Property Assessment

You're paying how much for your home and auto insurance? Here's your big chance to cut those premiums down to size.

As a 24-year-old man living in an urban Queens, N.Y., neighborhood, Delta Air Lines ground crewman Anton Miskulin is already the kind of driver that insurance companies see as risky and are loath to insure. But when he traded in his Ford Taurus for a slightly smaller Toyota Camry last fall, Miskulin's insurer immediately started treating him like Evel Knievel incarnate.

After Miskulin switched cars, his insurer, American Agents Auto Insurance, more than doubled his annual premium, to a crippling $4,700. Furious, he called his local insurance broker for an explanation. As far as American Agents was concerned, the Camry was a sports car, and Miskulin was now a prime candidate to drag race down the expressway. "We're talking about a midsize coupe with a four-cylinder engine," says Miskulin. "Not much sporty racing going on with this car... Right then and there I knew it was time to look for another insurance company."

Miskulin hit the phones and surfed the Net, hoping to slip into something a little more comfortable. He had seen ads for Geico's low rates, but when he applied for a policy at its Web site, he was quoted an outrageous $6,500 a year. Relief finally came when Miskulin answered an ad for Travelers Insurance in his company newsletter: After a 15-minute phone interview, he was offered a $2,300 policy. But he's still dazed by his shopping experience: It just doesn't seem possible that the same person could be charged such wildly different premiums for the same coverage.

Believe it, because it's happening with your home insurance as well. When Alan Weaver, a computer-programming teacher, reviewed the coverage that his 88-year-old mother had held for years on her house in Stamford, Conn., he saw something odd: Mom lived six miles from the nearest large body of water, but according to Allstate, her house faced a risk of flooding ? which meant paying a higher premium. Weaver thought Allstate was overstating the risk ? and so did his own home insurer, Electric Insurance, which offered his mother a $300-a-year premium, 40% cheaper than Allstate's. "I told my mom, 'The money you saved is gonna pay for your air-conditioning this summer,'" Weaver says.

Consumers have waited decades for this, and the inevitable has finally happened: The nation's insurers no longer have you over a barrel. You still need coverage; without a policy, it's illegal to drive a car and impossible to get a mortgage. And umbrella policies for personal liability coverage are now a must for anyone whose assets, including savings, annual income and home equity, add up to more than $300,000. But the truth is, you can probably get all three policies for a fraction of what you're paying now.

A lot has changed in the insurance industry in the past couple of years. Sellers of "property and casualty lines," the trade name for home and auto insurance, are struggling to make a profit. Underwriters are so determined to boost their market share that they are willing to slash premiums to lure new customers and give better deals to existing ones just to keep them from swapping carriers.

It isn't that your insurance broker is that generous a chap. He's betting that you'll just pay the bill he sends you, without shopping around for a lower premium. And so far, he's been right. Only 32% of car owners shop around for auto coverage, according to a recent survey by the Marketing Risk Management Group, a market-research firm. Homeowners are even less enterprising: About 95% automatically renew their policies each year, most of them without looking for other offers.

It's time to get off your duff, though, because prices are about to start rising again. An increase in auto accidents that involve bigger, more expensive cars is expected to drive premiums up 3% or 4% annually for the next three years. Homeowner rates will leap even higher, about 5% a year, according to analysts at the insurance research firm Conning & Co., as insurers try to reverse 10 years of heavy losses from disasters like the Northridge earthquake and Hurricanes Andrew, Fran and George.

But that isn't the end of your insurance worries. Carriers have become more sophisticated about identifying people who are likely to file claims and cost them a bundle. While you may feel you're the safest customer to ever step into an agent's office, your insurer may think otherwise. Common sense says that your driving record and your home's value ought to determine the amount of premiums you pay, but they're no longer your underwriter's chief concern. Insurers now base many of their underwriting decisions on everything from your credit history to your Chihuahua's bad temper ? judgments that can send your premiums spiraling or deny you coverage altogether.

What's it going to take to slash your premiums? Patience and a good road map. We have everything you need to buy the right policy at the right price now. We'll show you how to shop shrewdly for auto and home coverage and how to fight your insurer if one of your claims is rejected. We've also tested the top auto- and home-insurance sites online, and culled those that didn't meet our standards, so you can find a policy with the least amount of hassle.