Consumers : How to Save Money on Car Insurance--Even Without Proposition 103

Legal challenges have reduced insurance rate rollbacks and Proposition 103 to motionless promises--at least for the time being.

But California motorists, say insurers and industry analysts, have always been free to reduce their auto premiums anywhere from $100 to a half with neither plebiscite nor Supreme Court blessing.

It’s just that most have never taken the trouble.

“Subjectively,” noted one expert, “my guess would be that 80% or 90% of the people could save some amount of money by taking some time and looking at the alternatives.”

But how much saving and by what alternatives?

--Up to 15% by car-pooling if you live less than 15 miles from your place of business.

--As much as 50% for the motorist willing to sell his shack in Beverly Hills to buy a manse in Glendale.

--By increasing the amount paid as a collision deductible, which automatically decreases the policy’s annual premium.

A False Economy

--By resisting “first dollar” (zero deductible) comprehensive coverage, a false economy similar to insuring against broken fingernails.

--Now put the car before the horse and shop for insurance before buying that Nippon GTZ5000 Vitesse--because some cars, even econo-boxes of similar size, value and power, are considered more damageable than others.

--Then obtain quotes--because auto insurance is no different from buying dentures or sanding hardwood floors: Few companies charge the same, and variations could be as high as 20%.

And then consider that--unlike live-in relationships or owning matched Dobermans--insuring two cars may indeed be cheaper than one.

“I once owned a Chevrolet Corvette worth $20,000 and a 1966 Pontiac Grand Prix worth about $3,000,” said a former Los Angeles actuary. He requested anonymity for reasons he soon made obvious. “Because I took the inexpensive car I rarely drove and had it listed as the primary vehicle.

“Then I took the expensive car and had it listed as a second car, a pleasure vehicle, which almost cut the rate (for the Corvette) in half. The combination, the sum of those two insurance policies, was less than having the one car alone.”

For the dubious record, the Corvette’s insurance went from $2,000 to $1,000. The primary Pontiac only cost $300 a year. Flip-flopping their status, he said, resulted in a saving “of $700 or thereabouts . . . and I got that advice from an agent.”

Such bald misrepresentation--along with living in high-risk Hollywood Hills while listing your brother-in-law’s Pasadena address for insurance purposes--is regarded by insurance agents as a horror somewhere between totaling a Rolls-Royce or doing lunch with Ralph Nader.

There may be no law against it, noted Alan Lawrence, president of a Canoga Park insurance firm, but it could result in a denied claim or “the alternative of canceling the policy because of misrepresentation.”

Poor Coverage Possible

Lawrence also warned that any search for inexpensive insurance contains the risk of obtaining protection with all the coverage of a wet Kleenex.

“I once had to work with someone who had an $8,000 collision claim denied incorrectly,” he said. “I told him how to get it paid and eventually it was . . . but that proves that the lowest price is not always the best bargain.”

Still, agreed Chris Denove, an insurance specialist with auto industry analysts J. D. Powers & Associates of Agoura Hills, there are more legitimate wrinkles to saving on auto insurance than you can shake a stick shift at.

“First of all, all you single guys out there . . . get married ,” he said. “And all you people in Beverly Hills, move out to the suburbs. . . . Beverly Hills to Glendale, you’ll cut it (premiums) by half and to Thousand Oaks, by another third.”

Unfortunately, Denove agreed, the expense of either ploy would be several thousand dollars higher than any benefits.

But, he suggested, do check the medical coverage of your auto insurance policy to see that it doesn’t duplicate your group health insurance at the office.

And don’t be suckered into thinking that buying a four-door suburban crawler costs less to insure than a snorty sports car.

“People say that if you get a sports car your rates are going to go through the roof,” he said. “False, absolutely false. The reason that it seems that sports cars have a higher rate, is that the people who buy the sports cars tend to be the higher risk drivers.

“People were saying for a while: ‘Oh, that Suzuki Samurai, the insurance is killing it.’ Hey, if those guys (Samurai drivers), usually 18-year-old kids, single, going off to college with a couple of speeding tickets, went out to buy a Toyota Camry, their insurance would still go through the roof.”

Yet it is not driver dumbs, continued Denove, but the overall value of the car that remains “the biggest single determining factor” in auto insurance rates. “Realistically,” he concluded, “the major, actionable aspect to all this (reduced insurance costs) is buying a less expensive car.

Type of Driver

“You can go out and get a fire-breathing classic, a Plymouth Barracuda, a muscle car, something like that, with all the horsepower,” he explained. “In nice shape it is going to be valued around $4,000 or $5,000 . . . and you can insure that for probably much less than you’re going to insure a new Honda Civic.”

An insurance broker, who also requested that her name not be used, said most companies she dealt with offered certain rate reductions for car pooling.

“There are varying requirements and categories but, say, if you generally drive 12 miles to work . . . if you car-pool on a regular basis, they (insurance companies) will bump you down from business to the pleasure rate,” she said. “That is generally (a saving of) 10% to 15%.”

She is a disciple of never making a mountainous problem out of a molehill ding.

Take a Small Loss

“Personally, if I had a collision loss and the damage was only $300 and I had a $200 deductible,” she added, “I’d eat that $100 difference because I don’t want them to come back and charge me for a collision for years to come.”

Alan Morris, director of underwriting for the Automobile Club of Southern California, sees such self-insurance to be the better part of premium reductions. So are higher deductibles.

“You can achieve rather significant savings if you are willing to self-insure, say, your first $250 or even $500 of the damage to your own car. Over several years without any loss at all, you could save half of your comprehensive premium.

“You buy insurance to protect the large loss that would disrupt your normal financial situation. When it comes to the smaller losses, in essence, what you’re doing is incurring the heavy administrative expense of an insurance company to settle a minor claim.

“And that is passed on in the form of higher premiums.”

Morris even will advocate--in certain circumstances--carrying no insurance beyond liability.

“If your vehicle is in fact now seven, eight or nine years old, take a look at what is the total value you have invested in the car,” he said. “Or what it would cost you to replace that car versus what you are paying out in insurance premiums for the comprehensive and collision. You might decide not to carry any insurance at all on collision or comprehensive.”

A Disposable Car

In essence, why pay $800 a year for four years to insure basic transportation worth only $700 with a new battery? Ergo, the disposable car.

“You should also see what kind of discount program a particular company has,” Morris suggested. “For example, we offer a discount for retired senior citizens.

“Car pooling discounts. Multiple car discounts. Some companies still do a non-smoker discount. It is an individual decision . . . but I’m sure there are a significant number of people who could pare their insurance back.”

But, for one Santa Monica motorist, such suggestions are so much codswallop.

“I think the best thing individuals can do is hope that the (State) Supreme Court acts very quickly,” he said. “It’s a stacked deck under the old law. You can do all sorts of tricks to make your insurance dollar go further. But the real answer is to have the industry reformed.”

So said Harvey Rosenfield, who chaired the Proposition 103 campaign.