Save Money on Insurance

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How to Save on Insurance

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There are a lot of factors that affect how much you pay for auto insurance. Some of these factors are in your control, some are not. Auto insurance companies use a process called underwriting to take your information, assess the risk they believe you present, and then quote a premium. While insurance companies do not all use the exact same criteria in the exact same way to determine insurance cost, there are common factors that all car insurance companies use. Here are 25 of them.

Age: Age is a big factor in auto insurance premiums. If you are under 25, expect to pay more. While premiums for men under 25 are significantly higher than premiums from women in the same age group, all other factors being equal, both can expect to pay in excess of 100% more than an adult base rate. And at the other end of the age spectrum, rates can go up as you enter your golden years.

Gender: Particularly for younger drivers, men can expect to pay significantly more than women.

Driving Record: Your driving record is obviously important to assessing insurance risk. Some insurance companies go back as far as five years. However, as any past accidents or violations age, your premiums can come down.

Type of Vehicle: The type of car or truck you drive impacts premiums in a couple of ways. More expensive cars that cost more to repair send premiums higher. And some cars are more or less prone to accidents. For more details, check out our list of the most and least expensive cars to insure.

Age of Vehicle: this factor relates to vehicle type. As a car or truck ages, its value declines and premiums go down as well. Of course, inflation can cause other factors in the premium to go up. Also, some really old cars my lack safety features that may affect the premium. But all things being equal, an older car generally will be less costly to insure.

Credit Score and History: Study after study shows a high correlation between credit scores and claims history. On average, those with lower credit scores have a higher rate of claims. Just another reason to improve your credit score.

Marital Status: Apparently, married people are, on average, more stable and less accident prone. Just another benefit of marriage!
Where You Live: There are several things going on with your geography. First, some locations are just more expensive than others. It will cost more to repair a car in northern New Jersey than it will in the middle of Ohio. Also, some locations are more accident prone than others due to traffic congestion and patterns.

Claims History: It should go without saying that your auto insurance claims in the past will be factored into your premiums. The good news is that if you go long enough without a claim, some insurance carriers will put you into a category that keeps you from being dropped because of claims. After more than 25 years with Nationwide, I’m in that category, so my agent tells me.

Criminal Record: When you do the crime, you must do the time. And that can mean higher premiums depending on just what crime(s) you’ve been convicted of.
Other Insurance: Most insurance carriers will offer multiple policy discounts. If you get your auto, life, and home owner’s insurance from the same carrier, for example, you should see a discounted rate.

Miles Driven Each Year: Some insurance carriers offer low mileage discounts. We recently wrote about car insurance by the mile. While that option is not available in most states, low mileage discounts are.

Car Alarm: Simple enough. Car alarms reduce the risk of theft, thus lowering premiums. Having lived in Boston for three years, though, I can tell you that against the right thief, they are not much of a deterrent.

Occupation: Insurance companies will factor in what you do for a living. The data indicates that some occupations, and being unemployed, can increase the risk of claims.
Education: Generally, the more education you have, the lower your premiums. Keep in mind that not all carriers use the same underwriting criteria. So exactly how something like education will impact premiums is difficult to determine, but it is a factor.
Homeowner Insurance - Tips to Buying Homeowner Insurance
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How to Save Money on Your Homeowner Insurance Policy

By Scott Purves, Insurance Agent

Shopping for homeowner insurance is one of those nagging home buying details that sometimes manages to slip though the cracks. It’s not unusual for insurance agents to receive last-minute frantic phone calls from title and / or escrow companies requesting a home insurance binder. To save yourself trouble, it’s a good idea to start shopping for a homeowner policy as soon as your purchase offer is accepted. Here are a few tips about buying homeowner insurance that are designed to save you time and money:

Determine Insurability

Your insurance agent needs extensive information from you to quote you the best rate for your policy. To determine insurability, an agent will ask:

When was the home built?

How old is the plumbing and electrical?

What type of roof?

What’s the square footage?

How many claims have been filed over the past 5 years?

Where is the home located?

If the home is located in a rural area without a nearby fire department or there is no fire hydrant on the street, some companies may refuse to insure it. In that case, you may have to inquire at a specialty or surplus-lines company, and this quote will take longer to obtain.

Deductibles

You can save money by having a higher deductible on your policy. Typically, insurance companies will start giving discounts at a $500 deductible and increase the discount as your deductible increases. Most companies offer deductibles up to $10,000. Be careful, however, because many mortgage companies will not allow you to exceed a $1,000 deductible, so check with your lender before opting for a higher deductible.

How Much Insurance Do You Need?

Most agents use a cost estimator to figure cost replacement estimates. This will ensure that your home is insured for the correct amount. Insurance companies do not insure dirt. If you buy a home that includes a large lot, do not be astonished when you receive an insurance policy for a lot less than what you paid for the home. This is because you are buying coverage for the home and not the land.

In the past, replacement coverage was called Guaranteed Replacement Cost. There is no such coverage anymore. Today it is Replacement Cost Coverage, which means each insurance company designates a percentage of additional coverage on top of the insured amount. This is designed to protect the homeowner who has suffered a loss from having to pay additional construction costs to rebuild. It can cost more to build because of inflation or simply because material prices have increased. For example, if the dwelling coverage is insured for $300,000, and the company has 125% replacement cost coverage, the homeowner would receive an additional $75,000.

I recommend 200% replacement cost coverage, which gives homeowners double the coverage.

Policy Options

You have other choices on your home insurance policy that you can tailor. Liability coverage is a part of your homeowner's insurance policy that is often overlooked. This protects the insured against claims arising from bodily injury and property damage to others. For example, if your five-year-old was playing with matches and set your neighbor’s house on fire, your liability coverage would pay for this damage. You might have to move out of the neighborhood, but your insurance policy would pay your neighbor.

It is common to see $300,000 in coverage for liability, but the cost to raise it to $500,000 is about $20 more a year. You can have up to one-million coverage on most policies. Over that, you need an excess liability policy or “umbrella” policy. Umbrella policies give you an additional $1,000,000 liability coverage for a $300 to $500 premium.

Available Discounts

Make sure that you are getting all of the credits for which you are eligible. If you have an alarm system that reports to a central station (a company such as Brinks or ADT), in some cases, you can get up to a 10% discount. If you are over 50 and care to admit it, you may be eligible for a discount. Companies have different names for age preference policies, from senior discount to mature policyholder discount.

The most common discount is the multi-policy discount. This will save you money on your home and auto insurance. By combining the two policies with the same company, you are given a certain percentage discount on both. the percentage discounts vary among companies, so it’s best to shop around.

Review Your Policies

Call your agent and review your homeowner policy at least every three years. Needs change, markets change and coverages change. You should stay up-to-date on your insurance because you never know when you will need to rely on it.