How To Reduce Your Insurance Premiums
Kiplinger has put together a list of ways to reduce costs for auto, home, and life insurance. For auto and homeowners insurance, boosting your deductible from $250 to $1000 can lower your premiums between 15-25%. If you haven't looked at your life insurance policy in a while, don't wait any longer to shop around—rates have "dropped significantly" over the past 15 years but are now on the rise. And when calculating homeowners insurance, don't fall into the market value trap: make sure you're covering the true cost of replacing only the home and what's inside, not the value of the land.
"Slash Your Insurance Costs" [Kiplinger]
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Comments:
@MostlyHarmless:When I worked at Geico they told us the "turning 25 = lower insurance" is a myth and typically insurance rates drop during a person's 20's as they become safer drivers and tickets/accidents from their youth start falling off their record.
Also, one of the biggest factors geico uses to determine your rate is your credit. Infact one of the trainers there told me the credit score the was biggest factor underwriters use, but I had a hard time believing her.
@Jon34511: Well, my premium fell from $1033 to $413 when I turned 25. Nothing much changed in those 6 months, and I did not have any tickets in the past either. So I am guessing there is SOME relation.
Just did that recently, and i basically just took all the road protections, in case of car accident or car problems. When i just have my cellphone to make any calls if needed.
Reducing your bills is a great way to increase your saving...
I've done bill reducing for my cable, internet, car insurance, gonna work on mortgage acceleration next...
Great article as always!
@MostlyHarmless: for females most auto insurance goes lower at 23. i know mine did, even WITH an accident at age 21.
@MostlyHarmless: I agree, it's hard to argue about it being a myth when age groups is one of the biggest drivers in insurance costs. Once you hit 25, you're out of the worst car insurance brackets.
Earthquake insurance is still through the roof though.
@cabjf: Mine dropped significantly when I turned 25, I don't remember specific numbers, but it was very nice. My car insurance also dropped when I moved from Michigan (no-fault) to Ohio (at fault). While there were other factors to consider, my insurance premiums literally dropped in half.
@ironchef:
Not as bad as volcano insurance though. We've never had one, but I think we are due for one.
@catastrophegirl:
Insurance companies are not allowed to rate based on gender. If yours is doing so, file a complain with your state insurance commissioner.
@crosenblum:
I shop my personal insurance (auto & homeowners) annually. I had a company rep once chide me for doing so because I'm not "building up loyalty with one company". I don't give a damn about loyalty. My CLUE report shows my clean driving record, and I'd rather save 20% today than build up the ability to save 20% in a few years. Incidentally, I just moved my auto/homeowners this year and dropped my premium by $300, while decreasing my deductibles.
@Jon34511: Perhaps, but I didn't have an accident or a ticket on my record at all and my rate went down significantly on my 25th birthday.
@ironchef: I think that depends on where you live. If you're in CA vs. MA you're going to see a difference in premium costs.
@tbax929 is back from the beach: Saying it does not make it so. This is not true in any sense of the word "true," unless you live in one of the "unisex" hold-out states like Montana:
Please do at least a little research before proclaiming something to be fact.
I pay $213 a month for Progressive in NJ. My policy is up for renewal in mid Oct and they want to raise it to $270 a month. No changes since then. So now I'm pondering switching to Geico and getting basically the same insurance coverage for $170 a month. I love Progressive, but they are killing me on prices. Going to try and make both of them fight for my $$.
@tbax929 is back from the beach: admittedly, that was over 10 years ago, so i wasn't thinking about current laws, like i should have been
@bnceo: A commenter on the Kiplinger article suggested that if you rent, try looking for packages that combine auto with renters insurance, as sometimes they work out to be less than auto alone. Not sure if this is true but might be worth investigating.
@bnceo: Roger that. Just doing about twenty minutes' comparison shopping online betwixt GEICO, Progressive and State Farm saved me 30% on my Allstate Auto Policy AND scored me a $160+ refund on my Homeowners Policy after I gave the printouts to my agent.
Double score, with payback! Checking the competition works, folks!
These "cut your insurance costs" articles always recommend increasing your deductible, because it "prevents small claims."
What prevents small claims is you not filing them. What increasing your deductible means is that now, when you have that fender bender, instead of being $250 out of pocket, you're now $1,000 out of pocket. Are you glad now that you saved $100 on your car insurance this year?
Don't raise your deductibles to an amount that you can't comfortably pay out of pocket in the event of an accident. If you have to make a claim under your collision coverage, that means you hit something or somebody, so you're probably losing your claims-free discount anyway.
Comprehensive coverage is cheap, and raising your deductible there means you'll be replacing your windshield out of pocket every time it gets a crack.
@schance: Plus if you still owe money on the loan, they'll require no more than a $500 deductible on the insurance...
"don't fall into the market value trap: make sure you're covering the true cost of replacing only the home and what's inside, not the value of the land."
Or, if you're in CA, make sure that you're insuring the replacement cost at a minimum, and increase it for upgrades that you have done... (See Wildfires, San Diego)
My house is insured well over market; and that comes from being honest with the insurance agent at the beginning with the house construction type, upgrades, etc. etc. Don't forget that demo costs are beyond the cost to actually replace! (and I do think that right now the cost to rebuild my house really would exceed it's market value, unlike the high point of the real estate market, where I watched one home go from $300k to $1.0m in 2 years, with no other change in construction....)
@MostlyHarmless: @catastrophegirl: My insurance definitely dropped when I turned 23, but didn't when I turned 25. I attributed it to my moving out of a "dangerous" age bracket, and for maintaining a good record.
Don't listen to the OP, sure your insurance will be lower, but your hair will be thinner, you will gain 10 extra pounds that you can't lose, your joints will start to pop, and many other things that just aren't worth the insurance savings of turning 25.
I didn't see this mentioned - Do you have medical benefits through work? Reject your "Uninsured/underinsured motorist" coverage. It pays for your medical bills in the event someone hits you who doesn't have insurance. If you have medical through work, why pay for double coverage? This alone can knock off $100.00 or more from your premiums.
@Chris Walters: Unfortunately not every company offers renters insurance. Progressive, for example, does not.
@schance: This is absolutely correct. As an insurance agent for GEICO, I can honestly say that raising your deductible is not always a good idea. Most often, a finance company won't allow it, and if they do, it's going to make it very difficult in the case the vehicle is totaled.
Want a good price on insurance? Don't speed and take a defensive driving course.
I've got one - check your motor vehicle record and make sure everything reported on it is accurate. I found out when I renewed my insurance last month that my first ever speeding ticket (from neighboring state) was reported incorrectly to my state - my ticket was for 10-14 mph over but they reported it as 15+. I'm working with DVS here to fix it, but it completely took me by surprise.
@Saboth: 25. Not 35.
@pecan 3.14159265: What? I thought you were a year younger! You need to get your story straight, because I'm telling you, I have a freeze ray.
@MostlyHarmless: Nope, I'm 25! No, I will not show my receipt or my ID. You can't make me, na na na na!
@Chris Walters: Yes yes yes. I can confirm that. I went with State Farm earlier this month, and my 1 year renter's insurance + 6 months auto with renters discount ended up costing the same as 6 months auto without discount. So yes, it is a big savings indeed. Also you get the same discount no matter what your renters coverage is.
@chiieddy: I'm not sure why someone in Maine would even buy earthquake insurance, given their infrequency and small scale.
@pecan 3.14159265: MA is Massachusetts, ME is Maine, but your point stands. My point was the original poster wasn't specific. You can purchase insurance in areas where there's less risk for less money than where there is high risk. If you don't want to pay a lot for earthquake insurance, don't live where there are earthquakes. I'm sick of flood insurance, myself, so I'm moving out of a flood zone.
@bnceo: You should call the company you do renter's insurance through and see what they charge for auto insurance with the combined policy holder discount. You can cancel out of Progressive early for no more than $50 (it's in their FAQ, I had to look it up recently for the same reason, although mine was home insurance vs. renters, they won't insure if you have a fuse box vs. circuit breakers). See if the math works out for you.
@MostlyHarmless: When I was 24, I called my car insurance company and asked if it was true that my rate would decrease upon turning 25. They confirmed that it would. So, the day I turned 25, I called my insurance company and gave them the great news. They told me that technically, the rate does not change until the policy is renewed, at some point after I turned 25. So, I said, easy enough, I would like to terminate my policy and go with someone else. Two minutes later, I received a phone call from my insurance company with a quote for a lower rate and a policy that started that day.
@schance: my idiot brother in law decided to go without collision and carry liability only....which is all fine and well UNTIL A TREE CRASHES ON YOUR CAR DURING AN ICE STORM! and then you don't have the money to repair your now totaled car or buy a new one.
I currently pay around $150/mo for car insurance for one car, I'm 20. I used to pay $220/mo before I went shopping around a bit. I found that when your in a state that has no-fault insurance, your rates go up like crazy, however something like that is understandable due to the higher risk from the insurance companies.
@tbax929 is back from the beach: That depends on the state. In my state, we certainly are allowed to rate based on gender.
@ShruggingGalt: sadly with the current housing market the "market value" is sometimes less than the replacement cost.
boy I love telling clients that their house that is only worth 150k now has to be insured for 200k because thats how much it would cost to rebuild.
Here's another insider tip for you. many companies (Progressive etc) offer a AAA discount on insurance. The 5% discount often exceeds the cost of the AAA PLUS you get all the benifits of the membership.
its like having your insurance company pay you a few bucks to have AAA every year.
@NatalieErin: Progressive does have renter's insurance, its just they won't give you a discount if you hold renter's and auto or motorcycle. I just switched from them to allstate for my renter's and cut the cost in half.
Don't live in Brooklyn (or at least have it on your driver's license).
A friend of mine told me once about a talk he had with a rep from a car insurance company that will remain nameless.
After getting a quick quote, my friend asked the rep why the rate was noticeably higher than what he was already paying. One reason, according to the rep, was due to the zip code he lived in. If my friend lived in, say, a different town 150 miles away in the same state, his insurance would be a lot lower. The reason being that some zip codes represent a lot higher risk than others.
Now keep in mind that at this point, my friend has just received two different quotes from the same company, and the same rep, in the exact same phone call. The only difference was the zip code used in the two quotes.
The rep went on to say that my friend didn't necessarily need to live in the different zip code, and that all he needed to do was have a P.O. box in his name and just forward all the mail to his home address. Would the cost of the P.O. box outweigh that of the difference of quoted insurance premiums? I have no clue.
But the point is...
My friend's town of say 8,000 represented a much higher risk than a metro area population of 375,000.
1. Turn 25. Seriously.