As the economy downturn deepens, consumers and businesses are looking for ways to cut expenses to save enough to ride out the economic storm. The general principle I've been telling people is: Spend on what you need instead of what you want, and invest for your future growth.If you are an individual, use these savings to pay off your credit card or other debts. If you are a business owner, use these savings to invest in your business assets. The multiplexed effect of either action goes way beyond the face values of the dollars you save today.. If you are an individual, use these savings to pay off your credit card or other debts. If you are a business owner, use these savings to invest in your business assets. The effect of either action would go way beyond the face values of the dollars you save.
In this post, I'll discuss how to apply this principle to and save lot of money out of your homeowner and auto insurance policies.
Homeowner Insurance
Let's first talk about homeowner insurance. The rates of homeowner insurance policies depend on a number of factors: age and size of the house, dwelling cost, loss of use, personal property coverage, personal liability, deductible, and etc. You're not able to change the facts of your house, such as, age and size, unless you're making a move. There is lot of room for the rest of the factors. You have to decide what is reasonable and practical for those factors. Even with the same understanding of how your house is built and your location, each insurance carrier has different guidelines to calculate the cost to rebuild your house. The results can vary significantly, so do the rates you pay for.
Auto Insurance
The auto insurance depends on the age, the make, and the model of your cars, safety/anti-theft features, coverages for bodily injury and property damage caused at your fault and by uninsured motorists, comprehensive coverages, towing, your annual mileage, driving records, and so on. Again, you should decide on what's reasonable and practical for your condition.
Your New Insurance Mentality
Many people think insurances are supposed to cover all possible unexpected damages of their homes and cars. That mentality has to change, because the insurance carriers have changed their ways of operating business. If you ever file a claim, you're almost guaranteed to see your insurance rate rising, when the policy is due for renewal. For a serious accident or incident, you don't have a choice. That's what the insurance is for. You should avoid filing small claims, if at all possible. Your insurance policies are to protect you from unexpected disasters not bad lucks.
Once you change your mentality, you should consider removal of the comprehensive coverage and raising your deductibles to as high as you can. These adjustments can save you lot of money.
Comparing Quotes
These days, it's so easy to get quotes from multiple insurance agencies representing various insurance carriers by filling out a form on some websites. You can easily find those websites from popular search engines with keywords, such as, "insurance quote", "home insurance quote", or "auto insurance quote". You'll get a few quotes in your email and phone calls within minutes. You should also contact some carries that have operations in your state but not among those who reply. You can get the list of the insurance carriers from FreeAdvice. FreeAdvice also offers statistics of customer satisfaction about the insurance carriers.
I highly recommend that you make a simple spreadsheet to record all the quotes you've received for an easy overview and comparison. You should review your policies at annual basis, and the spreadsheet will become very handy during that process.
Keep in mind that these are just initial quotes. It's quite common that the actual rates become higher. In that case, you should immediately go back to your spreadsheet and decide whether you want to continue purchasing that policy.
Ask For Available Discounts
Ask your insurance agents for any potential discounts available. Almost of the insurance carriers offer multi-policy discount, if you purchase your home and auto policies or policies for more than one car. Even so, you should consider purchasing policies from different carriers, if the total premium turns out to be lower. Other discounts include, but not limited to, your profession and education degrees.
Carrier Ratings
Although our goal is to find the policies at the lowest cost, you may want to avoid carriers that suffer financial problems or receive lots of complaints. You can get the ratings from companies, such as, A.M. Best and FreeAdvice.
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