How can I save money on my insurance?

How can I save money on my insurance?

Insurance is one of the only products in life you buy and never hope to use.  The purpose of an insurance policy is to protect you from unforeseen catastrophes that could leave your finances in shambles.  No one wants to have a catastrophe befall them but you need to be prepared in case the unthinkable happens.  Make sure you have the best coverage available but also make sure you are paying a reasonable premium.

For the vast majority of customers, you cannot directly negotiate your insurance premium.  As independent agents, we work with our companies to get the best coverage for you at the best price available.  Is there anything you can do to help lower your premiums yourself?  Let’s take a look at a few concepts and see if you can.

Should I shop around?

Yes, but to be more precise, let us shop around for you!  Companies increase and decrease the premiums they charge based on a number of different factors but largely on the amount of losses they have had to pay for compared to the dollars they bring in.  This means that some companies may give you a better premium at certain times and a higher premium at other times.  It can be a headache and a ton of work for you to do this yourself.  Instead, contact us! As independent agents, we can shop a number of carriers for you to get the best coverage at an appropriate price.

Another idea to keep in mind is that you can call us when you are deciding to purchase a new vehicle, home, RV or boat to see what the cost of insurance would be.  If we already have your insurance, this can typically be down in a few minutes over the phone.  Make sure you have details on your new purchase when you call such as VIN, year, make and model of your car.  If we don’t have your insurance, let us quote the whole package as well as your potential new purchase!

What discounts are available?

I could write a blog on this topic alone.  We will do our best to get you all the available discounts to help keep your premium low.  There are discounts for taking a defensive driving course, students with good grades, parents who are “empty nesters”, not having a mortgage, having an alarm system, backup generator or water shut-off system, quoting your insurance more than a few days from your renewal, etc.  The important thing is to understand there are a lot of discounts you may qualify for and not be aware of.  Make sure you ask if there are any other discounts available with your carrier and we’ll see if you qualify.

What’s credit got to do with insurance?

Now that’s an excellent question!  Most carriers now use an insurance score to help determine what premium to charge you.  An insurance score uses similar information as a credit score but is not the same formula.  Further, different companies use different formulas.  In short, insurance companies have used a massive amount of statistics to determine that people with higher credit suffer fewer losses and people with lower credit suffer more losses.  It’s important to keep this mind when making financial decisions: having good credit can get you better rates on your mortgage and better insurance rates in addition to a number of other benefits.  Make sure you are monitoring your credit score and work to get it as high as you can.

Will higher deductibles save me money?

Yes!  Every company will offer lower premiums for higher deductibles.  The important consideration you need to make is if the premium reduction is worth it.  You need to make sure you pick a deductible that you can afford.  If you don’t have $5000 in cash at any given time, do not choose a $5000 deductible.  The purpose of insurance is to prevent you from having a large financial burden when an unexpected loss happens.  If you’re deductible is too high for you, it will partially defeat the purpose of your insurance policy and leave you disappointed at claim time.  Keep in mind that many companies will only allow certain minimum deductible options such as $250 or $500.

Does bundling insurance really help?

Absolutely!  Most companies will offer you a substantial discount to bundle your home, auto and umbrella insurance with the same company.  This discount can be anywhere from just a few percent up to 20%!  That can make a huge difference on your overall premium invoice.  You also get the advantage of having a simplified billing process and claim handling process if more than one policy is affected in a claim.  Some companies will even offer an option to waive a deductible if both your home and auto are insured by the same company and are damaged in the same claim like a hail or windstorm.

Aren’t all insurance policies the same?

Absolutely not!  Many insurance policies are based on the same form produced by the Insurance Services Office (ISO).  However, almost all companies will add coverage tweaks to these forms based on the customers they target, their claims practices and pricing strategies.  In addition to just the base coverage forms, most companies have a variety of endorsements you can select to alter how your policy performs when you have a claim.  Coverage differences can make a huge impact on what you get paid at claim time.  If you are comparing two quotes, make sure you understand that there are likely differences in coverage that you cannot even see on the quote.

In addition to coverage differences, your service is going to be different base on what company you purchase your policies from and who sold you those policies.  We are an independent agency which means we represent a number of companies.  However, you always get our service first.  Make sure your agency has great reviews, a good reputation with friends or relatives that use them and can answer all of your questions.  Check out the companies your agency represents too!  If you buy directly from an insurance company or through a captive agent (State Farm, Allstate, etc. that only offers insurance from one company), you need to do the same research.  Always ask as many questions as possible.  Try to contact them via phone and email and make sure you are getting a response time that is satisfactory to you.  The more work you do up front the more likely you will be happy with your decision when you need to use your insurance.