Christian Living


Seven Ways to Cut Insurance Fat

When I was an insurance broker, I experienced some crazy stuff!  I saw everything from a car getting attacked by a cow (the man brought in a piece of the cow’s hide to prove his case) to a woman who would not turn off her overflowing commode until she called our office, laughing hysterically, to make sure she had coverage!  But even crazier than killer cows and comic commodes was the fact that people routinely paid more for less insurance coverage than they had to pay. 

Most insurance choices are “pay me now or pay me later.” But some families buy the wrong coverage and end up paying for their own losses, and others pay for more protection than they need. Here are seven suggestions for cutting insurance fat and still maintaining the right kind of coverage.

Cut homeowner’s insurance costs. Most people have their homeowner’s insurance paid as part of the mortgage payment and don’t think to get an annual review on this policy. Each year, a family should ask its agent how to reduce costs through discounts for non-smokers, fire prevention devices in the home, security systems, or a new tile roof. Carry only the coverage needed. Most families should carry the homeowner’s broad form and only up to 90 percent of the home’s value (don’t include the land in this coverage). You can’t collect more than the home value if there is total loss, so don’t pay for additional premiums.  Further reduce premiums by increasing the deductible to $500, $1,000, or one percent of the total amount of coverage.

Reconsider replacement value. You should carry replacement insurance on your personal property. It only costs a little more and the additional coverage is worthwhile. For example, if the pipes freeze and permanently damage your carpet, replacement value will reimburse the cost of replacing the carpet with the same quality carpet, less the deductible. If there’s no replacement value, the carpet will be depreciated, which won’t leave much of a check to cover the damages.

Remember riders for personal articles. If a thief steals jewelry, guns, computer equipment, antiques, coin collections, and other personal items, the homeowner’s insurance could cover as little as $1,000 unless they are itemized. The cost of this additional coverage depends upon the total amount of the rider.

Renter’s insurance savings.  Many families rent and some military families may live in base housing.  You still need to cover your household goods. This coverage comes in handy during a self (or company) move, as you can get replacement value for any items that are stolen or lost if you have this feature in your policy.  To save money, contact the insurance company that carries your automobile policy—there are oftentimes discounts for multiple policy holders.  The personal articles floater and replacement value information in the above sections also apply to renter’s policies.  Be sure you do not overestimate the value of your household goods, or you will overpay premiums and you will still only be able to collect actual replacement value in the event of a total loss.

Protect your identity. It can cost thousands of dollars to undo the damage a thief causes when he steals your social security number and ruins your credit. Protection usually costs about $25 per year and can be added through most homeowner’s policies.

It pays to drive with care. Each ticket and each accident add surcharge points and additional premiums to the cost of a policy. Consequently, if you were given a ticket unfairly, it pays to fight it. If another person was at fault in an accident, call the police to the scene to write a police report that proves there’s no fault and removes any surcharge points on the policy. Go for the higher deductibles on comprehensive and collision in order to insure big accidents, not fender benders.

Shop around. Obtain estimates from at least three major companies before purchasing auto insurance. Reduce the cost of insurance on your car by buying the right kind of car. Some vehicles are far more expensive to insure than others, so check with an insurance agent before buying a car. If possible, use the least expensive car to travel to and from work. “For pleasure only” vehicles have the cheapest rating, so use that on the most expensive vehicle.

Discounts mean dollars. Some companies offer discounts to non-smokers and/or non-drinkers (total abstainers). Other possibilities include anti-theft devices, safe-driver discounts, multi-car discounts, driver education courses, and discounts for drivers between age 30 and 60. Certain professions, such as the military, sometimes are given special discounts. Other companies offer a discount if you carry your homeowner’s insurance with them.

Teenage Drivers.  It’s also important to consider what to do when a teenager acquires a driver’s license. Once a teenager obtains a license, he or she must be listed somewhere on your auto policy. The best option is to name the teenager as the principal driver of an older vehicle that carries only a basic insurance package---but in this case that youthful driver will usually need to be named on the title.  These policies vary from state to state.  Consider letting the teen pay a portion (or all) of his insurance premium. It’s an extra incentive to drive safely.


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