Eight Rules for Saving Money When You Buy Insurance
Money isn’t your only asset. That peace of mind that comes from knowing you are protected in the event of a tragedy, or illness is priceless. But sometimes insurance can be costly, not to mention confusing and complicated.
It is important to understand the different types of insurance available and how they work. In addition, understanding some basic terms can be helpful when shopping around for a particular policy. This article provides eight rules for saving money when you buy insurance.
1. Get a good amount of coverage
Don’t skimp on coverage, the value of this peace of mind can become priceless in an emergency. Approximately 60% of all homeowners policies are included in the $250,000 per occurrence limit on coverages such as crime, fire and smoke detectors, plumbing defects and more (pg27). Make sure the policy you choose has everything you need.
2. Know your exclusions
Most policies contain exclusions, or conditions that don’t qualify for coverage under certain circumstances. It is important to understand these, and whether or not your policy requires an endorsement to cover any excluded events. Avoid coverage gaps by understanding what events are included and what events are excluded in your particular policy (pg29). For example: if you want flood insurance but live in a non-flood zone it will not be covered under your existing policy, so specific action must be taken to ensure that your home is protected against rising water levels.
3. Ask for quotes
Most insurance companies have websites where you can get an online quote. Alternatively, you can call them to find out the price of your policy. Keep in mind that even if you get multiple quotes, they should be similar as every insurance company has to follow the same basic rules and statues and is not allowed to offer dramatically different coverage amounts (pg30). They also can’t offer preferential treatment to a certain policyholder based on his or her occupation, employment status or financial situation.
4. Understand your premium
The premium is the amount of money charged for a specific period of time by an insurance company to cover a risk. Everything from age and location will affect your premium. Keep in mind that the premium is a fixed amount per month no matter how much coverage you need. The greater the exposure to a risk, the higher the cost to insure it.
5. Shop around
Insurance companies compete for business every day and would rather have you as a customer than another company’s customer. Because of this, they regularly offer discounts and special deals to entice customers and keep them as loyal customers (pg31). Keep in mind that your premium can be affected by things such as location, age, driving record (cars only), health or whether or not you smoke or are a smoker, any claims history, credit history and current credit score (pg33). To make sure you are getting the best deal on your insurance, shop around every few years.
6. Understand the deductible
The deductible is the amount of money you must pay before the insurance company starts to pay for a claim. It is important to decide what amount of risk you are comfortable with and choose accordingly (pg33). The more coverage you have, the higher your premium, however if your premium goes up too much it may be worth it to find different coverage. You can often lower the cost of your premiums by raising your deductible or choosing other forms of savings (pg35).
7. Stick to your limits
As tempting as it may be to exceed your coverage limits, this can cause many issues later on. Insurance policies are designed so that you have coverage for all the possible events which may face or affect you and your home, yet usually don’t include an unlimited amount of coverage (pg36). If you choose not to purchase all of the additional available coverages and then experience a catastrophic event, there may not be enough coverage in place to pay for all that is required of the insurance company, leaving you with no coverage at all (pg38).
8. Take advantage of discounts
Low risk or no risk (no claims) often requires the same premium as more risk and claims. That is why companies offer discounts to those who have a good driving record, are at relatively young ages, have no claims on record, or are non-smokers (pg44). In addition to these factors, many insurance companies also offer discounts based on your occupation and credit history. These can be worth investigating to see what your insurance premium could look like if you were in a different profession or under a different credit agreement (pg45).
9. Find out about special features
Some policies provide coverage for things such as flood, fire and vandalism within your home (pg46). Others provide coverage to pay for the claims of the third party when you are not at fault (pg47). These are helpful things to include on your policy. By including them, you’ll be able to take advantage of these features without having to pay extra for it in your premium.
10. Use discounts and savings wisely
Insurance companies have rewards and special offers for those who meet certain requirements such as being a member of a certain political party, belonging to a sports club or being married to someone with a high credit rating. Take advantage of these offers and discounts as they are often available to everyone and can make a difference in your premium (pg50).
11. Avoid fraud
Insurance companies have very strict rules regarding fraud and misrepresentation, which is why it is important to check your policy carefully upon joining or even at renewal (pg53). More than half of all insurance policies contain language that states that the policyholder is not represented by an agent while other policies offer parent company disclaimers which state that the agency has reviewed, approved and disclaims all statements, representations, promises, guarantees, actions or omissions contained in this document.
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Conclusion
The purpose of insurance is to protect you from financial losses that may come up in the future. If you have coverage or are able to find coverage, it will reimburse you for any financial losses that are made due to a loss or damage in your home or car. There is also coverage for the replacement of your belongings, personal injury protection, liability protection and health insurance (pg54). These are some useful tips on how to choose the best private home and auto insurance policy: ow.ly/i/rvQk0"
In this article, we have looked at how to get started with policy comparisons and comparing quotes from different companies. We hope this helps you make good decisions when buying a policy.