’t have a clean driving record. Just ask the agents you deal with for the best rates for which you qualify.  If you have so many accidents or violations that it is difficult for you to qualify for coverage, you have the right to get insurance through your state’s “assigned risk” plan. Rates in the assigned risk plans are often three times or more what you’d pay for a “preferred” policy.  Companies’ actual underwriting practices—which drivers get the best rates, which pay more, and which they won’t insure at all—are not publicly disclosed. And they may include factors other than such obvious matters as age and accident histories. For example, even if two drivers are the same age and have the same accident history, which makes them borderline cases for getting the best rates, one with a poor credit history might not qualify for a good rate because the company considers credit history as an underwriting factor while the other who is a homeowner might qualify because the company looks favorably on homeowners.  Finding Good Service  You will want to consider price in relation to the quality of service you can expect the different companies to provide. Probably the most important type of service is claims handling. We give you two types of information to help you evaluate companies’ service: a survey of policyholders and an analysis of complaints. Our Ratings Tables contain our data on companies or insurance groups rated by 10 or more respondents in our survey of policyholders.   Our Survey of Policyholders  We surveyed CHECKBOOK and Consumer Reports magazine subscribers and collected ratings of individual insurance companies from policyholders who said they had filed an auto insurance claim within the preceding three years. These consumers rated their companies “inferior,” “adequate,” or “superior” for “simplicity of claim procedures,” “adequacy of claim payment,” and other elements of service. Our Ratings Tables show what percentage of policyholders rated each company “superior” on each of these elements.  At the time of our last full, published report, USAA, Electric, Amica Mutual, and New Jersey Manufacturers were rated “superior” for “simplicity of claim procedures,” for example, by more than 75 percent of their surveyed customers. In contrast, several companies got “superior” ratings from fewer than 50 percent of their surveyed policyholders. (For a further description of our policyholder survey and how its results and our other research results should be interpreted, click here.)  Complaints  Another way to assess quality is to count policyholder complaints and to look at each company’s number of complaints in relation to its volume of business. While customers might have rated a company less than “superior” on our survey of policyholders even if the company’s deficiencies were minor, filing a formal complaint with a department of insurance presumably reflects serious dissatisfaction. On our Ratings Tables, we have reported counts of private passenger auto insurance complaints filed in Pennsylvania in 2002 and in New Jersey in 2003 (Delaware was unable to provide us with complaint counts). We have also reported the “complaint rate” for each company. The complaint rate is intended to take into account the fact that some companies do much more business than others and therefore are more exposed to incurring complaints. In Pennsylvania, it is calculated as a company’s number of 2002 complaints per million dollars in 2002 direct private passenger auto insurance premiums written; in New Jersey it is calculated as a company’s number of 2003 complaints per one thousand vehicles insured. Some companies in our survey do not sell auto insurance in all three states. We have included on our Ratings Tables a column indicating in which states a company was writing private passenger auto insurance policies at the time we went to press.  Some of the companies with substantial business volume and relatively low complaint rates are USAA, State Farm, New Jersey Manufacturers, Palisades, and Chubb.  Shopping For Security  If the price is right and service appears satisfactory, your next question will be whether you can be confident that the insurer will not terminate your coverage or dramatically raise your rates because of accidents or traffic violations. Termination by your company at best is inconvenient and at worst can force you to pay rates hundreds of dollars higher when you find a new company or enroll in a special plan for high-risk drivers.  There are certain legal restraints on termination in all three states. It is relatively easy in all three states to cancel a policy during the policy’s first 60 days while a company checks the accuracy of its policyholders’ applications. Termination is then much more difficult. Even at the time of renewal there are restraints and certain procedures that must be followed.   In fact, except in cases of nonpayment of premiums, termination is relatively rare. Accordingly, we don’t recommend spending more than an extra $100 or $200 per year to have a company with a particularly good record of sticking by its policyholders through a string of accidents or violations. And you shouldn’t have to pay even that, since some of the lowest priced companies get high ratings on our policyholder survey for their termination practices.  On the survey, we asked policyholders who had made claims to rate their companies on “not unreasonably cutting coverage.” You can see the results on our Ratings Tables. The tables show the percent of survey respondents who rated each company “adequate” or “superior” on these questions. Those who didn’t rate their companies “adequate” or “superior” rated them “inferior.” Several companies are rated “inferior” by fewer than three percent of their surveyed policyholders, but a few of the companies got such low ratings from more than 10 percent.  Of course, termination by a company is not the only disruption you might experience. If a company raises your rates dramatically in response to an accident or violation or two, you may be faced with having to terminate on your own, or take a big hit to your budget. On our customer survey, we also asked consumers to rate companies on “not unreasonably raising premium.” That is the question on which most companies scored lowest. There was big company-to-company variation, with several companies rated “inferior” by more than 20 percent of their surveyed policyholders.  Checking For Solvency  In shopping, you will want also to be alert to news of a company’s financial instability. You will not want to sign on with a company that may soon have to cut many policyholders or raise prices sharply to stay alive. Nor do you want a company that may go out of business soon, forcing you to begin your shopping again.  On the other hand, there is no reason for great anxiety about insurer stability. If a company goes bankrupt, policyholders may have to wait to recover money owed them but generally are protected from major losses. A special “insolvency guaranty fund” exists in every state with the duty to assess all insurers doing business in the state on a pro rata basis to pay off all outstanding claims of an insolvent company and reimburse each policyholder’s paid-in premium. There is a $300,000 limit on most covered claims, with no deductible, in Pennsylvania and Delaware. Paid-in premium reimbursement is subject to a $10,000 per policy maximum in Pennsylvania and Delaware, and in Delaware there is a $100 deductible. In New Jersey, there is a $75,000 limit on auto claims and paid-in premium reimbursement, with no deductibles.  You can check on a company’s financial soundness using any of several sources:  The A.M. Best Company: 908-439-2200, www.ambest.com  Standard & Poor’s: 212-438-2000, www.standardandpoors.com  Moody’s Investor Services: 212-553-0377, www.moodys.com  Fitch Ratings: 212-908-0800, www.fitchratings.com   You should be able to find copies of ratings from at least one of these sources in the reference section of your local library. If you are unable to find them, or if the ratings in your library are outdated, you can contact the services directly. All four services will provide ratings over the phone or on the Web, at no charge. On the Web, you can learn about the specifics of the rating criteria each of these sources uses.  What If No One Will Insure You?  Some individuals—usually the young and those with a record of accidents or violations—find it difficult to locate a company that will agree to insure them.  The only answer if you are one of these “high-risk” individuals is to shop. Try several of the major groups and ask that you be considered for their “preferred,” “standard,” or “nonstandard” plans. Then try the special publicly created insurance arrangement—the “assigned risk” plan—in each state: the Pennsylvania Assigned Risk Plan (PA ARP), the Delaware Automobile Insurance Plan (DAIP), and the New Jersey Personal Automobile Insurance Plan (PAIP). These plans are open to licensed drivers who can’t get coverage through the regular market. An agent or broker contacts the plan on the driver’s behalf and drivers are then assigned to regular insurance companies. Each company is assigned a pro rata share of policyholders according to its share of business in the state, and the policyholder pays the same premium no matter what company he or she is assigned to.  Don’t assume that because you have been turned down by one “preferred” company you must turn to a high-risk company or the assigned risk plan. Companies’ standards for accepting new policyholders vary widely and change from day to day as their rates and volume of business change. To enhance your chances, remind an agent that you or members of your family have other business with a company—for instance, a homeowner’s policy or automobile policies for other drivers. On the other hand, don’t stop shopping even if you are accepted by a “preferred” company. Sometimes the high-risk companies or the assigned risk plan offer better rates; the PA ARP has a “clean risk” option with lower rates than its regular assigned risk policies. If you must join the assigned risk plan at a very high price, try to get other coverage after a year.  What To Do If You Are In An Auto Accident  At the Scene of the Accident  1.    Stop! You are required to stop your car.  2.    Give all possible aid to the injured. Stop severe bleeding and keep victims warm. Do not attempt to move a seriously injured or unconscious person.  3.    Call the police as soon as possible. If someone is injured, tell the police when you call.  4.    Prevent further damage to your vehicle. Flares, warning signs, or signaling by a police officer or pedestrian should alert oncoming traffic. Aside from the safety consideration, you may be liable for the cost of any further damage to your car if such preventive measures are not taken.  5.    Get the driver’s name, address, license number, and name of the owner for any car involved in the accident and give information on yourself to any person whose property is damaged, or who is injured.  6.    Get the names, addresses, and phone numbers of any witnesses who may have seen what happened.  7.    Be careful in discussing the accident. Cooperate with the police, but if you are not composed, or if you feel that your answers to questions from a police officer or anyone else could bear on future liability, you do not have to discuss the details of the accident until you feel better. Do not disclose any information about your insurance coverage except the name of your company, your agent, and your policy number.  8.    If you are asked by a police officer to submit to a breathalyzer test, or any other test to determine the amount of alcohol in your blood, it is advisable to comply. Refusal will be grounds for the suspension of your license. You may want to request such a test as evidence that you were not drinking.  9.    Note carefully the circumstances of the accident, especially any special hazards such as faulty traffic signals or road obstructions that might have contributed to the accident.  After You Have Left the Scene of the Accident  1.    In Pennsylvania, you must file a report with the Department of Transportation within five days if the police do not investigate and anyone is injured or killed, or if a vehicle must be towed. In Delaware, you must report the accident to police if the accident involves injury or death, occurs on a public highway and damage appears to be in excess of $500, or it appears that any driver involved is under the influence of drugs or alcohol; in New Jersey, you must notify the police if anyone is injured or killed, or there is property damage.  2.    After any serious accident, contact your insurance agent or company as soon as possible. A contact by phone is sufficient. It is a good idea to report to your company any accident if it is serious enough to be reported to your department of motor vehicles. Although you may be right in fearing that the accident will drive up your premiums or lead to termination of your coverage, you have little choice; companies check department of motor vehicles records anyway.  3.    If you have been injured, do not sign any waiver or release with an insurance company or anyone else until you are certain all expenses (wages, medical, etc.) have been determined. Keep a record of all medical costs incurred, loss of earnings, or any other inconvenience.  4.    If your car has been damaged, do not sign any waiver or release right away. Do not accept a cash settlement for the damage to your car until you are certain exactly what it will cost to have it repaired, or to have it replaced if it is considered a total loss.  5.    If you do not have collision coverage, you can collect for the damage to your car only if the other driver was at fault. Submit the bills to the insurance company of the other driver. Include any costs you incur for a rental car.  6.    If you do have collision coverage, some insurance companies will pay your repair bill (minus any deductible) and collect on their own from the other driver or the other driver’s insurance company. When your company collects, it must refund your deductible (or a pro rata share of the deductible if its net recovery is less than your original claim). Letting your own company handle all the work can save time, aggravation, and delay in recovering the amount necessary to repair your car—although, in some circumstances, particularly when the other party admits fault, the other driver’s insurance company may be willing to pay you fully and promptly.  7.    Before you have repairs done, give the company that will be paying a chance to estimate the damage to your car. This is required if you will be relying on collision coverage and desirable if you intend to collect from the other driver’s company. If the company decides it is cheaper to replace the car than to repair it, be sure that the value the company computes for the car from the “book” corresponds to the condition the car was in.  8.    If you have collision coverage, within a few days your company should arrange for an appraiser or adjuster to inspect your car and estimate how much the company will pay to repair or replace it. It is a good idea to get your own estimate of these costs in advance and in writing from a reliable body shop (see CHECKBOOK, Volume 1, No. 2). At the very least, insist on taking the car to a shop you trust for the needed repairs.  9.    If you have a dispute with an insurance company, complain to the department of insurance:  Delaware—1-800-282-8611 or 302-739-4251  New Jersey—1-800-446-7467 or 609-292-5316  Pennsylvania—215-560-2630  Return to the ratings of auto insurance Back to top