We’re almost halfway through 2011. How are those resolutions from January doing? Lucky for all of us, we don’t need a new year or a resolution to want to save money, especially on insurance.
Save Money with Your Deductibles
Before you start eliminating or lowering coverage on your insurance policies to cut costs, consider modifying your deductibles instead. Deductibles are what you pay first, before the insurance company reimburses you for damages as a result of a covered peril. The larger the deductible, the lower the premium.
For example, if you have a $500 deductible on your homeowners insurance, consider raising it to a minimum of at least $1,000. The higher the amount you can afford to self-insure, the lower the premium will be. Insurance companies do not—I repeat, do not—want to be bothered with small claims. Those small claims probably cost more than the actual check due to administrative costs.
If you own a condominium, co-operative apartment, or townhouse, check with your agent on the premium difference between $500 and $1,000. It may not be that considerable.
Depending on your driving record and the number of incidents (accidents and tickets) on your motor vehicle report (MVR), you may want to consider increasing your collision deductible to at least $1,000 as well. Check with your agent on the price differential.
Save Money on Auto Insurance with Collision Coverage
With collision coverage, the insurance company is only going to reimburse you the actual cash value of the car at the time of loss. This could be a tough spot for some because it may cost more money to replace the vehicle than the check you receive from the insurance company will cover.
I am often asked when is a good time to drop the collision coverage. The answer to this is the same as the answer to nearly any insurance question: “It depends.” You have to review the value of your vehicle at the time you are considering eliminating this coverage to determine what will work best for your situation.
Typically, a good time to check the value of your car is when it is eight to nine years old. If you are comfortable with self-insuring a lower-valued vehicle, then you may want to consider dropping that coverage at that time.
I typically recommend maintaining comprehensive coverage, which protects against theft, vandalism, deer, falling objects, and glass. This is relatively affordable, even for an older model vehicle, given the perils insured.
Save Money on Your Health Insurance
For employers who have been able to provide health benefits to employees, I’m sorry to say, it continues to be a struggle to lower premiums for such policies. The increases at renewal are exorbitant, and a way to minimize the increase is to consider offering plans with higher co-payments. Clients have also considered plans featuring in-network deductibles and Health Savings Accounts (HSAs) as a way to help employees and keep premium costs down. Unfortunately, I don’t foresee any major relief in the near future for this issue.
Remember, when reviewing your personal or business insurance, you typically do not need to wait until the anniversary/renewal period to make changes to your policy. Take the time this summer to discuss with your agent what options you have to save money on any or all of your policies.
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