Good Time to Shop Around for Auto Insurance

Now is a great time to shop for auto insurance.

Along with the rest of the property/casualty insurance industry, the auto insurance industry is in a soft market. The nationwide average annual cost for auto insurance premiums in 2007 was expected to decrease for the first time since 1999, according to the Insurance Information Institute, a non-profit organization supported by the insurance industry. The institute attributes the more favorable conditions for consumers to a more competitive marketplace, safer cars and aggressive fraud-fighting that has reduced bogus claims.

Furthermore, if you're a do-it-yourselfer who likes shopping for insurance online, there's more good news. In June of this year, the Customer Respect Group released a study that found that auto insurer Web sites are improving. Most of the improvements cited stemmed from the sites' responsiveness to emails and their disclosure regarding personal data consumers must enter to get a quote. Both are steps in the right direction, so you should check out your online options.

The companies that performed the best in the study were GEICO, a subsidiary of Berkshire Hathaway(BRKA Quote - Cramer on BRKA - Stock Picks); Progressive(PGR Quote - Cramer on PGR - Stock Picks); Liberty Mutual; Farmers; American Family; and Cincinnati Insurance, a unit of Cincinnati Financial(CINF Quote - Cramer on CINF - Stock Picks).

Whether you're shopping for coverage now or in the future, you should always understand what you're getting. This excerpt from TheStreet.com Ratings' Consumer Guide to Auto Insurance (available for $49.95) walks you step-by-step through an auto policy and, more importantly, how insurers determine your premium.

Types of Coverage

At its core, auto insurance is simply a contract between you and your insurance company to protect against financial loss in the event that you have an accident. Depending on what type of coverage you purchase, the insurance can provide financial assistance to:

• Repair your vehicle or replace it in the event it is damaged or stolen.

• Reimburse others if you cause an accident that hurts them or their vehicle.

• Pay for any medical expenses arising from injuries you or your passengers sustain in an accident.

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