If all of our neighbors would just drive even less, we'd get lower auto insurance rates.

And that could be in the process of happening. When Americans spend less time on the road, the frequency of auto accidents declines. And when auto accidents go down, so do claims on auto insurance. That gets the ball rolling: When auto insurance companies see their costs on claims declining steadily, they typically respond to market conditions by lowering their auto insurance quotes and, ultimately auto insurance rates in a bid to stay competitive. And voila!, we write smaller checks for our auto insurance premiums.

With run-away gas prices, Americans are already driving less. The Federal Highway Administration (FHWA) reported in May 2008 that Americans are driving at "historic lows." The estimated "vehicle miles traveled," or VMT, for March 2008 fell 4.3 percent compared to March 2007, making it the sharpest dip for any month since the FHWA began tracking traffic-volume trends in 1942. Want to follow driving trends? The FHWA publishes monthly "Traffic Volume Trends."

When auto accident claims go down, auto insurance companies can usually respond fairly quickly. To adjust premiums, they must file new auto insurance rates with every state in which they operate. They can file new auto insurance rates any time they want to respond to market conditions, and many states offer a "file and use" system, where auto insurance companies can file new auto insurance rates and begin using them immediately without prior approval from the state insurance department. Some states even have a "use and file" system, so insurers can implement new auto insurance rates and then officially file them shortly thereafter. This way auto insurance companies can begin passing on savings (or increases) right away.

The nation's largest auto insurance companies are the first to see trends in accidents and claims payments due to the sheer volume of their claims data. For example, State Farm, the nation's largest auto insurance company, handles about 19 million auto insurance claims a year (that's a little over 17 claims per minute, all day, every day).

Robert Passmore, Director of Personal Lines for Property Casualty Insurers Association of America (PCIAA), an industry trade group, says, "This is where you see competition kick in." He notes that if you live in a state that requires "prior approval," it would take a longer time to see rate reductions. That means Californians and New Yorkers could be tapping their toes waiting for auto insurance rate reductions while everyone else pockets savings.

Auto insurance companies also note that auto insurance rates have been holding steady or declining over the past few years anyway. For example, State Farm customers in all states have seen rate reductions between Jan. 1, 2004, and Dec. 31, 2007, and customers in 39 of those states saw double-digit percentage rate decreases. (State Farm policyholders in New Jersey got the biggest drop of 29.19 percent.)

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