Homeowners and Auto Insurance is a very valuable and very needed expense for nearly every household. It is not something you should cut out of your budget (and if you owe money on a home or auto, your lender will require insurance). So even though this expense is necessary, there are a few tips that we have discovered to help you reduce the cost of your insurance premiums for both your home and your autos.
Here’s some tips that we do as we strive to get great insurance for a good price and as we attempt to keep finding our 2% budget cuts.
- Get a new quote annually. Get new quotes from other carriers to compare costs and see if you can find a lower rate with the coverage you desire. We get an annual insurance check.
- Have insurance companies compete. With your new quote, you can either switch providers, or take this quote to your current provider and see if they will compete for your business. If you have been a good customer with no claims that year, there is a very good likelyhood that your current insurance will compete.
- Increase deductible – You buy insurance to be protected in case of the “unexpected.” But it really is unexpected and many go their entire life without needing to make any insurance claims. So, we recommend increasing your deductible so that your monthly premium will be reduced.
- Get the minimum coverage needed on your vehicle. Meaning if you own your vehicle, only get liability. You typically are only required to get comprehensive if you still owe your lender money on your vehicle (another reason to get out of debt :)) Do talk to your insurance agent as far as other coverage they would recommend such as uninsured driver and medical expenses.
- Ask about any of these discounts:
- Discounts for having safety measures in place like alarm systems – If your home has certain safety measures in place, you may be in for a discount. The most common is an alarm or security system.
- Discounts for professionals – This one was new to us this year. We recently re-evaluated our policy and discovered that we could receive an additional discount for being a professional (by day, I am a Software Engineer). You will need to prove your professional status, generally with college transcripts, degree, or professional certificate. Also, a professional is going to be defined differently for each insurance company.
- Discounts for marital status – If you are married, you may be able to get additional discounts.
- Good credit discounts – If you have decent/good credit, this may also give you an additional discount!
- Good driver discounts – If you are typically a “good” driver and have not had any violations in a couple of years or on your record. You will want to check with your state as to how long violations will stay on your record. It varies from state to state and from violation to violation, but the average for minor traffic violations is 2 years.
- Good Student discounts – This would be a helpful one for any of the “teens” that are on your insurance. Much like credit rating for adults, a student’s good grades are often used to judge the “responsibility” factor of a teen and so if you have a good student in your house, you may earn some extra discounts.
- Low mileage discount – If you do not drive a lot (usually less than 8K miles per year), you may be eligible for additional discounts.
- Only insure rebuilding costs, not the cost of the land – If the unexpected were to happen, it is most likely going to happen to only your home and the claim you would be making would be the cost to rebuild your home – not the land! The land your home sits on is generally included in the total value of your home (like the price if you were to sell it!), but you will be able to “reuse” the land and so there is no since in insuring the land, just the cost to rebuild the home that sits on that land.
- Pay your policy in a 6 month or 1 year lump sum. – This is another common discount among insurance providers. Many will give you a dollar amount discount or percentage off discount by paying your premiums for a full 6 months or even 1 year.
- Check with employer to see if they have a group discount for homeowner’s or auto insurance – Many companies will have provided a group purchasing discount through that employer – you can think of it like a co-op. Some larger companies will offer this discount as an “added benefit” to working for their company by allowing employees to buy into the group plan.
- Combine policies with one company – Another common discount is the multiple policy discount. Many insurance providers will give you discounts if you also purchase your car insurance, life insurance, etc. with your homeowner’s policy.
- Think twice before going with a discount company. We have always bought our insurance through one of the top insurance companies (All State or any of the ones with “Farm” in the name) as the service is high quality and the claims submitted are most often paid up on our behalf. We have heard many, many bad reports from the discount companies in regards to paying up on claims. So be aware that you may be getting what you pay for. We can’t name names, but do your research and check reviews online and with the Better Business Bureau to verify if this is a discount company worth going with.
As a side note, we follow the above steps each year and we also discovered a super sweet discount and pricing for couples and individuals that fall into a certain category. If you have no violations on your record – or in other words, a good driving record and really good credit – you may want to look into Farm Bureau as they have an elite discount program for those that fall into this elite category. Although it is not many that will qualify for it, if you have the above factors, then this is worth checking out. We discovered it this year as we were doing our annual “shopping around” and it is probably going to be something we will not be able to beat in the future.
You really can find discounts on those expenses. Please share with us any tips that you might have in getting a bit of your money back from purchasing home insurance.
Disclaimer: We are not licensed insurance agents. As such, please do not consider this as professional advice, but please always solicit and work with a certified insurance agent prior to implementing any of the ideas presented in this post.