This is the second part of the series on saving money on insurance the RIGHT way. I hope you find something here that you can use and help ease the pain of budget strain! I’ll admit it. Insurance is a very tough line item on a budget. When you look at a house payment, you can look around and see the beautiful house that you are paying for. When you make a car payment, you can look out in the driveway and see that nice new car. Even school loans, while you can’t really see an education, you can certainly see the benefits of an education, so that payment is a little easier to take! Insurance, on the other hand, is a very hard item to purchase. We see the money going out of our checking account month after month after month, and all we see is a big blank spot where money used to be! If you’re lucky, your agent might send you a thank you card or a holiday card, but for many people who never have a claim, that’s all they get! It can be very hard to see the need for insurance when you never have a claim. For people who have had a claim, however, the need for insurance becomes immediately pressing and obvious. While some of us may never have made a claim on their insurance, we know people who have and we can see the benefits of it. With all that being said, it is still difficult to see the money going out into space! So what can we do to save money on insurance? Is there any way to do it? I’m glad you asked because there are several ways you can save money on insurance without leaving huge holes in your risk management profile. I will list a few that you can hopefully put to good use. Number 1, make sure that your insurance information is accurate. For many people, insurance is one of those things that they’d just like to “set it and forget it.” While that idea may be convenient, it could also be costly. I have often seen situations where a youthful driver moves out and the parents never call to have them removed. These situations can potentially cost thousands of dollars in overpaid premium if not dealt with. Also, people make take jobs closer to home. This reduces the amount of miles driven every year, which could potentially create a lower cost of insurance. Not only that, some people get new jobs that may qualify them for what’s known as an “affinity” discount. People in law enforcement, registered nursing, credentialed teachers, or architects may qualify for this discount. If you own several vehicles plus a home, this discount alone can be pretty hefty. Number 2, Bundle! Some people don’t like the idea of bundling because they feel that they are “putting all their eggs in one basket.” They feel that it is better to have their home insurance with one company and their auto insurance with another company because they somehow won’t be “overloading” the insurance company if there are several of one type of claim. Let me dispel that myth. Admitted insurance companies in California will be able to handle your claim, even if it’s catastrophic. They are regulated by their various states just so they ARE able to pay those claims. The savings you can realize by bringing everything together far exceeds any risk management benefit someone might perceive. Once again, bundling could save several hundred dollars a year. Don’t forget life insurance as well. Many companies offer an additional discount on top of the other bundling discounts for life insurance, so make sure you check out that possibility as well. Number 3, Deductibles. If there’s one thing that I have more discussions about with insurance (other than billing!), it’s deductibles. If you were to ask the average person, “what’s better? A high deductible, or a low deductible?” Most people would answer a “low” deductible. Before I get too far in, let me explain that a deductible is the amount of damage that must occur before any money is paid out on a claim. For example, if you have a $1000 deductible on your auto insurance, there needs to be $1001 worth of damage before a claim payment would even be possible. Very few people would bother making a claim for $1, but hopefully that illustrates how deductibles work. So, to get back, it makes sense to have a low deductible since that will really good in the event of a claim, right? Most likely, WRONG! To help you to understand, think about this. When was the last time you had a claim? When was the last time you had a homeowner’s insurance claim? For most homeowners, the answer is “never.” Most homeowner’s will never have a homeowner’s claim. So how does that translate to saving money? The difference between a $500 deductible and $2500 deductible as far as annual cost is concerned is often several hundred dollars. I’ve seen situations where the difference in cost was over $700 per year. That’s a big savings! Multiply that $700 over 10 years with no claims, and we’re looking at $7000 worth of savings. That’ll get your attention! The same concept works on the auto side. The difference between a $250 and $1000 deductible could be several hundred dollars per year, especially if you have several vehicles. It doesn’t take long to save your deductible in cheaper premiums! Having used these principles, I have regularly saved people 20-25% on their insurance premiums. All it takes is being accurate, bringing everything together, and adjusting your deductibles. If you have any questions on how you can take advantage of these money-saving tips, please feel free to give me a call at (661) 946-4224. You can also email me at dave@thedaveowens.com. I or my licensed staff will be more than happy to go over your insurance program with you. As always, this posting is not meant to take the place of advice from an insurance professional who knows your situation personally. Thanks for reading!
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AuthorDave Owens, Owner/Agent. I have proudly served in the Insurance Industry for over 20 years. Archives
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