Although buying the cheapest insurance policy is not the ideal long-term move, there are ways to lower your premium and save money.
1. Don’t underinsure. It may be tempting to lowball your coverage, but don’t do it. If the worst happens and you do have to file a claim, you’ll wish you had that extended coverage rider (it adds up to 30 percent to standard replacement value limits) and add-on coverage for sewer backups, jewelry, and other expensive items. Additionally, check your home’s value every few years. You want your insurance policy to reflect your home’s current market value.
2. Choose a higher deductible. Although you do not want to be underinsured in the event of a claim, the reality is that you likely will not need to file more than one or two claims. Even so, nearly half of America’s insured choose deductibles of $500 or less. You are better off choosing a $1,000 deductible, which greatly reduces your annual premium. Just make sure you save a sufficient amount to cover that deductible. Start by putting the money you save on your premium into savings.
3. Bundle your policies. It seems obvious to us, but we are always surprised when we learn how many do not bundle their home and auto insurance. The potential savings are huge, up to 30 percent. If you are not bundling, call your agents to find out how much you can save by consolidating your policies.
4. Don’t be afraid to shop around. Insurance is not like your significant other; you can take a peek at what else is out there from time to time to see if it is better. Search online or use an insurance broker and see what you can find. It might be better than what you have right now.
5. Lower your loss risk. The more claims you file, the higher your premiums. You can prevent that with some risk-saving measures, such as equipping your home to withstand dangers common to your region. This may include roofing that holds its own against hailstorms, storm shutters to protect against hurricane winds, or bolting the frame to the foundation if you live in an earthquake-prone location. Standard fixes for any location include never leaving stoves unattended (a leading cause of house fires) and reinforced hoses for your washing machine to prevent flooding. Also, look for discounts for items such as fire and burglar alarms. Even deadbolts may cut your premiums.
It can feel like walking a tightrope, making sure you have enough insurance without paying too much, but a little homework goes a long way. Talk to a broker or your insurance provider to discover steps you can take to lower your risk as well as your premiums and make sure you know what gaps are hiding in your policy. If you ever have to file a large claim, you will be glad you did.