Slash Your Insurance Costs
These tactics can save hundreds on auto, home, life and long-term-care premiums.
By Kimberly Lankford, Contributing Editor, Kiplinger's Personal Finance
September 22, 2009
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Editor's note: This article is from the 2009 issue of Success With Your Money. Order your copy now.
AUTO INSURANCE
Boost your deductible. One of the easiest ways to reduce your auto-insurance rate is by raising your deductible. Boosting the deductible from $250 to $1,000, for example, can cut your premiums by 15% or more. And you'll be less likely to file small claims that could jeopardize a claims-free discount and lead to a rate hike.
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Trim your coverage. If your car is five years old or older, you may be paying more in premiums than you could possibly get back in claims. Consider dropping collision and comprehensive coverage, which could reduce your premium by 25% to 40%. A good rule of thumb: If your car is worth less than ten times the cost of the annual coverage, drop it. You can get a ballpark estimate of your car's value at www.kbb.org. (If you have an outstanding loan, your lender may require you to keep collision coverage.)
Shop around. Car-insurance prices can vary enormously by insurer -- it isn't unusual to find price differences of hundreds of dollars per year for the same family. And even if you shopped carefully a few years ago, you could benefit from assessing your options again, especially if you've experienced any life changes. The insurer that offered the best rate for a couple, for example, may have some of the highest rates for adding a teenage driver.
It's easy to get price quotes from several insurers at www.insweb.com or www.insurance.com. You can also check rates for a few insurers at their own Web sites, such as www.statefarm.com, www.progressive.com and www.allstate.com. Or you can find an independent agent who works with many companies and knows from experience which insurers are more likely to offer you the best deal (you can find an agent in your area through the Independent Insurance Agents & Brokers of America).
Get all the discounts you deserve. Auto-insurance companies offer a slew of discounts. Some may come automatically, such as a price break if you have several cars or multiple policies with the same insurer (maybe homeowners insurance and an umbrella policy as well as auto coverage). And having a good driving record -- no at-fault accidents or moving violations in the past three or five years -- may slash your premiums by up to 20%.
But you may not benefit from some other discounts unless you know to ask -- such as discounts for low mileage (often 7,500 or less per year) or carpooling, or a premium reduction when you retire. Some insurers even offer a discount for people age 55 or older who take a defensive-driving course. Ask your insurer for a full list of discounts and find out what you need to do to qualify.
Save money on teenage drivers. Good grades can have a big payoff-some companies shave as much as 30% off the premiums for a student who earns at least a B average. And some companies offer extra discounts for kids who participate in their own driver-safety courses (such as State Farm's Steer Clear program). Matching the kid with a safe car can also lower your premiums (check safety ratings at www.carsafety.org).
Also let the insurer know if your kid goes away to college without taking a car -- your rates could drop by as much as 30% if the school is at least 100 to 150 miles away from home, and the student would still be covered when home on summer or semester break.
It's generally a much better deal to keep your new driver on your own policy rather than buy a separate policy; many insurers won't even cover teenagers by themselves, and they'll benefit from a multipolicy and multicar discount on your policy, as well as any breaks you've accumulated for being a longtime customer.
HOMEOWNERS INSURANCE
Boost your deductible. Increasing it from $250 to $1,000 can lower your premium by as much as 25%; raising it from $250 to $2,500 could cut your premiums by up to 30%.
The higher deductible also makes you less likely to file small claims that could result in a rate hike or even being dropped by your insurer. Boost your emergency fund to make sure you have enough money to cover the deductible.
Reader Comments (5)
Posted by: Bernard I. Turnoy at 09/23/2009 09:07:45 AM
Valid observations, however, you fail to mention the overt need for disability income protection coverage. Every insurance vehicle you mention in your piece either pays someone else, or covers stuff. You fail to mention the need to insure the Golden Goose - one's future earnings capacity. Most Americans assume that Social Security will replace lost earnings due to a significant sickness or injury; in most cases it will not. Individuals dependent on their earned income should insure those earnings. Future earnings in most circumstances are THE most valuable asset anyone has. There are a handful of reputable insurers that offer decent coverage terms [what you get, when you get it and for how long]. Mass Mutual and Guardian Life readily come to mind. Don't overlook the Golden Goose, the consequences can be and often are devistating.
Posted by: Cary W. White at 09/24/2009 07:54:30 PM
Wow! On the face of it, this looks like a quick overview of some key money savings tips often overlooked by consumers. In reality, this is a dangerously brief and simplistic view of insurance that encourages people to go it alone. If Hulk Hogan's current suit against his attorney for legal malpractice insurance is any indication, insurance can be complicated and representation by a qualified professional insurance broker or agent is essential. Instead of looking at insurance as a necessary evil expense that must be minimized as this article suggests, consumers should take heed to Bernard Turnoy's comment below, insurance is intended to protect you. The coverage you purchase, the limits you buy, the deductible you select and coverage extensions you consider should be weighed very carefully in the company of a qualified insurance professional that you trust.
Posted by: Jim Blair at 09/25/2009 12:05:04 AM
I think the point to take away is to just get updated quotes. Most people haven't looked at their policies in years, even good drivers to get a reduction...
Posted by: Web design at 09/26/2009 04:34:33 PM
Tip for everyone who ONLY has car insurance: Having renters insurance and car insurance is often cheaper than having just car insurance alone. The multi-policy discount comes into play regardless of the second policies cost or type. Since renters insurance is so cheap (<$100/year), the discount is usually greater than the cost of renters insurance.
Posted by: Rico at 09/28/2009 12:54:07 PM
Gee, after reading that lengthy endorsement from Cary W. White for always using an insurance agent rather than saving some money and cutting out the middle man by buying insurance on your own, I was just shocked to do a quick google and find that Mr White is... an insurance broker! What are the odds of that?