How to Save on Insurance in a Down Economy

Aug 01

Insurance. It’s probably the first thing you think of dropping when you don’t have the money for it. Unfortunately, doing so is probably the worst thing you can do. Why? Because insurance is your safety net. It’s what will protect you when times really get tough – tougher than they are now. Still, you can’t afford to become insurance poor. Here’s what you need to do to save money in a down economy.

Lower Your Coverage

While it’s not the best move in the world, lowing your coverage does make it cheaper. Re-examine all of your insurance covers and see if there’s some room to decrease your protection. For example, if you recently added collision insurance to your vehicle, but you did it as an extra measure of protection on an older car, consider dropping it.

With homeowner’s insurance, it’s tough to justify dropping or reducing coverage. Doing so will only expose you to more risk. However, you might be able to justify a small decrease in liability cover if you  absolutely have to. Finally, don’t be shy about contacting your life insurance agent. Term cover doesn’t leave you with much wiggle room – but whole life does.

If you just can’t swing the premiums right now, ask about using dividends from any “with profits” policies to help cover the premium. Alternatively, ask about automatic premium loans to tide you over until you are making more money.

Increase Your Excess

Increasing your excess is another way to decrease your premium. Rather than dropping coverage, you keep the same coverage and just assume the risk of paying more out of pocket when you need to file a claim. In some cases, raising your excess significantly can make a dramatic difference in your premium.

Just be careful with this because you do have to come up with the excess amount now before the insurer will pay anything toward a claim.

Consolidate Coverages

Consolidating covers is another smart move that can save you a lot of money – sometimes up to 40 or even 60 per cent. By combining home and auto insurance, the insurer gets more of your premium dollars. If you give the insurer your umbrella liability and life cover, you will see the greatest savings possible.

Insurers are willing to do this because the more premium they collect from you, the more they have to invest. It’s not technically cheaper to offer the cover to you from an actuarial standpoint, but it does increase the company’s reserves. If the insurer can generate more revenue, than they can afford to discount their pricing.

Shop For Better Rates

When all else fails, shop for better rates with another carrier. You might just have to resign yourself to the fact that your current insurer doesn’t have the best home insurance rates, life cover, or auto premiums. Switching might be the only way to save yourself some money.

Fortunately, this doesn’t have to be a painful breakup if you work with an insurance agent. Your agent can shop the marketplace for you, find a better deal, and then sign you up (with your permission, of course). He handles the dirty work, and tells the old insurer that you’re leaving.

Sam Fenton is a retired insurance officer. He enjoys sharing his articles online through blogging.