#home and auto insurance
Sure Ways to Save on Auto, Home Insurance
With most of us looking to cut corners every way we can during the recession, an often overlooked path to savings is closely examining our automobile and homeowners insurance. As “Early Show” money maven Ray Martin explains in this column, that could provide more in savings than you might realize.
According to an annual survey of Consumer Reports readers, many folks have stayed with the same auto insurer for 15 years. The insurance industry says this is a good thing. Some say that, if you stay with the same carrier for several years, you may receive a discount for being a long-term policyholder. But that may not always be best. Insurance companies can change their appetite for risk and their pricing over time. Depending on your profile and where you live, you might be able to save hundreds of dollars by shopping around every few years and asking for discounts.
If you haven’t compared costs for your auto and home insurance in awhile, start with the
National Association of Insurance Commissioners’ Web site and click on NAIC States and Jurisdictions to find your state’s insurance department. Most states Web sites will provide comparative premium quotes, based on standard customer profiles. If your state doesn’t, you can compare premiums from multiple carriers by using insurance Web sites such as InsWeb. Insurance.com and Insure.com. according to the Insurance Information Institute .
But shopping around is only the half of it – you also need to know the available discounts, and which coverage to decline. With the average cost of home insurance running at $1,200 a year and auto insurance costing $800 per year, smart shoppers who ask for and get all the discounts can save over 30 percent, which can add up to over $50 per month in savings.
WHERE TO LOOK FOR SAVINGS ON AUTO AND HOMEOWNERS INSURANCE
Money-Saving Checklist for Your Home Insurance:
With real estate values in decline, don’t be tempted to reduce the dwelling coverage on your home, figuring you will save money on insurance, now that your home will sell for less than when you last updated the coverage in your policy. Home insurance is designed to cover the cost of rebuilding a home and not the sale price of the home. Homeowners should be careful to purchase enough insurance coverage to completely rebuild their home and replace their belongings.
There are better ways to save money on home insurance, including:
Increase the Deductible: Consider a deductible of at least $500 or more. If you raise the deductible to as much as $1,000, you may save up to 25 percent on many home insurance policies. Some carriers allow you to raise the deductible to as high as $5,000. Since the average person only files a claim every eight-to-10 years, most homeowners will save money over time.
Ask about Home Security Discounts: Most home insurers offer at least a five percent discount for a smoke detector, burglar alarm or dead-bolt locks. Some companies may offer discounts of as much as 15 or 20 percent if you install a sprinkler system over your kitchen stove or a fire and burglar alarm that connects to a central monitoring station. Water level and leak-monitoring and automatic water shut-off systems can also garner a discount, in addition to being a great idea for a second home. But these systems aren’t cheap, and not all of them will qualify for a discount. Before you buy, find out what your insurer recommends, and how much the device would cost as opposed to how much you’d save on premiums.
Buy All Policies from the same carrier: Most insurers that sell homeowners insurance also sell auto and excess liability insurance (An excess liability policy, also known as an “umbrella,” provides additional liability coverage.) Many companies will reduce your premium by 10 – 15 percent if you buy two or more insurance policies from them; this is called a multi-line discount. But make certain this combined cost is lower than buying the policies separately from different companies.
Seek Additional Discounts: Ask your insurance company representative about any other discounts that may be available to you. For example, if you’re at least 55 years old and/or retired, you may qualify for a discount of up to 10 percent at some companies. If you’ve modernized your plumbing or electrical system since the last time you updated your policy, tell your insurance company, and they may offer a price break. You may also pay less if your house is located close to a fire hydrant or in a community that has a professional, rather than a volunteer fire department. While many companies offer these and other discounts, they don’t all offer the same types of discounts or the same level of discount in all states.
Finally, when considering home improvements, before you get too far into the project, ask your insurance company representative what you can do to make your home more resistant to natural disasters such as windstorms, floods, earthquakes. You may be able to save on your premiums by adding storm shutters, shatter-proof glass and reinforcing your roof. Also, consider modernizing your heating, plumbing and electrical systems to reduce the risk of fire and water damage.
Money-Saving Check List for Your Auto Insurance
Every state has financial responsibility laws for drivers that require them to buy a minimum amount of liability coverage. But resist the temptation to skimp on auto insurance costs by buying only what the law makes you purchase. If you do, you may end up paying significantly more out-of-pocket in the long-run. Most drivers should have more liability insurance than their state requires because accident damage claims generally cost more than the minimum limits. If you are found to be legally responsible for costs that exceed what your insurance covers, you will have to pay the difference, and these costs could be financially devastating. Also consider purchasing an excess liability (umbrella) policy. These policies provide coverage above and beyond the coverage in the underlying policy. For not a lot of extra cost – typically about $200 to $300 per year – you can get an excess liability policy with $1 million dollars in coverage.
Better ways to save on auto insurance costs include:
Increase Deductibles: As with home insurance, by requesting higher deductibles, you can lower your costs substantially. For example, increasing your deductible from $200 to $500 could reduce your collision and comprehensive coverage cost by 15 percent to 30 percent. Going to a $1,000 deductible can save you 40 percent or more.