It doesn’t happen by itself, however.

Get Your Ducks in a Row

In order to make the most efficient use of Internet technology to secure cheap online car insurance, you’ll need to have some of your personal information handy. Typically, you’ll see a number of fields that will ask for information such as your address, the make and model of your vehicle and your driver’s license number. With this information, a convenient, web-based application will quickly crunch the numbers and provide you with an instant car insurance quote right then and there.

There are even websites that act as a virtual independent agent and can thus get you rate quotes from a number of different insurance companies – which sure beats the heck out of spending hours on the telephone, wading through layers and layers of “menu options” before you actually speak with a live human being – who in all probability is sitting in front of his/her own computer screen doing the same thing that you could be doing yourself in the comfort of your own home.

Keep In Mind…

You can also actually buy auto insurance online using a credit or debit card. However, before you commit to purchasing the coverage, remember that your quote is only an estimate. Although online, web-based computer applications can give you a pretty close approximation of what you will eventually pay based on the data you provide, ultimately it still takes a real, live, flesh-and-blood underwriter to determine your exact rate.

This said, the increasing intensity of competition among insurers has forced these companies to provide better services and products at the same time they must offer lower prices on policies – sometimes dramatically.

Good News for New Jersey Drivers

One example of how increased competition among insurers has worked out very well for consumers has been reported by various media outlets in the past week. While the large players in New Jersey have been raising rates, 21^st Century Centennial, a subsidiary of Farmer’s Insurance Group that offers direct auto insurance, has dropped theirs by as much as 20%. This is no doubt welcome news to automobile operators in the Garden State, where the average cost of car coverage hovers just south of $1,500 a year (on the high side of the median U.S. price for car insurance).

American drivers like to complain about high auto insurance rates – and in high-priced states like Louisiana, ils ont la raison as they might say in the Pelican State. However, for the most part, Americans have had it pretty good; getting direct auto insurance, having the proper safety equipment, choosing safer vehicles and above all, maintaining a safe driving record has meant that insurance rates in the U.S. overall have increased only slightly, remained level and in some cases even decreased.

This is not the case for their counterparts across the pond in the U.K. In a nation where owning and operating a motorcar is already prohibitively expensive (for example, petrol – what the British call “gasoline” – is the equivalent of over $6 a gallon in that country), drivers have been hit with insurance increases of over 12% just since the beginning of April.

U.S. and U.K. Compared

Britain’s Automobile Association Ltd. (counterpart of the AAA) reports some types of motor car insurance, such as fire and theft coverage, have risen by nearly 16%. Today, the average British driver pays the equivalent of over $1,500 USD per year in order to protect their vehicles, and in some cases, nearly $1,900 annually. That’s still cheaper than 21 American states (in Louisiana, a driver’s auto insurance cost can be over $2,500 a year), but if the current trends continue, it’s going to cost British drivers a whole lot more to get car insurance.

Also, keep in mind that many of the other costs of auto ownership in the U.S. – such as fuel, maintenance and vehicle and road use taxes – are a fraction of what they are in the U.K.

Why?

According to a report published in Bloomberg Businessweek, the increases – which are the most dramatic in history – are due to several factors, not the least of which is the rising cost of handling and paying out claims. Two of the U.K.’s largest insurers, Aviva Pic and Direct Line (a subsidiary of the Royal Bank of Scotland) claim that increased litigation has driven up the costs of paying out claims to the point that they are losing money. One insurance industry spokesman says that “unscrupulous accident injury lawyers” (what we in the U.S. might call “ambulance chasers”) are convincing people to file claims for even minor injuries in order to make a few fast quid.

Another factor is lower investment returns that have further cut into insurer’s profit margins in that country.

The Worst is Yet To Come

As British insurers continue to lose money – and as a dysfunctional economic system, put into place by former PM Margaret Thatcher, drives working Britons to look to their civil courts as a source of revenue – chance are that full coverage auto insurance in the U.K. could rise by as much as 50% by the end of 2012.

Meanwhile, on our side of the pond, auto insurance rates in Ohio (the third least expensive state to insure a vehicle after Vermont and Maine) rose a very modest 2.8% since last year – and in New Jersey (currently #22), increased competition has given some drivers the opportunity to cut their premiums by 20% or more.

Americans don’t have it so bad after all…

In fact, if you drive a car that is in high demand by car thieves and/or live in a region (such as Las Vegas, Nevada or Yakima, Washington) where the chances of having a vehicle stolen are statistically much greater, such devices are almost mandatory. At the very least, good theft deterrence systems will give you much greater peace of mind, because the consequences of having a vehicle stolen can go far beyond the simple loss of property.

Alarms are Good – But…

Probably all of us have been awakened in the dead of the night by a car alarm going off in the neighborhood. Cheap car alarms can be set off by almost anything – even a change in the temperature. Nonetheless, they can be very effective in scaring off a would-be car thief. Because of the problems with cheap ones however, it’s best to spend a nickel and buy a decent model that only goes off when someone actually attempts to break into the car.

Other Options

Theft deterrence can also be visual – and often, this works just as well, or better. Representatives of the top insurance companies agree with the conclusions of the National Insurance Crime Bureau that would-be car thieves who see a steering wheel lock are much more likely to decide that attempting to steal the vehicle would not be worth the effort – and move on. The same is true of brake pedal and wheel locks.

Steering wheel and brake pedal locks are fairly inexpensive – they can be purchased from between $15 and $100 and most auto parts stores. Wheel locks can cost as much as $200; these are however the most visible of deterrents as well as the most effective. If you have a fairly new vehicle that is still worth a great deal, it’s probably a worthwhile investment.

Get the Options

Some car manufacturers offer locks with numeric keypads and even vehicles that require voice or fingerprint identification in order to start. Another common option uses a GPS device and allows the owner or law enforcement to track the vehicle and immobilize it from a remote location should a car thief attempt to abscond with it. These can add a bit to the car’s sticker price, but will definitely lower your auto insurance estimate.

How Much Can You Save?

This is a good question – and one that only your insurance agent can answer. S/he will best be able to tell you what types of theft deterrence devices will result in the greatest savings on your comprehensive car insurance premiums.

This is because teen driving insurance is high risk auto insurance, especially for males. People in this age group have a greater propensity to engage in risky or reckless behavior; they also make more distracted more often with radios and CD players, ipods, cel phones – and a car full of rowdy, noisy, distracting friends. According to statistics gathered by the National Highway Traffic Safety Administration (NHTSA), motor vehicle accidents are the leading cause of death among teenagers; on the average, eleven teens die in auto-related accidents every day.

States Respond

In attempts to address this problem, most states have instituted “graduated driving privileges,” which severely restrict teen driving privileges until the young person has demonstrated responsibility while operating a motor vehicle. Although the details vary from one state to another, these laws essentially prohibit a teenager from driving without an adult in the car, from carrying friends or other passengers in the vehicle, and from operating the vehicle between 11 PM and 6 AM except to travel to and from employment. These restrictions are gradually lifted over the course of six months to a year, eventually enabling the teen unrestricted driving privileges.

Lawmakers in Washington DC now want states to take it even further by denying people full driving privileges until they reach the age of majority – in other words, eighteen. Bills have been introduced in the House and in the Senate that would require states to comply or lose federal highway funding.

More Statistics

According to Representative Michael Castle (R-DE), who is a co-sponsor of the House bill, the proposed legislation would “reduce the accidents…the deaths…the serious injuries greatly in this country.” A representative from Allstate, one of the nation’s major insurers, also says that stronger graduated licensing would “cut it by 20 to 40 percent,” adding that “it’s really just commonsense stuff.”

Despite support from adult constituents across the country however, neither the House nor the Senate bill has gotten much support. In the meantime, a family with one or more teen drivers can continue to expect a higher car insurance premium once they start getting behind the wheel, existing state laws notwithstanding.

Lower Your Rates Today

The best ways to get the best car insurance deals for your teenager today: (A) make sure s/he toes the line and don’t be afraid to take the keys away if s/he gets sited for so much as an illegal lane change; (B) get them a used, plain, four-door sedan to drive (these are the least expensive vehicles to insure); (C) keep the pressure on them to maintain a high grad-point average – most insurance companies offer good student car insurance discounts, since teens who demonstrate academic excellence are statistically less likely to be involved in accidents.

Generally, driving a car that is safer – has more road stability, better brakes, “crash cages,” airbags and other safety equipment is of course going to result in a much better car insurance price for the owner and operator. Recently, cars have come out that allow a vehicle to literally drive itself, report on its own location in the event of a collision, enable blind people to operate the vehicle in public roads (!) and even “smile” and “frown” at other drivers. However, as amazing as these technological advances may seem, it’s possible that they may create as many problems as they solve.

Intel Gets Into The Act

The most recent innovation is the Intel “Connected” Car. Intel of course is a manufacturer of computer chips, and has no plans to start making automobiles. However, the company recently created a prototype Fortwo Smart Car equipped with a wide array of cameras and sensors that can measure and record (among other things) driver maneuvers (turns, speeds, etc.), braking capability at any given moment, and even automatically send accident reports to law enforcement and the auto insurance agency or company. The new Intel technology can even take over control of the vehicle should the driver become incapacitated or displays poor judgment.

While this opens the possibility of self-driving automobiles (simply enter your start point and destination and the vehicle does the rest), there is a potential downside; it might be very easy for predators and car jackers to hack into the system of such a vehicle and simply shut it down from a remote location – leaving the driver vulnerable.

Cars For The Blind?

Meanwhile, at Virginia Tech, work is progressing on what are known as non-visual interfaces that will make it possible for blind people to not only operate a motor vehicle, but even get car insurance. These are a collection of technologies that use tactile and audio signals to alert drivers as when to turn, apply the brake, etc. Considering that many people with good eyesight have difficulty operating an automobile safely, it is questionable as to whether or not this technology should be implemented and allowed on the streets. Nonetheless, plans are underway to install these devices into a Ford SUV and do a public demonstration later this year.

One suspects that if cars for the blind are ever allowed on public streets and highways, the car insurance price for such drivers will be high, however.

Personality?

Nissan is not the first to design cars with front ends that resemble faces; since the 1940s, automobiles have borne an eerie resemblance to animals from the front. The famous “dollar grin” on the 1954 Buick Century was probably the most famous, but Nissan is taking it a step further, with front ends made of flexible polymers that can allow the driver to display smiles and frowns for the benefit of other drivers.

Here’s what concerns us: psychologists believe part of the paranoia and “road rage” phenomenons has to do with the face-like appearance of automobiles. Although our rational mind realizes it’s simply a machine, our lower, instinctive “reptilian” brain perceives a threat at the subconscious level – and those of us who are fatigued, stressed out or less stable react accordingly.

Esurance, a San Francisco-based company offering auto insurance online (among other insurance products) in thirty states may not have been the first insurer to offer the customer an online auto insurance quote, but it currently appears to be leading the way toward making it easier to deal with insurance issues online. Recently, the company announced the release of an application for the popular iPhone that lets its clients make payments, review their policies, file claims, find repair facilities – and even view the repair shop and their vehicles while repairs are being carried out.

In addition, for those who are in the market for car insurance, instant online quote services can be accessed through their iPhones.

Brief Background

Esurance is the Johnny-Come-Lately of the insurance industry; the company was founded in 1998 and began selling direct car insurance policies to individuals the following year. Its status as a small, independent insurer was short-lived; since the turn of the century it has been a subsidiary of the White Mountains Insurance Group, a large conglomerate.

Esurance management prides itself on being environmentally friendly, using “carbon offsets” for its offices and offering completely paperless customer transactions and filings.

Will other auto insurance providers follow suit? Many have already been running some hard competition to Esurance, though Esurance so far is the first and only insurer to offer comprehensive car insurance services online through an iPhone application.

Hartford Given Top Marks

While Esurance’s iPhone access is innovative, the Hartford Financial Services Group, a Connecticut-based company and one of the nation’s larger insurers, recently got the top rating for its online services. In a June article, published in Business Wire, it was reported that Hartford’s web site was the most user-friendly and persuasive of the top seventeen insurance company web sites surveyed. Insurance web sites were also evaluated based on content quality and how often it was used by those on social networking web sites such as Facebook and MySpace.

The company that did the survey, Change Sciences, Inc., also gave highly favorable reports on the web sites of Liberty Mutual, Progressive, Nationwide, GEICO, and State Farm, among others. What was interesting is that Esurance, which pioneered online insurance services, came in at Number 8; the top seven are old, established “traditional” insurance companies that have had some catching up to do when it came to establishing a presence on the World Wide Web.

Of course, the ultimate winner in this race is the insurance consumer, for whom insurance shopping has become easier than ever. As far as online insurance has come however, it’s not perfect; the Change Sciences report indicated that over three-quarters of the insurance company websites surveyed “fail to answer at least one question that users have,” while nearly three-fifths have “instances of navigation design that pose challenges” – and all of them came up a bit short in providing “persuasive” content in some way.

For the past two years, a driver in Texas could get more affordable auto insurance by minimizing the number of miles driven, thanks to an innovative “pay-as-you-go” insurance model. Now, his/her counterpart in the Golden State will enjoy a lower California auto insurance rate as insurers adopt a similar model.

Based on Actual Mileage

Usually when you buy car insurance, the rate is based in part on the estimated number of miles you drive every year. The way this is listed on the policy is “under 12,000,” or “12,000-24,000,” etc. Unfortunately, if your policy is based on “under 12,000″ and you only drive 6,000 miles a year, you wind up paying the same.

MileMeter, a Texas auto insurance company, was the first in the nation to offer “Pay As You Drive” (PAYD) auto insurance, in which drivers pay based on the actual number of miles they drive their vehicles. This insurance first became available in November, 2008. So far, other insurance companies have been slow to sign on to this particular insurance model. California is the first state outside of Texas in which automobile operators have the opportunity to realize substantial savings by reducing the number of miles they drive every day.

More Benefits

Among the major upsides of the PAYD auto insurance model are that it not only benefits the policy holder by reducing insurance costs, but it benefits society and the environment as well. By encouraging drivers to think twice before making extra trips and encouraging the use of public transportation, bicycles and car pools, and walking, there is less traffic and stress on the highway infrastructure and fewer accidents – and less pollution. In addition, this model makes some progress toward reducing the nation’s dependence on oil imported from hostile and unstable regions of the world.

According to a report from the Brookings Institute, if PAYD auto insurance was offered in all fifty states, two-thirds of American households would realize immediate savings of up to $270 per vehicle, and losses due to auto-related damages would go down by as much as $60 billion.

Sacramento Changes with the Times

Most of this will depend on consumers and voters who are willing to pressure their state legislators. The biggest roadblocks to nation-wide implementation are current state insurance regulations and the willingness of insurance companies to offer PAYD. California’s insurance regulations were changed last year, which has allowed insurers to start offering this type of auto insurance product. So far, two California insurers have volunteered to sign on to the new program. Insurance customers have the choice of submitting an estimated mileage statement or submitting their vehicle’s odometer readings at specified intervals. Alternatively, they can have a special device installed that will report mileage automatically, which may result in the biggest savings.

Higher Costs

Fewer people in the E.U. (of which the U.K. is a member) own automobiles than in the U.S., where automobile ownership is almost universal. The main reason is that the direct costs of owning and maintaining a vehicle are much higher. In some E.U. countries such as Germany and Denmark, this isn’t a problem; public transportation is well-funded, efficient and fast. People in the U.K. however still find themselves needing a vehicle to get around from time to time, but in many places – particularly London, where the basic cost of living is very high compared to other regions of the country – it is simply not cost-efficient (and in many places, even possible) to own, store and maintain a vehicle full-time.

In the U.S., companies such as Zipcar have offered solutions for people who cannot or do not wish to assume the burden of full-time auto ownership by offering car rentals on an hourly basis. Though it may seem expensive (a $35 annual membership is required, and fees start at $7 an hour), when you consider that reserved parking, insurance, fuel and maintenance is all included, it’s actually a pretty good deal for those who only use an automobile on occasion.

It’s also a much better alternative than borrowing or lending out a vehicle, which can open up a can of worms when it comes to insurance and liability issues, and is a very bad idea for that reason.

The U.K. Alternative

Lloyd’s of London is a venerable insurance company (founded in 1688) that has long had a reputation for insuring high-risk ventures that other insurers won’t touch. (In fact, Lloyd’s was the company that insured 1940s pin-up girl Betty Grable’s legs for $1 million, and has actually done the same for Irish dancer Michael Flatley.) Now, Lloyd’s has come up with a new insurance product that makes it possible for U.K. auto owners to get coverage while turning their vehicle into a source of revenue.

Called WhipCar, this program covers the vehicle as well as the driver when an owner rents out his/her personal auto to a third party, such as a family member, a friend or even a neighbor. A WhipCar policy replaces the owner’s own policy temporarily and covers the vehicle while being operated by a third party. The WhipCar website actually goes further than that, operating as an online clearing house that matches car owners with available vehicles with people seeking to rent a vehicle. Membership is free and WhipCar deals with all the paperwork – including making sure the vehicle is safe and in good operating condition and the prospective driver has a safe record – and is of legal age (21).

If you are a U.S. resident driving in Canada – or vice versa – and get into an accident, you can be sure (provided your premiums are paid) that you will be indemnified up to the limits of your car insurance policy.

However, if you are driving in Mexico and this happens, your own insurance policy is not going to help you. The fact is that if you plan on driving south of the border, you will need to buy auto insurance especially for the time you are in that country before you cross the border.

¿Por Que?

U.S. and Canadian insurers will normally not cover any damages that you either incur to your vehicle or cause while driving in Mexico. The only exception here is that some (not all) U.S. insurance carriers will cover damage to your vehicle if the incident occurs within 25 miles of the border. However, liability is not covered at all – and if you travel outside that 25 mile limit, you have no protection whatsoever from your U.S. insurer. This is an important point to understand, because it is the reason many people get confused over this issue and wind up with muchas problemas.

The primary reason is that Mexican courts refuse to recognize U.S. and Canadian auto insurance. If you fail to carry a Mexican liability policy and are caught, you’ll be detained – even if you have life-threatening injuries and are in serious need of medical attention.

Mexican Auto Laws

The Mexican legal system is quite different than the one you are familiar with – and because of the grinding poverty suffered by most Mexicans due to an oppressive, oligarchical regime dominated by the tiny minority of the very rich who control 99% of the wealth in that country, Mexican officials and law enforcement officers tend to be very corrupt.

Unlike the U.S. and Canada where you simply exchange insurance information then file a claim later, Mexican law requires that a person who causes an accident provide evidence there at the scene that s/he is able to pay for the damages. If you do not have a valid Mexican liability policy, the police will toss you in jail (and Mexican jails are notoriously bad) until you cough up the dinero. Chance are, you’ll have to hire a Mexican attorney to represent you – and if you think American lawyers are sharks, you ain’t seen nothin’ yet. There is no limit to what a Mexican lawyer will charge to defend you, because you are from El Norte and therefore assumed to be made of money – and they know you don’t have a lot of options.

The Good News

On the upside, getting Mexican liability insurance is not difficult nor is it expensive. It only takes a few minutes to purchase a policy online, and basic liability insurance can be obtained for about $10 a day (full coverage will cost more). It’s a little more time and expense, but it is well worth it and will save you a huge amount of time, money and hassle should you have the misfortune to be involved in a collision while driving in Mexico.

Just make certain you arrange it before crossing the border.

Unless you’re one of the lucky folks on Wall Street or heading up one of our fine transnationals, or living the life of Reilly dining on champagne and caviar inside the D.C. Beltway – if you’re among the majority of Americans who actually has to work for a living and make an actual, genuine contribution to society – chances are you are very interested getting the lowest auto insurance rates you can.

Deregulation hasn’t worked out terribly well for the average person when it comes to the petroleum industry (just ask the folks along the Gulf Coast these days), but it has brought positive changes to the auto insurance industry by forcing insurers in most states to compete harder for customers

Now, many insurers will send out advertisements, claiming they have the cheapest auto insurance rates – and for some potential customers, that may very well be true. But everyone’s situation is a little different. You as an insurance customer are going to have to do some serious due diligence of your own.

In addition, there are some things you can do to reduce the cost of your car insurance policy.

Consider the Value of Your Vehicle

These days, more and more working people are forced to make do with aging vehicles held together with spit, duct tape and bailing wire. If you have been driving your vehicle for ten years or more and have had it insured with the same company during this time, you’ll definitely want to check your policy to make sure you’re not insuring it for more than it’s worth. Once your vehicle’s value is less than ten times the annual cost of your policy, it’s time to jettison the collision and comprehensive coverage. You can determine this by consulting the Kelly Blue Book.

Raise Your Deductible

As you know, the deductible represents your out-of-pocket costs before a claim is paid. By raising your deductible, you can seriously lower your monthly or bi-annual premiums. If you are a safe, law-abiding driver and could afford to lay out $1000 for car repairs in case of an accident, this is a good way to go.

Shop Shop Shop

Take advantage of today’s deregulated insurance market and the World Wide Web. Thanks to the Internet, it’s easy to get dozens of quotes from as many insurers within thirty minutes.

Keep Your Driving Record Clean

This goes without saying – but it not only benefits you as the primary driver, it benefits others in your household as well. For example, common wisdom dictates that it’s better to buy a separate policy for a teenage driver – but if you have an excellent driving record, an insurance company may offer a discount when you add your teen to your own policy. This is enlightened self-interest on the part of the insurer; though teens are high-risk operators, the company is always interested in developing a long-term relationship with a potential lifetime customer.

Low Mileage Discounts

At least one insurer is currently experimenting with “per-mile” insurance, in which the driver pays only for the time s/he actually drives the vehicle. This hasn’t caught on nationwide, however; in the meantime, you can qualify for low-mileage insurance discounts while saving money and the planet by taking public transportation, riding a bicycle, or telecommuting.

If You Buy Another Vehicle…

Remember that the least expensive vehicle to insure is a plain, no-frills four-door sedan. Sport roadsters and SUVs are the most expensive; consider this when shopping for a new vehicle.