Save Money This Year by Cutting Down on Insurance Costs

One of the easiest ways to acquire additional pocket change — perhaps to spend on the plethora of daily deals we find — is by cutting down on your other expenses. Instead of putting in overtime hours at work to earn a couple extra bucks to buy that tablet you've had your eye on, you can instead cut back on other expenditures, beginning with your insurance policies.

Your insurance policies may be tying up hundreds of extra dollars, and reevaluating your plan before you renew is where you'll likely find lots of savings. Inertia is a big factor that keeps people from examining their insurance expenses however, since it's a lot easier to forget about something that doesn't really affect day-to-day life.

Huge savings can be found in auto and home insurance policies — you just have to know where to look and what to ask. All it takes are a few phone calls and some research in order to find where your extra money can come from. Here are some ways to start your search.


Go Shopping
Once you sign off on an insurance policy, it's easy to forget about it and simply pay the monthly bill when it arrives. Break this cycle and do a little research. A month before your policy expires, contact other insurers and ask for rate quotes. Consumer agencies in your area can help you find a reputable company and helpful organizations such as the National Association of Insurance Commissioners can assist you in investigating any issues with an insurance company.

While it may be tempting to save big on insurance, don't go after the lowest-priced policy. You'll want to talk with as many insurers as possible in order to get a price quote and a feeling for the quality of services they provide. Insurance is one area where you don't want to be left out in the cold when filing a claim.

Ask for Discounts
There are more discounts available for insurance policies than you'd think. The most common form of savings comes with bundling policies, such as auto and home. Go with one company for both and you can receive discounts of up to 30%.

Some auto insurers also offer additional discounts to student drivers with good grades, elderly drivers who take driving classes, groups of workers (teachers and credit union members), customers who are insuring multiple cars, people who opt to sign documents online or are enrolled in paperless billing, or folks who pay their premiums a year in advance. Home insurers may also offer discounts to people 55 and older, or for installing a new roof, or alarm system.

Raise the Deductible
Deductibles are what you pay toward a loss before your insurance company pays on a claim. Raising your deductible is an easy way to save money, as it can even lower your annual premium by up to 25%. For example, if you have a $500 deductible on your car insurance, you pay the first $500 of any claim and the insurer pays the rest. Increase your deductible to $1,000, and you can save on your monthly payments of the premium. It's always wise to save the money you're not paying towards car insurance in case you get into an accident and do need to actually pay your deductible.

Cut Out the Middleman
Working directly with an insurance agent is a matter of preference, based on your service needs. With the ability to find lower rates from a selection of available insurers, you might be getting a great price, but their 15% commission sometimes makes your low-cost policy much more expensive.

Companies like Allstate and State Farm use "exclusive" agents to sell their products, who also work on commission. But because they work for only one company, their commissions tend to be lower than an independent agent's.

You should also consider going with a company like Geico, which mostly sells insurance policies directly to consumers via the Internet or over the phone. This method of sales keeps their costs low, which they pass on to customers by offering lower rates. The only downside here is that customers may not receive as much attention as they would working one-on-one with an agent.

Have Good Credit
Your credit score plays a huge role in the cost of your insurance rates. The better your credit score and history, the better rate you're likely to get, so it's vital to pay your bills on time and ensure that your credit score is accurate. There are many factors that go into a credit score, like credit history and loan status — not one determining factor. So while working to fix a bad credit score will take time, insurers require a history of good credit before they give you a great rate.

Examining your insurance providers and premiums, and keeping track of your credit score, will save you big bucks in the long run. Just by following these steps, consumers can save hundreds of dollars in premium payments. While that extra money might not be enough for a full family vacation this holiday, it's a good investment for one down the road.


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