Smart Ways To Lower Home And Auto Insurance Costs

Home and auto insurance can be expensive, but there are ways to lower your costs. For auto insurance, you can increase your deductible, shop around for the best rates, maintain a good driving record, and take a defensive driving course. You can also bundle your auto insurance with your home insurance, which can save you 5% to 15% on your premium. Speaking of home insurance, you can also lower those costs by increasing your deductible, making your home more secure, and skipping small claims. You can also save by making home improvements, such as adding storm shutters or impact-resistant roofing, and by building your credit score.

Increase your deductible

Increasing your deductible is a quick way to reduce your premium. The deductible is the amount you pay if you have to make a claim. The higher your deductible, the more money you can save on your premiums. For example, if you have a $1,000 deductible, you could save an average of nearly 13% a year by increasing it to $2,500. Most insurance companies recommend a deductible of at least $500. If you can afford to raise your deductible to $1,000, you may save as much as 25%.

However, it's important to remember that if you live in an area prone to disasters, your insurance policy may have a separate deductible for certain types of damage. For instance, if you live near the coast, you may have a separate windstorm deductible; if you live in a state prone to hail storms, you may have a separate deductible for hail damage; and if you live in an earthquake-prone area, your earthquake policy will have its own deductible.

Increasing your deductible puts more money in your pocket every month that would otherwise go to your insurer. Do the math to see if the potential savings are worth it for you, and make sure you have enough saved to cover a larger out-of-pocket expense if you need to make a claim. It's a good idea to set up a home emergency fund to ensure you have enough money on hand in case of an unexpected event.

While raising your deductible can lower your premium, it also means you'll need to have more emergency cash available in case something goes wrong. Before increasing your deductible, consider the following:

• Ensure you have enough money to cover the larger deductible. You may need to pay a higher premium while you build up your savings.
• Crunch the numbers to determine your potential savings. Calculate whether increasing your deductible will result in significant savings for you.
• Think about how often you might file claims. If you're reluctant to file claims due to potential premium increases, a higher deductible may be a good option.

Keep in mind that raising your deductible is just one way to reduce your home and auto insurance costs. Other strategies include shopping around for the best rates, bundling your home and auto insurance, and making home improvements to increase security or disaster resistance.

Make your home more secure

Making your home more secure is an effective way to lower your insurance costs. Here are some measures you can take to improve your home security:

Install a Comprehensive Security System

Adding a comprehensive security system, such as a monitored fire and burglar alarm, can help deter intruders and detect fires early on. Some insurance companies offer significant discounts for installing these systems, but they can be expensive, so be sure to check with your insurer about the specific systems they recommend and the potential savings on premiums.

Upgrade to Deadbolt Locks

Upgrading to deadbolt locks is a basic yet effective way to improve your home's security. Deadbolt locks are stronger and more durable than traditional spring-loaded locks, making it harder for intruders to break in.

Install Smoke Detectors

Smoke detectors are essential for early fire detection and can help you and your family escape safely in the event of a fire. They are often required by building codes and can earn you a small discount on your insurance.

Install a Sprinkler System

Consider investing in a sprinkler system to complement your fire detection system. Sprinkler systems can help control or extinguish fires, reducing the damage to your home and possessions. Insurance companies may offer discounts for installing sprinkler systems, but be sure to check with your insurer about the specific requirements and potential savings.

Reinforce Entry Points

Reinforcing potential entry points can make it more difficult for intruders to gain access to your home. This includes installing solid-core doors, reinforced glass, and window bars. Additionally, consider adding motion-sensor lights around the exterior of your home to deter intruders and alert you to any potential threats.

Secure Your Surroundings

Don't forget to secure the area around your home. Trim tall trees or shrubs that could provide cover for potential intruders, and ensure your fence or gate is secure. Adding security cameras can also help you monitor your property and provide evidence in the event of a break-in.

Remember, before making any significant investments in security systems or home improvements, consult your insurance provider to understand their specific recommendations and requirements to qualify for any available discounts.

Improve your credit score

Improving your credit score takes time and consistency, and there's no one-size-fits-all solution. However, if you're new to credit or your score is lower than you'd like, you may see bigger improvements by implementing some of the following strategies:

• Pay your loans and bills on time: Your payment history is the most significant factor in determining your credit score, accounting for 35% of your FICO® Score. Late or missed payments can significantly impact your score, while a consistent record of on-time payments will help improve it.
• Don't get too close to your credit limit: Aim to keep your credit utilisation below 30% of your limit on any card. Lower utilisation rates indicate that you're only using the credit you need and can manage it effectively.
• Maintain a long credit history: Avoid closing old credit accounts, even if you no longer use them, as this will shorten the overall length of your credit history. Lenders prefer to see established lines of credit.
• Diversify your credit mix: Having different types of credit, such as credit cards, student loans, mortgages, or auto loans, can improve your score. It shows lenders that you can manage various types of credit responsibly.
• Limit new credit applications: Every time you apply for new credit, a hard inquiry is made, which can negatively impact your score. These inquiries remain on your credit report for two years and affect your score for up to one year.
• Dispute inaccurate information: Review your credit reports for any errors or signs of identity theft. Disputing inaccurate information can help improve your score, especially if there are serious issues like late payments or high credit card balances.
• Become an authorised user: If a family member or friend has a credit card with a good history of on-time payments, ask to be added as an authorised user. This can have an immediate positive impact on your score, especially if you're new to credit.
• Pay off credit card debt: If you can pay off large credit card balances quickly, your score will be updated as soon as lenders report the lower balance. This can be particularly effective if your credit utilisation rate was previously high.

Seek out other discounts

When seeking out other discounts, it's important to remember that insurance companies don't all offer the same discounts or the same amount of discount in all states. Here are some ways to seek out other discounts:

Retired Status

If you're retired, you may qualify for a discount of up to 10% from some insurance companies. Retired people stay at home more than working people, so they are less likely to be burglarized and may spot fires sooner. Retired people also have more time for maintaining their homes. If you're at least 55 years old and retired, be sure to ask about this discount.

Group Insurance

Some employers and professional associations administer group insurance programs that may offer better deals than you can get elsewhere. Ask your employer and inquire with any groups or clubs you are a member of to see if this is possible.

Career-specific Discounts

Some insurance companies offer discounts if you work in a specific career, such as teaching, engineering, or firefighting.

Paperless Billing

Some insurers offer discounts if you choose paperless billing.

Payment Method

You may be able to get a discount if you pay your premium via automatic bank payments.

No Smokers

If no one in your household smokes, you may be eligible for a discount.

Recent Home Purchase

If you've recently bought your home, you may be eligible for a discount.

Good Credit Score

In most states, insurance companies can use a credit-based insurance score to determine your rates. A higher credit score can lead to lower insurance costs.

Review your current policy

Reviewing your current policy is an important step in lowering your home and auto insurance costs. Here are some detailed tips to help you through the process:

Understand Your Current Coverage

Firstly, get a copy of your current insurance policy and take time to understand it. Identify the types of coverage you have and the limits of each. Know what is included and what is excluded. Familiarize yourself with the terms and conditions, as well as any endorsements or add-ons you have. This will give you a clear picture of your existing protection and help you make informed decisions when comparing other policies.

Analyze Your Needs

Consider your current life situation and insurance needs. Have there been any significant changes, such as getting married, having a baby, moving to a new home, or retiring? Life events can impact your insurance requirements and eligibility for discounts. Review your possessions, their value, and whether you've made any major purchases or additions to your home. This will help you assess if your current coverage limits are still adequate.

Evaluate Your Deductibles and Premiums

Your deductible is the amount you pay out of pocket before your insurance coverage kicks in. By increasing your deductible, you can often lower your premium, which is the amount you pay for your insurance policy. Consider whether you can afford a higher deductible in the event of a claim and if this could lead to savings on your premium.

Assess Your Eligibility for Discounts

Insurance companies offer a range of discounts, and it's important to determine if you're taking advantage of all the ones you're eligible for. Common discounts include those for bundling home and auto insurance, having safety features in your home or car, being claims-free for a certain period, improving your credit score, and being a long-term policyholder. Ask your insurer about any discounts you may qualify for, and don't be afraid to negotiate.

Compare Similar Policies

When reviewing your current policy, it's essential to compare it with similar policies from other insurance providers. Gather multiple quotes from different companies, ensuring that the coverage types and limits are the same across the board. This will give you a true sense of whether your current policy is competitively priced or if there are better options available.

Stay Up to Date with Policy Changes

Insurance policies can change over time, and it's important to stay informed. Insurance companies may introduce new coverage options, discounts, or benefits that could benefit you. Similarly, they may discontinue certain features or raise premiums. By staying up to date, you can make any necessary adjustments to your policy or explore other options if needed.

Remember, reviewing your current policy is a crucial step in lowering your insurance costs. It empowers you to make informed decisions, negotiate with your insurer, and identify areas where you can reduce expenses without compromising your protection.

Frequently asked questions