The cost of property insurance and automobile insurance seems to go up every year. However, there are a few ways that you can fight back. Here is a list of 8 suggestions for containing your insurance costs:
♦ Review the coverage amount of your homeowners insurance. Bear in mind that the land value of your property should not be part of the insured value. For example, a property worth $500,000 probably has a land value of at least $150,000, if not more. You should only be insuring the replacement cost of your dwelling and its contents, not the land value. Do not assume that your insurance agent will call this to your attention.
♦ Get rid of low deductibles. The premium difference each year for a low deductible policy often exceeds the deductible difference over a few years. Claims rarely occur. So plan to “bank” the premium savings over a few years to offset a higher deductible if you do eventually have to make a claim.
♦ Get younger drivers rated on older vehicles – perhaps by titling the vehicle in the younger drivers’ names. Auto insurance carriers often automatically rate younger drivers on the most expensive vehicle in your garage. If the younger driver actually owns an older vehicle the carrier may be forced to rate the younger driver on the older vehicle.
♦ Pay attention to mileage driven on each vehicle. Most carriers charge less for lower mileage, such as 7,500 miles per year. Make sure you are accurately rated for the mileage driven on each vehicle.
♦ Fight every traffic ticket. Moving violations can cause your auto insurance rates to skyrocket. The cost of challenging a citation will pale in comparison to a few years of higher insurance premiums.
♦ Look for combined premium discounts. If you combine your homeowners insurance with your auto and other coverages, your carrier will often discount the whole package. Sometimes “a la carte” insurance is more expensive in total.
♦ Check your auto coverages to make sure you are not being charged for coverages or benefits you do not need. For example, towing insurance and road service coverage should not be chosen if your car is under manufacturer’s warranty – these are usually covered by your warranty. Collision coverage might be dropped on older high mileage vehicles – heir book value probably does not warrant the coverage. “Comprehensive” coverage (vandalism, acts of God, cracked windshields, parking lot dings etc.) should also be dropped on older cars. These coverages are expensive and not worth the cost for older cars (unless your older car is a ’63 Corvett…)
♦ Periodically re-evaluate your need for life insurance. As younger children mature and your net worth builds there is less justification for having life insurance. Life insurance might best be viewed as a necessary evil – but make sure you really need it. It is not an “investment.”
Review your insurance coverages with these principles in mind and there is a good chance that you can lower your insurance costs – and remember, your insurance bill comes every year, so any reduction that you can achieve will repeat itself in years to come.
– Kevin Palmer