Save Money On Insurance

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Title: Saving Money On Insurance
Author: Chemain Evans

Did you know that you could be overpaying for your insurance
by as much as hundreds of dollars? Most of us have a hard
time getting excited about shopping for different insurance,
but a little time invested can go a long way in saving you
money. Of course, the cost of premiums isn't the
be-all-end-all; quality of service, quick response to
claims, and financial soundness are all important factors to
consider. However, the focus of this article is on getting
and keeping those automobile, homeowner/renter, and life
insurance premiums down. First we'll discuss some
generalities; then we'll get down to some specifics for each
category.

Shop around. Shopping around for insurance will take some
time, but could save you a good sum of money. Ask your
friends, check the Yellow Pages or call your state insurance
department. You can also access insurance information for
your state on the Internet at
http://www.naic.org/1regulator/usamap.htm. States often make
information available on typical rates charged by major
insurers and many states provide the frequency of consumer
complaints by company. Also check consumer guides, insurance
agents, companies and online insurance quote services. This
will give you an idea of price ranges and tell you which
companies have the lowest prices. But don't consider price
alone. The insurer you select should offer a fair price and
deliver the quality service you would expect if you needed
assistance in filing a claim. So talk to a number of
insurers to get a feeling for the type of service they give.
Ask them what they would do to lower your costs. Check the
financial ratings of the companies with AM Best or Standard
and Poor's.

Compare against your current policy. When comparing
companies, have your current policy handy when calling so
you can compare apples to apples. And if you do find a
better policy, absolutely make certain that your new policy
is in effect before dropping your old one.

Use a licensed, low-price insurer. You can save several
hundred dollars a year on homeowner or auto insurance and up
to $50 a year on renter insurance by purchasing from a
licensed, low-price insurer. Call your state insurance
department for a publication showing typical prices charged
by different companies. Then call at least four of the
lowest-priced, licensed insurers to learn what they would
charge you for the same coverage. If such a publication is
not available, it is even more important to call at least
four insurers for price quotes.

Use the same insurer for multiple policies. Whenever
possible, buy your home and auto policies from the same
insurer. Some companies that sell homeowners, auto and
liability coverage will take 5 to 15 percent off your
premium if you buy two or more policies from them. But make
certain this combined price is lower than buying the
different coverages from different companies.

Stay with the same insurer. If you've kept your coverage
with a company for several years, you may receive a special
discount for being a long-term policyholder. This is why it
is important to compare against your current policy. Some
insurers will reduce their premiums by 5 percent if you stay
with them for three to five years and by 10 percent if you
remain a policyholder for six years or more. Check to ensure
that you are getting the "renewal" discount. But make
certain to periodically compare this price with that of
other policies.

Look into group coverage. If your employer administers a
group insurance program, check to see if a homeowners or
auto policy is available and whether it is a better deal
than you can find elsewhere. In addition, professional,
alumni and business groups often work out an insurance
package with an insurance company, which includes a discount
for association members. Ask your association's director if
an insurer is offering a discount on homeowners or auto
insurance to you and your fellow graduates or colleagues. If
you are a member of an auto club, such as an affiliation
AAA, check with that organization as well.

With those general rules out of the way, let's move on to
some specifics.

Auto Insurance

Get your discounts. Make sure you get all the discounts you
may qualify for. Check on discounts for safety and security
features. Safety features can also lower your payments.
Heading the list of money saving safety features is antilock
brakes. Check to see if the insurance company you have or
are considering gives a discount for this feature. Automatic
seatbelts and airbags may also give you premium discounts.

Stay clean. Keep your driver's record clean; avoid tickets,
especially moving violations. Drive a car that is less
popular with thieves, inexpensive to repair, and/or an older
model. When shopping for a new car, check with your insurer
about insurance costs as well.

Raise your deductible. Talk to your agent or insurer about
raising your deductibles on collision and comprehensive
coverages to $500 or more. Deductibles are the amount of
money you have to pay toward a loss before your insurance
company starts to pay a claim, according to the terms of
your policy. The higher your deductible, the more money you
can save on your premiums. If you have an old car consider
dropping these coverages altogether. Taking these steps can
save you hundreds of dollars a year.

Check for a low-risk occupation discount. Insurance
companies collect information about what types of people get
into accidents. Over the years they have seen trends that
show that drivers in certain occupations tend to get into
fewer accidents. These occupations are then labeled
"low-risk". Since, on average, drivers in these occupations
have a lower chance of getting into an accident, insurance
rates for them are lower. Check with your insurance company
or agent if you are in a low-risk occupation.

Homeowner/Renter Insurance

Raise your deductible. Nowadays, most insurance companies
recommend a deductible of at least $500. If you can afford
to raise your deductible to $1,000, you may save as much as
25 percent. Remember, if you live in a disaster-prone area,
your insurance policy may have a separate deductible for
certain kinds of damage. If you live near the coast in the
East, you may have a separate windstorm deductible; if you
live in a state vulnerable to hail storms, you may have a
separate deductible for hail; and if you live in an
earthquake-prone area, your earthquake policy has a
deductible.

Make your home more disaster resistant. Find out from your
insurance agent or company representative what steps you can
take to make your home more resistant to windstorms and
other natural disasters. You may be able to save on your
premiums by adding storm shutters, reinforcing your roof, or
buying stronger roofing materials. Older homes can be
retrofitted to make them better able to withstand
earthquakes. In addition, consider modernizing your heating,
plumbing and electrical systems to reduce the risk of fire
and water damage.

Get the right amount of coverage. Make certain you purchase
enough coverage to replace the house and its contents.
"Replacement" on the house means rebuilding to its current
condition. Don't confuse what you paid for your house with
rebuilding costs. The land under your house isn't at risk
from theft, windstorm, fire and the other perils covered in
your homeowners policy. So don't include its value in
deciding how much homeowners insurance to buy. If you do,
you will pay a higher premium than you should.

Improve your home security. You can usually get discounts of
at least 5 percent for a smoke detector, burglar alarm or
dead-bolt locks. Some companies offer to cut your premium by
as much as 15 or 20 percent if you install a sophisticated
sprinkler system and a fire and burglar alarm that rings at
the police, fire or other monitoring stations. These systems
aren't cheap and not every system qualifies for a discount.
Before you buy such a system, find out what kind your
insurer recommends, how much the device would cost and how
much you would save on premiums.

Seek out other discounts. Companies offer several types of
discounts, but they don't all offer the same discount or the
same amount of discount in all states. That's why you should
ask your agent or company representative about any discounts
available to you. For example, since retired people stay at
home more than working people, they are less likely to be
burglarized and may spot fires sooner. Retired people also
have more time for maintaining their homes. If you're at
least 55 years old and retired, you may qualify for a
discount of up to 10 percent at some companies.

Review annually. Review the limits in your policy and the
value of your possessions at least once a year. You want
your policy to cover any major purchases or additions to
your home. But you don't want to spend money for coverage
you don't need. If your five-year-old fur coat is no longer
worth the $5,000 you paid for it, you'll want to reduce or
cancel your floater (extra insurance for items whose full
value is not covered by standard homeowners policies) and
pocket the difference.

Look for private insurance if you are in a government plan.
If you live in a high-risk area -- say, one that is
especially vulnerable to coastal storms, fires, or crime --
and have been buying your homeowners insurance through a
government plan, you should check with an insurance agent or
company representative or contact your state department of
insurance for the names of companies that might be
interested in your business. You may find that there are
steps you can take that would allow you to buy insurance at
a lower price in the private market.

Buyer beware. When you're buying a home, consider the cost
of homeowners insurance. You may pay less for insurance if
you buy a house close to a fire hydrant or in a community
that has a professional rather than a volunteer fire
department. It may also be cheaper if your home's
electrical, heating and plumbing systems are less than 10
years old. If you live in the East, consider a brick home
because it's more wind resistant. If you live in an
earthquake-prone area, look for a wooden frame house because
it is more likely to withstand this type of disaster.
Choosing wisely could cut your premiums by 5 to 15 percent.
Remember that flood insurance and earthquake damage are not
covered by a standard homeowners policy. If you buy a house
in a flood-prone area, you'll have to pay for a flood
insurance policy that costs an average of $400 a year. The
Federal Emergency Management Agency provides useful
information on flood insurance on its Web site at
http://www.fema.gov/. A separate earthquake policy is
available from most insurance companies. The cost of the
coverage will depend on the likelihood of earthquakes in
your area.

Ask questions. If you have questions about insurance for any
of your possessions, be sure to ask your agent or company
representative when you're shopping around for a policy. For
example, if you run a business out of your home, be sure to
discuss coverage for that business. Most homeowners policies
cover business equipment in the home, but only up to $2,500
and they offer no business liability insurance. Although you
want to lower your homeowners insurance cost, you also want
to make certain you have all the coverage you need.

Life Insurance

The main purpose of life insurance is to replace your income
for your family if something should happen to you. If you
are single, you probably don't need life insurance. If your
kids raised and you have planned well for retirement, you
probably don't need life insurance. Anyone with children
still at home should carry life insurance, unless an
alternative plan is in place.

For savings, choose term insurance. If you want insurance
protection only, and not a savings and investment product,
buy a term life insurance policy. You will probably be quite
surprised at how reasonable it is. There are several
companies that can "shop" the rates for you and help you
narrow down the field. Select the longest term you can
afford and make sure the rates are set for the entire term.

For investment, choose other insurance. If you want to buy a
whole life, universal life, or other cash value policy, plan
to hold it for at least 15 years. It is, after all, an
investment. Canceling these policies after only a few years
can more than double your life insurance costs.

Check your public library for information about the
financial soundness of insurance companies and the prices
they charge. The July 1998 issue of Consumer Reports is a
valuable source of information about a number of insurers.

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© Simple Joe, Inc.
Chemain Evans is a quality control specialist for Simple Joe,
Inc., makers of the popular Simple Joe's Expense Tracker PC
software. Expense Tracker is a quick and simple way to keep
track of your expenses and stay within your budget. Expense
Tracker (http://www.simplejoe.com/expensetracker/index2.htm)
is ideal for tracking personal, business, home and club
expenses.

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