Saving BIG Dollars on Insurance (Auto, Home, Life, & Health)

Spring is around the corner and during this time of year most people get motivated to do a little "spring cleaning" the same should apply to most of your insurance. Some of your insurance you can not get different rates or even change but once per year...such as Life & Health. However, it doesn't mean that you still can't save boat loads of money with what you already have, we will discuss this towards the end of the post.

AUTO INSURANCE:
The easiest type of insurance to save money with is...you guessed it....Auto Insurance. So, we will be discussing this first. The best way to save is to get quote from multiple insurance companies. DO NOT TELL THEM HOW MUCH YOU ARE PAYING!!! They may be able to beat what you are already paying by a lot more than they will quote, but if you tell they what you are paying already they may just beat your current rates by a little vs. a lot! If the insurance agent asks for a copy of your existing policy tell them you will give them the specifics such as deductible, limits, coverages, ect. However DO NOT give them or fax them the original copy because it has the rates on it....let them know that you are shopping for the best rates....tell them that. When you are asking these other companies for quotes tell them you want a copy of the quote emailed to you and get a couple different quotes from the same company with different deductibles. When you get these quote and are comparing them, look to see the difference between the $500 deductible and $1000 deductible. If there is a huge difference between the premiums for these different deductibles it may behoove you to take the higher deductible. If it's just a couple dollars difference you may want to take the lower deductible....still not sure which policy to take?, try this, divide the difference in deductible by the difference in premium. For example:

Quote#1:      6 month premium with $500 deductible =  $600
                    6 month premium with $1000 deductible = $380....a difference of $220 every six months!*

*In order for the $500 deductible policy to pay for itself you MUST have at least 1 wreck every 15 months!!! If you driving record is better than that, then you would be overpaying for your insurance. You could take the $36.66 per month that you save with the higher deductible policy and directly put it into a savings account AND earn interest on that money vs. giving it to the insurance company, and YOU would only have to do that for 15 months and you have saved yourself the $500 difference in deductible! And if you went another 15 months without a wreck while saving the difference it would be as if YOU HAD A $0 deductible!!!  Plus YOU are earning interest on your money that you saved in case of a car wreck! It's a no brainer to take the $1000 deductible policy....you should also check the other deductible policies to see what the difference in premiums are.

Here is an example of a deductible would NOT be a good risk to take just to save a few dollars:


Quote#2:    6 month premium with $500 deductible = $600
                  6 month premium with $1000 deductible = $545....only a difference of $55 every six months.*

*In order for the $500 deductible to pay for itself you must have at least 1 wreck every 54 months (that is over a 9 year period without a wreck!) There is a good chance that even great drivers WILL have at least one wreck within that time frame. I would definitely take the lower deductible policy...it's worth it.


Now, if you have a long time relationship with your agent, I understand people like being loyal, I am not telling you to leave you agent, however, don't blindly let your insurance company overcharge you just because you don't think they would do that to you...they are a "FOR PROFIT" business, they aren't personally robbing you, they are doing their job and they will tell you it's "just business", and that is exactly what you are doing when you get other quotes. You are just being smart with your money, and it's "just business" nothing personal....you can tell them that as well. So, we have shopped around and got a couple different quotes, now it's time to compare what they gave you with what you are currently paying. If you find that your insurance agent is charging you too much, call your agent and ask them to beat the quotes you've received...if they match it, then at least you've got your rates lowered and you get to stay with your agent that you want to be loyal to. However, if you don't have that relationship with your agent, ask them to beat the quotes you've received, and if they don't...LEAVE! That simple! I would STRONGLY suggest getting the policy signed and in place before you cancel your current policy, that way there is no lap in coverage and if you get in a accident on your way to the new insurance agents office to sign your new policy, at least you are covered. I would definitely suggest calling around at least every 2 years and get at least 3 quotes. Let your agent know that you plan to do this...that way they keep your premiums competitive while they have you as a customer.

Home Owner / Renter's Insurance:
This type of insurance is VERY similar to auto insurance, in fact you may want to keep your auto and home insurance together....generally you will get a way better rate if you bundle them. Make sure you do your homework and at least check....it could save you BIG DOLLARS!!! When you are shopping for the coverages I would go with "full replacement cost" along with contents. The premiums for homeowners insurance is usually an annual premium and you need to take the difference in annual premiums for the different deductibles and see how long you would have to go without a fire or earthquake in order to have the higher deductible be worth the choice.

There are all kinds of coverages you can have with homeowners insurance, such as earthquake, flood, and fire. FIRE IS A MUST, earthquake in my opinion is a must as well, however flood is optional...it is VERY expensive and in some states required if you live in a flood zone. If you do not live in a flood zone then it's your choice to take or not to take the flood insurance. Personally I do not want the flood insurance for my home. That's all I'm going to say on that.

Along with home owners insurance there is renters insurance..same with this type of insurance as well (if you rent).

Life Insurance:
A lot of these insurance companies that offer auto and home insurance will also offer life. If you do not have life insurance YOU NEED TO GET IT!!! Term life if usually very cheap and covers your family if you die. The standard you should shoot for is 10 times your annual salary is what you should get for term life insurance. So, if you make $50,000/year then you need to take out a $500,000 term life insurance policy on yourself. This is very inexpensive, try and get the longest term you can while keeping the rate low. There are 10, 15, 20, 30 year term policies out there...the most common is 20 year.

This type of insurance is something you can shop around for as well. Get quotes, and don't tell the other companies what your quotes are....let them tell you.

Health Insurance:
This type of insurance is usually something you cannot shop around for if you are employed somewhere where your employer gives you health insurance plan options. Even with this, people will pay way too much by selecting a plan with a low deductible. You NEED to know your plans, ask your HR person to sit down with you and explain them if you are having trouble understanding them. For instance, the health insurance that we get where I work has three different plans, one with a $200 deductible ($400 family), $450 deductible ($900 family) , and then one with a $750 deductible ($1500 family) with an HRA account. Most of the guys that I work with take the $450 plan, since they don't want to pay the high monthly costs, yet they don't want the high deductible....they are paying WAY TOO MUCH!!! These guys do not know what an HRA account is, and they just look at the high deductible. If you have a plan available with a high deductible yet it has an HRA with it...take that one! An HRA is a "Health Reimbursement Account", this is an account that your employer funds with a predetermined $ amount for you to spend towards any health care costs...SUCH AS THE DEDUCTIBLE!!! For instance, I obviously have the $750 plan with my family, so my deductible is $1500 annually...normally this would scare me, however it has this HRA account attached to it and it is funded up to $1500 ($2500 family) for me to get reimbursed for my costs of health care. Last year I spent about $1600 in health care costs for me and my family, I was reimbursed a total of $1550 from my HRA, and never had to pay for ANY of the health care costs up front because I was "on top" of getting the reimbursement forms filled out and submitted, and would usually get the check from my HRA before the bill was due!!! So, my deductible that I paid out of pocket all year for the $1600 worth of health care costs was only $50!! That is almost a $0 deductible for the $750 plan, and this plan is WAY cheaper than the other two plans!!! My suggestion would be to KNOW your health insurance plans, and KNOW your options! Did I mention that the amount that is funded to the HRA account rolls over every year up to a maximum of $7500 ($12,500 family) of what you do not use...that is a truly AWESOME plan that is the least expensive...according to our HR rep, she said it is the least popular plan chosen because everyone sees the high deductible and it scares them away. I have made it my mission to tell the guys I work with about it and have already got a bunch of them to switch during the last open enrollment.

Obviously these suggestions are my own, and they do not always a good fit for everyone, please talk with your insurance agents, HR reps, and most importantly your spouse before making any decisions or changes to your insurance.

Thanks for reading, feel free to post any comments, suggestions, or tips so we can help all those who read this blog!