7 Key Ways to Lower your Insurance Costs (Home, Car, Life)

Published on January 25, 2016 By Lauren

Insurance is expensive! But follow these 7 tips and you will know you're getting the best products for the best price!

Sometimes we can find really creative ways to earn money or save money. Unfortunately, when you’re looking at insurance costs, it’s really pretty straight forward. The most critical thing you can do to cut your insurance costs is lots of research! This might mean reading about several companies, calling to ask about discounts, getting quotes, or finally understanding and fine-tuning the details.

I've included 7 tips to help you save on insurance and also to make sure you are properly insured. The last Bonus tip is probably the best one.

1. Analyze your needs

This is an important first step. Do you know how much life insurance you need? Do you know know what kind of auto insurance you need? Is your home properly insured for replacement cost?

These are questions that an agent might be able to help you with, but you also should also do your own research on your needs first. Here's one recommendation I'm gonna start with – you don't need whole life insurance. So if you have a whole life policy, cancel it. And before you get defensive on this, please understand that this is something that virtually 100% of financial experts agree on.

Your life insurance needs change throughout your lifetime, and agents make a TON of money on whole life policies. Better idea – buy term insurance, and invest the rest in a retirement account. You will end up with much more money in the bank.

Proper and adequate insurance coverage is vitally important. And you also need to understand your current policy and the policy you will potentially purchase.

2. Research

Start your research by shopping around as much as possible. Don’t leave your current insurance situation until you’re done with your research, as many companies value and reduce costs for loyalty, but do your due diligence and look into several different companies.

See what discounts they offer, if they have bundling options available, what payment options you have, etc. You can also let your present company know that you are shopping around and see what they can do to help you decide to stay.

3. Control Your Risk Factors

After your research, the most important thing you can do to lower all of your insurance costs is to demonstrate that you are a safe person to insure. This means having safety and alarm systems in both your home and car, taking defensive driving classes, refraining from life threatening hobbies (i.e. skydiving, etc.), and being in good physical health yourself.

Getting better insurance rates is simply another great perk to making healthier life decisions (being healthy and living longer are obviously more significant benefits).  Also, your credit score can play a role in setting your insurance rates, so work to have or keep a good score.

insurance design

4. Ask About Discounts

Outside of the safety discounts, many companies can offer discounts which seem to be based on random things. You must call and ask about discounts like this, but you can usually find a few for which you can qualify. Some agencies change their rates once you are a certain age, some offer a discount when students get good grades, and more!

5. Analyze Your Coverage

While you are on the phone with an agent, you should also speak with them about all the actual detail of your account. Some plans assume that your home increases in value each year, which can mean that you are paying too much for home insurance. Sometimes you have changed your driving patterns and put less milage on the car (which means you'll probably pay lower rates). Maybe you paid off a vehicle or have started to carpool. Perhaps you have more or fewer possessions which are included in your home insurance, etc. Often times, a policy can be adjusted for details like this and become both more accurate and more affordable.

Some of the most important things to look at in lowering your overall costs are the ability to bundle your policies and how you make your payments.  There is usually a straightforward discount for bundling, and if you are able to make annual or bi-annual payments, as opposed to monthly, you can often save a nice amount over the year.

You can also make changes to your deductibles, which saves you money on your payments, but will lead to you paying more if/when you have to use your insurance. While it can be a tempting way to cut costs in your budget, you should consider very carefully before you change your deductibles.

If you have a sizable emergency fund in place ($1,000+ in cash set aside for emergencies), then go ahead and raise some of your deductibles. If not, keep them lower while you get that emergency fund in place.

Insurance claim concept

6. Find a Group Rate

The last piece to your research is that you can look further into any groups or organizations to which you might belong and see if they offer any group insurance rates. This may be your employer, a union, the VA, or any other organization.

7. Big Life Changes Can Change Insurance Needs

You can also consider your insurance ramifications before you make any big decisions. For example, before you buy a car, you should look into the various types of vehicles and how they differ in coverage. This allows you to enter into your big decisions and purchases with eyes wide open about future insurance costs.

BONUS: Hire an independent agent (this is the best tip on the list)

If you call State Farm and ask about insurance products, guess what products they will show you? State Farm products. Not that they are bad insurance products, but you won't have any comparison.

An independent agent is not tied to any specific company and will gather multiple quotes for you. And you don't have to pay them. They are paid via commission that is built into the cost of the insurance product – a cost you'd pay regardless. Since it's already built into the pricing structure, why not get something for it?

A good independent agent can also help you figure out your insurance needs. Just let them know upfront that you aren't interested in whole life insurance 🙂

If you are willing and able to put in the time and do your research, you should be able to find a handful of different ways to save a bit on your insurance costs. The more you know, the more you can do to save on this area of your budget.

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