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According to the U.S. Census Bureau there were more than 131 million housing units and 250 million registered vehicles across the United States in 2010. Even when you factor out rental units and commercial vehicles, that still represents a lot of homes and cars that need to be insured. If you are a car and homeowner, we’d like to offer you three ways you can save on insurance for both.
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The key to saving money on all types of insurance is to shop around and compare policies. Like any other industry, insurance companies build a certain margin into their products in order to give themselves some wiggle room to compete with others. So if a given company’s profit margin normally stands at 20%, they can give you a 5% to 10% discount and still make money.
How to Compare Insurance Policies
Before getting into the three ways to save, it’s important to talk about how to properly compare insurance policies. If you don’t know what you’re looking at when you’re comparing quotes there’s no way to know what the value of the given policy is.
That is to say, one policy may be the cheapest among all those you’re comparing, but it may not provide you with the best coverage for the dollar. When comparing, you’re looking at total policy value in relation to your insurance needs.
For auto insurance, you’ll need to look at several factors including:
- Leaving state liability at minimum levels or increasing it
- Adding collision and comprehensive coverage
- Adding uninsured/underinsured motorist and personal injury protection if they are optional in your state
- Any fees associated with your chosen payment plan
For home insurance, you’ll need to look at several factors as well:
- Maximum benefit allowed
- Annual deductible
- Specific circumstances that are, or are not, covered
When you compare policies of either type, you need to first compare similar items line by line. After that, feel free to consider the extra items of one policy over the next. A thorough evaluation done in this manner should better equip you to decide on the right policy.
Bundle Your Policies
Our first way to save on home and car insurance is to bundle your policies together. Bundling simply means that you agree to purchase multiple insurance policies from the same provider. In exchange for the volume of business you provide, the insurance company gives you a discount on all of your policies. The more policies you purchase from a single company the greater your total discounts should be.
Just keep in mind that bundling may require a couple of compromises. For example, Company A may offer a less expensive homeowners policy as a standalone product. But that policy, combined with an auto policy from Company B may be more expensive than simply bundling both policies with the second company. In the end, insurance quote comparisons involve a bit more give-and-take when you’re bundling multiple policies together.
Raise Your Deductibles
Our second way to save involves deductibles; these are a component of our insurance policies we tend to forget about until we actually have a claim to make. If you’re not familiar with the term, a deductible is a set amount of money you agree to pay toward claims made against your policy.
For example, if you file a $10,000 accident claim on a policy with a $5,000 deductible, you pay the first $5,000 upfront and the insurance company sends you a check for the remaining $5,000. The money you receive can be used towards repairing or replacing your property.
Increasing your deductibles on both home and auto insurance reduces the risk your insurance company takes by that same amount. They are willing to pass along some of that reduction to you by way of lower premiums. Just keep in mind it won’t be a dollar-for-dollar reduction.
Consider Security Measures
According to the FBI there were just fewer than 2.2 million burglaries in the United States in 2009. Add to that some 4.5 million motor vehicle thefts and it becomes clear why insurance companies love consumers who implement security measures. Since taking such measures can help thwart theft and burglary, it qualifies as our third way to save money on home and car insurance.
In the home, security systems and alarm monitoring are good options.
They don’t provide 100% protection against burglary, fire, and other potentially damaging circumstances, but it does give you a leg up.
A burglar alarm can discourage someone from trying to enter your home, while smoke and flood monitoring can alert your alarm company to swing into action to mitigate damage. Homes with alarm monitoring qualify for lower insurance rates.
For your car, security measures to consider include factory installed theft deterrent devices, aftermarket anti-theft devices, and a secure location where you can garage your vehicle at night. Just like with homeowners insurance, providers are willing to give a discount to consumers who will take measures to protect their vehicles.
Ask for More Discounts
There are certainly more ways to save on your insurance than the three we’ve listed here. One of them is to ask about all the discounts you may qualify for.
For your car, you may qualify for a safe driving discount, another discount for your teenage children who’ve taken a driver safety course, and yet a third discount for your college student who maintains good grades. You’ll find that there are many different discounts available for all sorts of circumstances.
For the home you may find discounts and little harder to come by. But they do exist if you’re willing to press your insurance company or local agent. You might receive discounts for installing smoke alarms, replacing old basement windows with new block glass, and replacing old wooden doors with new steel security doors. Anything to make sure your home is safer may make you eligible for a discount.
Using a Local Independent Agent
If you find the prospect of comparing and bundling home and car insurance a bit daunting, you always have the option of working with a local, independent agent.
With more than 411,000 agents to choose from, according to the Bureau of Labor Statistics, you ought to be able to find at least one or two in your community you can work with.
Insurance agents are experts at helping you find the proper insurance to meet your needs.
The only thing to be concerned about with an independent agent is the fact that he or she is limited to the companies the agency represents. If your agent represents three auto insurance companies for example, he won’t be able to look at policies for any other companies when preparing your quotes. That may not be a problem in an agency that represents the most well-known and reputable insurance providers.
Also, keep in mind that your local insurance agent earns a living on the commissions paid by the insurance companies he represents. That may add a little bit to the cost of your policy in the long run. But if you have trouble investigating and comparing auto insurance policies, you might not mind paying a little bit extra to have someone do it for you.
Continually Compare and Adjust
It’s fairly normal for people to find an insurance company they like and then stick with them for decades. There’s something to be said for stability, that’s for sure, but it might not be the most financially sound decision. The truth is that the insurance industry evolves just like any other. It’s quite possible that a company offering the best policy value five years ago may be one of the worst today.
To see what we mean, take a few minutes to check out the Texas Department of Insurance’s website. They provide general comparisons by county as well as archived data from comparisons of years gone by. Using both of these tools, you can see how homeowners and car insurance rates have both fluctuated over the years. With these types of comparisons, you will be able to see if your rates are higher than they should be.
Some insurance experts suggest you compare policies on an annual basis. If nothing else, at least you’ll know how much you’re paying compared to other companies offering similar policies.
Moreover, if you really like your current provider despite the fact that they may not give you the best deal, doing annual comparisons could give you some leverage in trying to negotiate a better price. Remember that insurance companies build in a certain profit margin so they have room to come down a little bit.
When all is said and done, you ultimately have control over your home and car insurance policies.
You will decide with your purchasing choices who has the best coverage for the best price. If you feel as though you don’t have adequate knowledge or experience to make the decision, don’t be afraid to ask family members, friends, or even an insurance professional for help.
Enter your ZIP code into our FREE search tool to begin your search for competitive auto insurance rates online!