April 29, 2015

How to lower your Auto and Home Insurance Bill

What can I do to lower my home and auto insurance bill?  What can I do?  Where can I start?

Though similar this is a distinct and different question from How do I buy either cheap Home or cheap Auto Insurance.   That question is more based on how you shop around – this question is more of, sticking with what you may already have – how might you go about lowering your existing insurance bill.  Obviously this is totally based on your independent situation with your insurance professional and your specific insurance company, but we can attempt to share with you some general ideas of how to save a bit of money on your existing insurance plans for your home and auto.

How to lower your Auto and Home Insurance Bill:

First off, the most obvious, but potentially least considered is to file as few claims as possible.   Frequency and severity of claims is one of the most important factors that determines both your car (auto) and home insurance rates.  I am not suggesting that you not file a claim in a legitimate situation but rather you not engage in activities that are more likely to bring about insurance claims, in other words consider your actions when driving and living your life.

Second and this goes hand in hand with the first suggestion, is to raise your deductible once you can afford it.  Why should you raise your deductible?  Without going into the math of low deductibles let me just say that filing a $750 claim on a $500 deductible is rarely in your financial best interest if you are paying average insurance rates in California.  For middle class folks consider raising your auto deductible to $1,000 and for wealthier clients consider a $5,000 deductible.   For home insurance consider $2,000 and $5,000 for deductibles.  With One Million dollar homes on up, I often find 1/2 of a percentage point to be a good sweet spot with many insurers.   There are two savings to realize by raising your deductible, one obvious and one not.   You obviously immediately save by paying a slightly lower premium by raising your deductible, but you potentially also save by filing less claims (see above paragraph) which in the long term may save you even more money.

“develop a relationship with your independent insurance broker…”

The third suggestion I have, is to develop a relationship with your independent insurance broker or independent agent.   Make sure they know who you are, pop in their office for a quick hello.  Refer them to a needy friend.  Why should you develop a relationship with your insurance broker?  Mostly because it will keep you on top of their mind and may spark additional ideas that the insurance broker may not have thought of previously.  Also developing a relationship with him or her is likely to keep your insurance more up to date as your life and insurance needs change.   If you are working a direct to insurance company model, consider calling them up ever six months and asking them questions about lowering your bill.

Ask about discounts:  Discounts are the life and blood of insurance advertising, but in client service I find they often get lost in the exchange.  Why do discounts get lost / forgotten?   I can only guess in regards to others, but in my experience it can often be either a system issue or an agent issue.  None the less, consider reading my post about discounts to give you some ideas:  The Discount Dilemma.  Aside from not getting the discounts that you may have deserved you may also “grow into a discount” such as a senior discount when you hit a certain age or a membership discount when you join AAA or an affinity discount once you get your pharmacist license with certain insurance companies.  Many Insurers do give discounts for certain career specialties that they desire.  It can’t hurt to ask, you just never know.

“slow down and obey all traffic laws…”

Take it slow:  Slow down and obey all the traffic laws, this will not only save you money on your Auto Insurance, but may save you money on your umbrella insurance and even your life insurance in some cases.  Tickets can act as a surcharge to your insurance rates with your existing insurance company.   Depending on your state and your insurance carrier tickets can stay on your record for years to come.  Slow down and take it slow, follow all the traffic rules, how can this hurt?

Change your Insurance payment mode:  Some insurance companies charge you a minor fee to pay off the insurance bill in multiple payments per year.  Personally I find the fees to be a bit confusing, so you may have to call up the insurance company (or your agent) directly and just ask them.  I have seen it as low as $2 possibly and as high as about $10 per payment- these fees can really add up over the course of an entire year.   If you can afford to cut down the number of payments from say 12 to 2 per year, that could save you real cash.   Also ask if there if the fees are waived if automatic payment is set up.   If you are one of those people that like to pay off the home and auto insurance all with one payment and both payments are due on pretty much the same day, one technique you may try is to deploy is to change the renewal date for your auto and your home insurance to be split up about six months apart.  In other words have your auto insurance bill come due yearly on January 15th and your home insurance bill come due June 15th.   As far as billing is concerned I highly suggest that people sign up for payments online these days as I believe that this can make it harder to miss a payment.

Revisit the endorsements on your home insurance policy.   You may have purchased a home and needed a backup and sewer endorsement, but after living in the home for a few years you may now decide that you can go without that insurance endorsement.   Endorsements are often added but rarely revisited I find.  The same thing goes with Auto Insurance, as an example, you may have once had rental car reimbursement (in the event that you were in a covered auto accident), but now you have an extra functioning car that generally sits idle and therefore you may be able to use if one of your cars cannot be used because of an accident.  There are numerous other paid endorsements that may be sitting on both of your policies.  Do you understand these?  Do you need these anymore?  Ask your insurance company or agent, make sure you are clear – otherwise what good is the coverage?

It may be time to remove comp (comprehensive) and collision.   In my opinion as a car ages the need for comprehensive and collision coverage typically goes down.  When the value of the car is relatively low, you may consider cutting out this coverage all together, self insuring it yourself, and saving that extra money for the purchase of the ‘next’ or ‘replacement’ vehicle.  When you insure a vehicle with no comp and collision you will still be covered for liability.

“offer up the auto insurance to your existing home insurer…”

My last recommendations may skirt the rules that I originally laid out in this question and post, but you may consider merging your auto and home insurance from two different insurers into one combined policy assuming they are indeed split.  I recommend that you offer up the auto insurance to your existing home insurer and your home insurance to your existing auto carrier at the same time and see who comes out with the best quote options for you and your family.  Consumer Reports suggests that you shop around for insurance “every 2 or 3 years.”

I can not help but end this post with one other consideration for insured people that I have made several times:  Consider shopping your insurance with different insurance companies, either yourself or through an independent insurance agent or broker about every three years.  Doing it more often may or may not be worth it.   The simplest way to do it is to pull your insurance declarations sheet for each insurance policy and email it to an independent agent and ask for their best numbers.  The declarations sheet will usually contain most of the information that they need to quote out the policies.    A good broker will follow up with some simple questions and attempt to provide you with lower premiums and more coverage.

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Summation of How to lower your Auto and Home Insurance Bill:

In summary, How do I save money on my auto insurance and how do I save money on my home insurance are two of the most common questions that an Insurance Broker gets.   These ideas are not groundbreaking, rather just simple ideas to save money.   If you would like clarification, would like an insurance quote, or have further questions please do not hesitate to contact Marindependent Insurance Services LLC.

Caution, please see our disclaimer – you should always speak with a license insurance agent in your state when are considering your insurance options.

Scott W Johnson – California Insurance License – 0H11625

About Marindependent Insurance Services LLC:

Marindependent is an Independent Insurance Broker located in Marin County California.  We sell and service with a client based focus.  We shop so you don’t have to.   We can provide quotes for Auto, Home, Umbrella, Term Life, and Harder to place homes.  We also offer sales for Small Businesses.  California Insurance License 0K10734.   Please read our disclosures.

Marindependent Insurance Services LLC – California Insurance License – 0K10734