Automobile insurance rates are based on age, sex, marital status, and driving record. They are also determined by number and type of cars, the cost of repair, where and how often the car is used, plus other factors that may be unique to your job or situation.

Automobile insurance has two parts:

1. liability coverage for bodily injuries, property damage, and medical expenses to others when you are at fault, and uninsured motorist coverage to pay for injuries caused by another driver who is uninsured or by an unidentified hit-and-run driver.

2. physical damage (comprehensive and collision) for damage done to your vehicle from collision, fire, theft, flood, falling objects, or hitting an animal.

Considering today's high medical costs and the tendency of accident victims to sue, limits of $100,000/$300,000 for bodily injury, $100,000 for property damage and $100,000/$300,000 for uninsured drivers are recommended. You can also add more liability coverage using an umbrella liability policy.

One way to reduce automobile insurance premiums is to increase the deductibles for comprehensive and collision. Consider dropping collision coverage if the car's value is so low you could assume the loss yourself.

In many states, you must have liability insurance to drive a car. More than 900 companies sell auto insurance. Paying a high premium for your insurance does not necessarily mean you are getting more coverage; in most states, insurance companies can charge whatever rate they wish to for the same basic coverage. Minimize your insurance premiums by comparing coverage costs among companies. You may be able to save several hundred dollars on your insurance by checking with your local Cooperative Extension Service office for access to the Insurance Inquiry Program, a computer program from the state Department of Insurance that compares prices of all the companies in your state that insure homes and autos. This information is also available on the Internet.

Save money on your auto insurance

If you wish to have replacement value coverage without paying a high premium, you can reduce your premium by increasing the amount of the deductible payment. If you invest the savings and do not suffer a loss, your investment continues to grow, and you still have coverage without the high cost.

You can usually save money by insuring all family cars and your home with one company. Check for special categories considered good risks such as nonsmokers, nondrinkers, driver education training for young drivers, students with a B average or better, part-time drivers, anti-theft devices on your car, and good driving records. Some companies allow you to suspend the collision and liability portions of your auto insurance if your car is not in use. Ask your company if they offer this feature. When planning to purchase a different vehicle, be sure to check insurance rates, which vary considerably by make and model.