The problem with homeowner’s and auto insurance is that they’re indispensable, yet they cost an arm and a leg- we’re talking about an average of $1674 a year for full coverage on auto insurance and $1445 for homeowner’s insurance. While you can’t do without them, you can reduce the impact they have on your monthly budget. Here are 6 ways to pay less on your car and home insurance.
Get the Right Coverage and Appropriate Limits
When you purchase insurance, your get coverage -that’s the amount your insurer will theoretically pay should you encounter any financial loss. However, it’s not that simple, because your coverage is capped by limits. For instance, if you were to purchase home coverage worth $400 000 with a limit of $250 000 and you made a claim of $300 000, your insurer would only pay $250 000 and you’d be liable for the rest.
Setting limits on your coverage can be a bit of a seesaw affair because when your limits are too low, you’re underinsured, but exaggerated limits inflate your monthly premium. The good news is that you can tweak your limits in such a way that you’re paying less on your premium, yet still getting necessary coverage.
It’s worth noting that finding the appropriate limit requires professional skills and knowledge, so you may want to speak to an insurer analyst for this one.
Referral and Affiliate Programs
Referral programs have been around since the dawn of time, but did you know that you can leverage them to minimise your car and home insurance costs?
The vast majority of insurance companies administer referral programs for their clients. Most offer gift cards and once-off prizes for clients that bag a certain number of referrals, but some offer premium discounts.
Similarly, you can join your insurer’s affiliate program. If you run a blog or you’ve got a large following on a social channel, you can earn a commission for every lead. While this doesn’t directly reduce your premium cost, it provides you with a side income that you can use towards your premium.
Shop Around for Better Deals
You’ll be surprised how much premium costs differ from company to company. Here’s the good part though; no one expects you to stick with your insurer for years, especially if cutting them loose will help you save a couple of hundreds of dollars.
If you think your premiums are a bit too high, I suggest you find better deals from other companies. There are several ways to go about it. To start off, talk to family and friends, they might have useful insight and resources.
The most effective way though is to find appealing insurance deals by visiting quoting sites. There are dozens of those on the internet and they provide tools like coverage estimation and premium calculators. What’s more, you get results within seconds.
As a bonus, you may also be eligible for a refund if you cancel your current policy mid-term. However, you will be charged a cancellation fee.
Keep an Eye Out for Discounts
Let me let you in on a secret, insurers usually have a backlog of discounts to offer their clients, but they rarely promote them. Instead, they expect their clients to take the initiative and find out about available discounts.
Sure, most of those discounts aren’t life-changing, since they only range between 5% and 15%, but when you compound them, you could end up shredding premium costs significantly.
That said, here are enticing home insurance discounts that usually go under the radar;
- Home improvement discounts
- You may get a discount if you’re a new homeowner
- Married or single discounts( depending on which your insurer offers)
- Effective anti-theft system discount
- Discount for installing leak sensors
- You also get a discount if you pay your premium annually
- Loyalty discount
Keep your Driving History Clean
Generally, when you make a claim on your auto insurance, your premium rate goes up by a certain percentage, up to 40% to be more specific.
That’s mind-blowing, I know. But driving carelessly does more damage. To put it into perspective, a ticket for reckless driving could up your premium rates by up to 80%, which is almost like adding an under-aged driver to your policy.
Good driving habits and impeccable driving history lead to more affordable auto insurance premium rates. While you can’t exactly avoid road accidents, you can maintain good driving habits with the following tips:
- Driving within speed limits
- Keeping a safe following distance
- Staying alert
- Keeping a safe following distance
- Being aware of your blind spots
Larger cities are generally more costly in terms of insurance, especially homeowner’s and auto insurance. It’s mostly because they use rating systems to gauge environmental risks that are typically more prominent in large cities. They also consider other factors like average cost of construction, road accident statistics, weather patterns and proximity to dangerous zones.
I know relocating sounds a bit extreme, but it could help you save $600 or more annually.
Using one or two of these tips alone won’t make much of a difference. If you’re looking to seriously cut back on insurance expenditure, you’ll have to compound all these tips and use them in conjunction with other cost-saving methods. What’s more, you can also apply these tips to your health insurance policy.
Larissa Musangu is an accountant who combines her knack for words with professional experience to craft useful and actionable finance-related blog posts.