Ways You May Be Able to Save on Your Insurance

Updated on May 3, 2018
Ruben Sarmiento profile image

Ruben Christopher is a licensed insurance agent who has been in the insurance industry for many years.

Ten possible ways to save on your home and auto insurance

With every state in America requiring car owners to carry insurance, and lenders requiring homeowners with a mortgage to have insurance, people are looking for ways to save money on their insurance premiums. Insurance can be challenging for consumers, since not many consumers are as knowledgeable about insurance as other things in their lives. So this article lists a few simple ways consumers may be able to save on their home and auto insurance.

1. If you are retired, tell your homeowner's insurance company.

By the time they retire, a lot of retirees have their homes paid off or only have a few more payments to make on the mortgage. So they don't need homeowner's insurance any more to protect their mortgage. But do not cancel the policy entirely because if you do suffer a loss and do not have any homeowners insurance then the loss is yours to cover. Instead, inform your homeowner's insurance company that you have now retired. Many companies offer retirees discounts on their home insurance. One reason for this is that retirees are probably home more often than people still in th work force. Homes where the owner is home more often are less likely to suffer losses from fire, burglary or even unnoticed leaks, and if they do occur there is someone home to mitigate the damage.

2. Take a defensive driver course for older drivers.

If you are an older driver consider taking a defensive driving course offered by insurance companies like AAA. Most insurance companies such as State Farm, Geico, AAA, Safeco and others give a discount for older drivers who have taken a defensive driving course. This discount can have a dramatic effect on your car insurance rates.

3. If retired, let your auto insurance company know.

Retirees drive fewer miles per year on average than others because they no longer commute to and from work. So this reduces the risk of them getting into an accident and suffering a loss. So insurance companies will take this into consideration when determining your rate. It is called short mileage or reduced mileage and can make a big difference in your rate and monthly premium.

4. If you have a short commute to work, or drive less, let your car insurance company know.

Some who are still in the workforce have less of a commute to and from work than others. If you do, and only drive 15 miles or less roughly round trip, then let your insurance company know. Drivers who drive fewer miles per year have a lower chance of getting into an accident and suffering a loss. Thus they are less of a risk and that will be taken into consideration when the insurance company determines their rate. Generally, a short or reduced mileage vehicle is one that is driven less than 7500 miles per year. So if that is you, let your auto insurance company know.

5. Technology can help you reduce your rate.

A few years back Progressive insurance company came out with a program known as Snapshot to help drivers lower their rates. It was a little device that plugged into the data port of your car that you would leave in and it would monitor your driving habits. So it would use the data collected to help to figure your rate based on your specific driving. Those with better driving habits and who drove fewer miles could see a reduced rate on their renewal. Now more insurance companies offer a similar program, some companies such as State Farm do not offer a device anymore but an app that you download to your phone that does the same function.
This can be particularly helpful in lowering rates for younger drivers under the age of 25 or older drivers over 70 years old. Why? Because drivers under 25 tend to pay more for insurance because of their age and inexperience. While drivers over 70 tend to see an unavoidable rate increase due to their declining eyesight. So programs such as Snapshot from Progressive and Drive Safe and Save from State Farm can help to lower the rate.

Also if you have a newer car which has built-in tracking device or a service like Onstar, let your insurance company know because if the vehicle is stolen the police can use the tracking device or service to track and recover your vehicle. Insurance companies will factor this in when they determine your rate.

6. Beware of being a price shopper when it comes to insurance.

Most people have credit scores; drivers, likewise, have an insurance score or IS score. It is a number that ranges from 300 - 950 and basically tells the insurance company the odds of you filing a claim. For example, someone with an IS score of 400 will pay more than someone with an IS score of 800. The higher the score the lower the chance you will file a claim and thus you are considered a lower insurance risk.

Many factors go into figuring an IS score, and one of them is how often you change insurance companies.Insurance companies give you credit for prior insurance that you have had and the length of time you were with that insurance company. So someone who is constantly changing insurance companies to try and get a better rate is actually hurting their insurance score because their insurance company will not give them credit or as much of a credit. They know that in 6 months or a year or even sooner that they will be gone and they do not place much value on price shopper customers. So try to stay with one insurance company for as long as you can and remember rate increases are part of having insurance and every single insurance company will raise rates.

7. Compare quotes.

In today's day and age with technology so much a part of our lives, it has become easier to compare quotes or get multiple quotes from several different insurance companies. Gone are the days of calling multiple companies to get a rate quote, now you can compare quotes from multiple carriers from different lines of insurance such as auto, home, life, and health. Websites like Your Better Rate and others specialize in gathering multiple rates from different companies and giving the consumer options to chose from. They also do the same with all types of commercial insurance as well.

8. Consider using an insurance broker instead of a captive insurance agent.

Captive insurance agents are agents that represent one insurance company and one only. So, for example, your State Farm or Farmers Agent or Allstate agent. So these agents tend to try and sell you expensive add-ons or bundles under the guise of it will save you money. But beware because many insurance companies such as State Farm will only give you one multiline discount. So if you have the typical auto, renters/home or life bundle than you will only get the higher of the discounts. So if one discount is 10% and the other two are 5%, you will only get the 10% discount and will be paying for the other policies with no discount or reduced premium benefit. They try and bundle for two reasons. One is that they have quotas to meet for each specific policy. The other reason is that the more policies you have, the higher the chance you will stay longer than someone with a single policy.

9. You might want to raise your deductibles.

The higher your deductibles the lower your rate will be because the deductible is the amount you will have to pay in case of a loss. So the more you have to pay, the less the insurance company has to pay and thus the lower your rate will be. But beware because if there is a loss you will need to come up with the amount of the deductible. So make sure you are financially able to come up with that money quickly if a loss does occur. Also, note that with financed vehicles the finance company requires your deductible to usually be less than $1,000. So check what the finance company first to obtain the information on what limits your finance company requires before you change anything.

10. Consider reducing coverage and limits.

The more coverage you have and the higher your limits are than the higher your premiums will be. Your coverage limits are the amount the insurance company will pay for any one loss. So be careful that you do not lower them to low because if a loss occurs above those limits you will be responsible for the difference. Every state has a minimum or basic liability coverage limit that you are required to carry for auto insurance coverage. The limits vary by state so make sure you are above or meet that limit. Those with assets that a lawyer can go after in case of a loss, such as a home should have higher limits as they have assets that need to be protected in case of a loss.

If you have a new or a newer car you might want to have those higher limits and extra coverage to protect the vehicle against a major loss. Cars that are financed the finance company requires them to maintain full coverage to protect the finance companies investment being the car.

Remember insurance is protection against a possible loss that may occur and it is always a good idea to have adequate coverage at the least in case a loss does occur. If you are able to get the extra coverage or higher limits then do so because it is better to be over-insured then underinsured. You will be glad you are if that loss does occur.

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

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