4 Ways to Save Money On Your Personal Insurance
There is something that we have to get off our chest. Over the past month we have reviewed three different clients home & auto insurance plans and to say our clients were not getting treated like they deserved was an understatement. In all three situations alone, we identified hundreds of dollars of savings and were able secure them even broader insurance coverage. In other words, more for less. Who doesn’t like that?
The stories are pretty much the same. You get a referral from your real estate agent, friend or you decide to get a quote online on your own. As we have seen with most people’s insurance programs, it’s usually set it and forget it. Can you relate? Most people don’t think about the adequacy of their coverage or the cost after obtaining their policies. They just keep paying the new premiums as the policies renew. As you will see below, it’s financially intelligent to review your policies to see if you are paying the least amount for the coverage you need.
With all new clients we review their insurance coverage for deficiencies and cost savings opportunities. Not to mention, every year thereafter review our clients personal insurance, including their home, auto and jewelry policies and help them shop for new coverage.
We recently reviewed a new clients coverage and determined their liability and coverage limits were way to low and the premiums unusually high. These clients recently moved into a newly remolded home in a nice neighborhood. In order for the insurance company to make their homeowners insurance rate competitive, they designed a policy that under insured our clients home by $105,000. Can you imagine if your house burned down, and you had come out of pocket $100,000 to rebuild it?
In any event, we suggested they increase homeowners coverage, in addition to raising the liability limits on their cars, rental property and procure a $1mln umbrella policy. Not knowing the end result of increasing all of their coverage’s we shopped their policies with an independent trusted insurance advisor. Needless to say, by knowing what to look out for, our clients procured the critically important coverage while saving over $400 per year. All they had to do was sign a few pieces of paper.
When it comes to your personal insurance here are 4 Ways to Save Money on Your Financial Safety:
Shop your insurance coverage
Insurance rates vary by insurance provider based on their independent evaluation of your risk. Each insurer uses many factors to evaluate your risk, and they don’t all calculate it the same way. So what are you to do? The only way to address the inconsistencies in insurance rates among providers is to shop your insurance with multiple providers. Rates can vary significantly among providers, and the difference can be double the cost or more. There are many insurers out there, and it can be a time consuming process to contact them all for quotes, so many people work with an insurance agent to help them find the best coverage. But you also need to find the right agent. Is your agent a captive agent or are they an independent agent. A captive agent works for only one insurance company and only sells their products. An example of a captive agent is a State Farm agent. An independent agent does not work for a particular insurance company and can help you shop insurance rates at multiple providers. A client recently shopped for auto insurance for two automobiles, and for the same coverages, he was able to save 30% in premiums just by switching insurers. It pays to shop around.
Get all the discounts you can
You can save additional money on insurance with discounts. One of the best discounts to consider is a multi-policy discount. A multi-policy discount is a discount the insurance company offers you if you have multiple types of insurance policies with them. It only takes two types of policies (auto, home, boat, or RV) to get the discount. You will also benefit by having only one insurance company to work with for renewals and claims.
There are other discounts the insurance company may not tell you about, but you should ask about. If you graduated from college, ask about discounts for graduates of your college or university. Some insurers also offer discounts to members of professional associations. If you have a child on your insurance policy, ask about a good student discount. Make sure you let the company know about any security devices you may have installed in your home or car as there are typically discounts for those as well.
Increase your deductible
Your deductible, or how much you are responsible for before the insurance company pays out in the event of a claim, also plays a role in your premium. If you increase your deductible, the insurance company will not charge as much for premiums. So how much should you increase your deductible? We recommend a 5 year payback period. So if increasing your deductible $500 saves you at least $500 over 5 years, you should do so. You should also consider what amount you can cover out of pocket without filing a claim. If you have established an emergency fund, you can use your emergency fund for smaller claims up to the deductible amount and not have to file a claim which would likely cause your premiums to increase.
Pay your premiums upfront
When you’ve settled on an insurance policy and it’s time to pay the premium, you usually have the option to pay it upfront or pay on a monthly or quarterly basis. Usually, the insurance company charges more if you pay monthly or quarterly in the form of transaction fees and slightly higher premiums. You can avoid these unnecessary extra costs by paying the premium upfront. Remember, though, to budget for your insurance renewal premium that will be due in a few months or a year.
If reviewing your coverage and shopping it around is something that you don’t have the time for or understand exactly what you should be saying to your insurance agents, hire a financial planner that will help you manage these critical aspects of your financial life.