9 Ways to Reduce Your Insurance Costs
Insurance cost-cutters
It's hard to get through life without paying for insurance. In fact, if you have a family, you probably have several insurance bills -- for your health, car, home and, of course, your life. You're always glad you have insurance when you need it, but on the days you don't, it's easy to look at the bills and wonder: Why so much? So if you'd like to lower your insurance premiums, here are suggestions to chip away at the cost.
Loyalty pays.
It can be a good idea to switch insurers every once in awhile, but don't overdo it. "Many companies are now giving you credit for showing loyalty to a previous carrier," says Angela Nielsen, an agent with North Haven Insurance Group in Connecticut. "If you jump from carrier to carrier every year, companies are rating you in a different tier with less-competitive rates." Unless you're facing a drastic rate increase, you're better off sticking with your carrier and making policy adjustments, she says.
But if you must, shop around.
If staying put isn't an option for you -- your insurance rates skyrocketed, for example -- it's time to shop around. Check insurance-comparison websites like CoverHound.com or ask friends and family for recommendations. Just don't cancel before you get another policy. Something could happen to your car (or you) when you're between policies, and some insurers that learn you aren't covered may deem you irresponsible and charge you more than they would otherwise.
Show insurers you're safe.
Insurance is all about mitigating risk. So if you lessen the odds of something bad happening to you or your property, insurers often reward your safeguarding. "Smoke alarms, burglar alarms and automatic sprinkler systems in the home can really reduce costs," says Doug Smith, senior vice president of personal lines at Erie Insurance in Pennsylvania. Car insurance premiums often drop if you take defensive driving, and if you lose weight or give up smoking, you may be able to lower your life insurance premium.
Periodically ask about discounts.
Many discounts won't be a surprise -- you've probably heard that auto insurers sometimes lower premiums if your child earns A's and B's at school, for instance. Other discounts are more off the radar. Erie Insurance offers homeowners insurance discounts to those 46 and older, Smith says. And some companies give credits to people with bachelor's or master's degrees, according to Nielsen.
Consider bundling.
Many companies will lower your premiums if you buy more than one policy from them. So consider getting auto and homeowners insurance from the same firm, for example. But before you bundle, make sure to examine what you're getting and what you're leaving behind. If your new carrier lowers your premiums but you no longer have roadside service, that may matter to you.
Tinker with how you pay your monthly premium.
Most insurers will shave a modest amount off your policy (like $5 a month) if you make an annual payment instead of paying monthly. If you can swing it, you could save $60 a year and not have a monthly payment to worry about -- for the next 11 months, anyway. Or if you raise your health insurance deductible, you could lower your monthly payment significantly.
Review your insurance with your agent.
You may feel like you're walking into the lion's den, but a meeting with your agent may pay off, especially with homeowners insurance. "Review the replacement cost on your home, or any other property you insure, every couple of years," Nielsen advises. "Most standard market policies have an inflation guard. Your dwelling limit will increase every year to adjust for inflation and cost of labor and construction. While this is a nice feature, after several years, you can end up overinsuring your property."
Improve your credit.
This is definitely taking the long view, but consider that a lot of insurance companies look at policyholders' credit reports. They do so to determine whether you'll be able to keep up with the payments. And if your credit score is low, you may wind up with higher insurance payments. So if you can reduce your debt and keep paying bills on time, you may pay less for insurance in the future.
Don't go overboard in lowering your costs.
You have insurance for a reason: You want it to pay off if you need to use it. So remember that you get what you pay for, and if you buy insurance that stresses low payments but doesn't seem to boast anything else, your insurance may not cover your problem due to numerous exclusions in the fine print. In which case, you may end up feeling that the insurance premiums you've been paying have been a complete waste of money.
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