UPDATE 1-NY drivers save as insurance firms weigh gas spike

(Adds details, names of top insurers)

NEW YORK, Oct 14 (Reuters) - New York's motorists will save a total of nearly $515 million because several insurance companies decided to withdraw or curb rate increases they sought after being told to consider that rising gas prices have clipped driving, New York Gov. David Paterson said on Tuesday.

Some 43 car insurance companies, whose policies protected 75 percent of the state's drivers, were waiting for the state's insurance department to rule on rate requests on Aug. 6, when the regulator told them "to demonstrate how they were factoring in reduced driving when setting new rates," the Democratic governor said in a release.

New York's car insurance rates are the third highest in the nation and New Yorkers would have had to pay an extra $600 million had the increases been approved, he added.

"It's simply counterintuitive to increase rates by eight percent when people are driving less," Paterson said.

Each year, New Yorkers spend about $10 billion on auto insurance premiums, he added.

In June and July 2008, New Yorkers drove 907 million fewer miles than in the same two months last year, he added.

Allstate Corp (ALL.N), Berkshire Hathaway Inc's (BRKa.N) GEICO and Progressive Corp (PGR.N) are the state's top three car insurers, when measured by direct written premiums, a state insurance official said. Travelers Companies Inc (TRV.N) and Nationwide Mutual Insurance Co vie for fourth place. (Reporting by Joan Gralla in New York; Editing by Tom Hals)