We all need insurance on our cars and home, but how often do we consider the bill we are paying? Perhaps we get upset every time our auto insurance payment goes up, but homeowners insurance is often built into the escrow payment on our home, so we might not know exactly what it is.
If you haven’t been actively managing your insurance provider and policy provisions, chances are that you have an opportunity to save yourself some cash.
There are many ways to save on insurance, and in my opinion, these are the 3 easiest. And you can do them today. You should also learn how to budget better, which will help you recognize when an insurance bill is slowly creeping up in price.
1.) Shop Around
If you’ve been with your insurer for more than a couple years, it’s probably time to shop around regardless of your claim history. Instead of rewarding loyal customers, insurance companies usually penalize instead.
If they have confidence that you will not shop around or are uncomfortable with change, then they will charge you more money… slowly over time. $10 here and there, but it adds up. Use a website like TheZebra.com to help you compare rates across multiple companies.
2.) Increase your deductible
When you initially shop for insurance, the customer representative you speak to usually recommends a lower deductible. I know that when I was shopping for homeowners insurance, I was talked into a plan with a $500 deductible; and for auto, I had a $250 deductible.
Since claims are usually infrequent, you will almost always save money in the long term by increasing your deductible. Consider going as high as $1,000 for auto, and $3,000 for your home.
3.) Pay for the small things yourself
Your insurance premium is calculated based on many factors including your age and gender, which you obviously have no control over. But one very significant factor that you do have control over is how often you make claims.
Those who make claims often are placed in a high-risk category and pay higher premiums. If you seldom make claims, then you are more likely to be considered low-risk to the insurer, which results in a lower premium.
Where should you not skimp on insurance? Liability coverage. Liability coverage is the amount of money that the insurance company will pay due to a loss that someone else suffers due to something that is your fault while driving.
As reader Monika correctly points out in the comment, in most states, you are only required to have $50,000 of liability coverage. This might be enough for most small-medium fender benders, but if you take into account potential medical losses that a vehicle occupant might suffer in a car accident, $50,000 is actually pretty small.
Furthermore, raising this coverage to something like $500,o00 is actually much cheaper than you might think.