A former insurance agent spills the secrets

How to Save Money on Your Auto and Home Insurance

by Pauline Milner

Insurance policies covering vehicles and property are a necessary product most consumers own. During my years as a licensed insurance agent, one question from clients far outweighed all others. Can I get my insurance any cheaper? In many cases, the answer is "Yes."

It is important to ask about available savings as agents are not obligated to tell you about specific discounts unless you ask. Since many earn their income from commission on both sales and renewals, they may use discounts that you do not know about in order to offer you a better premium when you advise them you have found a better price elsewhere.

Take advantage of the following suggestions and you may find instant savings. Please note that the percentage savings estimates, shown in parentheses, are average amounts calculated by comparing those offered by various insurance companies. Premium reductions reflected as a dollar amount have been determined by comparing actual savings realized by policy holders.

Most insurance policies are issued with standard deductible amounts. If this is the case with your policies, increasing the deductibles will save you money ($120).

Drivers who have no tickets and students who maintain a minimum average in school or university can be eligible for reduced rates. New drivers who have taken driver training will also benefit from lower premiums. Drivers who have speeding tickets or other driving related convictions account for more accidents. If a driver in your household has a poor driving record and you agree to not let them drive, your insurance company may offer you a better rate (No tickets/Good student - 15%).

At fault accidents can cause you to pay increased premiums for up to six years. If your insurance policy is due for renewal and the accident will be six years old within the next six months, ask if the company offers a semi-annual policy, so you can take advantage of the premium reduction sooner. Insurance companies are unlikely to change your driver rating part way through a policy period ($900 annually).

Companies regularly offer you a discount if you have more than one policy with them. They also reward insureds who have not had claims or are long-term policy holders. Even being a senior can cost you less (Multi-Policy, 15%, No claims, Seniors, 10%).

Discounts may also be available if you are a member of groups such as the AAA, AARP or are a university alumnus. Current and retired military personnel can also enjoy special rate reductions. Also, be sure to ask if your insurance company participates in reward programs like Air Miles (Group membership, 10%, usually limited to one membership discount, Military, $500 annually).

How you use your vehicle can affect your premiums. If you use drive only for pleasure, do not travel back and forth to work, or if you have low annual mileage, you may find yourself paying less ($250 annually).

Are you paying too much for auto insurance?
Make sure you're getting the lowest rate.

Car alarms and safety features such as rear view cameras and traction control as well as monitored home security systems lower the amount of claims in addition to decreasing your premiums. A relatively new concept is insurance companies that monitor the GPS installed in your vehicle. Drivers who stay within the speed limit and avoid erratic driving can enjoy lower rates. Hybrid discounts are also becoming popular (Car and home safety devices, GPS, Hybrid 10%).

If you drive an older vehicle, consider removing the collision coverage. Insurance companies are not going to pay thousands of dollars for repairs when they can give you a lump sum payout equal to the value of the vehicle for much less. When purchasing a new vehicle, remember that premiums can vary widely between models. Also, claim statistics play an important role when companies are determining what premiums to charge. For example, taking the time to research which vehicles are most often targeted by thieves can reduce your comprehensive premium.

Instead of dividing your insurance payments into installments, paying them all at once can save on finance charges. Also, insurers have begun offering discounts for policies purchased online (Finance charges 5-8% annually, Online policy purchase, 5%).

Property insurance limits can increase automatically when your policy renews. Insurance amounts are based on the cost to repair or replace your home and not on market value. You can ask to have the amount recalculated, which could result in the limit being lowered. If your home has additional aspects that can reduce the likelihood of claims such as a septic or sump pump, specific heat sources such as electric as opposed to wood and brick construction, ask about specific discounts for those features.

Even if you are eligible for all available discounts, insurance companies will have a maximum allowable amount. Though they have set premiums and discounts, if you find a better price, certainly ask your existing agent if they can match the amount. With a lot of competition in the insurance market, companies are becoming more flexible. Discounts are limited to between 25% and 40% off the policy premium. Due to the wide margin, this can translate into significant savings making this information crucial to your bottom line.

In an economy where every dollar counts, a call to your insurance agent is a time investment that may translate into additional funds you never even knew you had.

Reviewed October 2017

Take the Next Step:

  • Knowing these homeowners insurance basics can help make sure you have the right amount of coverage without overpaying.
  • Make sure you are not overpaying for auto insurance. See how much you could save with just a few clicks. Fast, free quotes and online comparisons.
  • Stop struggling to get ahead financially. Subscribe to our free weekly Surviving Tough Times newsletter aimed at helping you 'live better...for less'. Each issue features great ways to help you stretch your dollars and make the most of your resources. Subscribers get a copy of Are You Heading for Debt Trouble? A Simple Checklist And What You Can Do About It for FREE!

Share your thoughts about this article with the editor.

Get Out of Debt
Stay Connected with TDS

Do you struggle to get ahead financially?

Surviving Tough Times is a weekly newsletter aimed at helping you stretch your dollars and make the most of your resources.

Debt Checklist

And get a copy of Are You Heading for Debt Trouble?
A Simple Checklist and What You Can Do About It
for FREE!

Your Email:

View the TDS Privacy Policy.

Get Out of Debt