Financial Goals – Reviewing our Insurance

Earlier this year I posted 12 Steps for Getting Our Financial House in Order.  One of those steps was to shrink our bills.  The first bill that I decided to focus on was our insurance. Our insurance bill is actually quite high.  We have four vehicles that we insure as well as our umbrella policy and our homeowners insurance (with multiple riders).  A couple of years ago Michael was responsible for a serious accident that required the totally of both cars as well as a settlement for the other driver.  You can only imagine how much our insurance went up after that!

Our insurance policy is one of those things that I’ve let go on for a while.  Mike and I have had the same insurance agent since before we were married.  Considering we’ll be celebrating our 22nd anniversary this July, that’s a long time!  Late last year our agent retired and we were assigned to a new agent.

Our new agent called to introduce himself and asked us to come in to review our policies.  He told me that when reviewing our file he found a few areas he thought he could save us some money.  I’m sure you’re thinking that I got right in there to save some money.  Well, you’d be wrong!  I put off going in there for almost six months and it sure did cost me!

As I stated, our new agent had spent some time going over all of our policies so he had some recommendations for me when I got in there.  Here are some of the changes that we made:

  • Modified the deductibles on our automobiles.  Because we had our coverage so long, we had some crazy low deductibles that are no longer available.  All things considered, the benefit of increasing our deductibles outweighed the risk so that was one of the first things that we did.  Within the next year or two we may consider dropping collision from my son’s vehicle.  At some point the cost of the insurance plus the deductible aren’t worth the value of the car.
  • Modified our umbrella policy.  We carry an umbrella policy to cover us in the event we would have a settlement against us that would require more money than provided for in our ordinary policies.  A couple of years ago we were sent a form asking us if we wanted a certain coverage under our umbrella.  Thinking that the more coverage I had the better I went ahead and sent it in.  Turns out that we had plenty of coverage under our car policy and we were better off not taking the extra rider.  Eliminating that rider has saved us quite a bit of money.
  • Added a rider to our homeowners policy.  If our house is damaged by hail, the previous policy would only have fixed the damage portion.  I can tell you from experience that matching damaged siding is impossible (especially when the color is discontinued!) and can lead to a lot of money out of pocket.  We added a rider so that the full house would be covered.
  • Modified the deductible on our homeowners insurance.  Once again, the amount of money that we are saving outweighs the risk of having a higher deductible.

These changes, for the next three months are saving us about $100 a month.  Isn’t that crazy!?  A portion of that savings is due to a credit, however we’ll still be saving over $75 a month.  I told you that my procrastination cost me!

If it has been a while since you have reviewed your insurance I would encourage you to do so.  Some of the items you may want to explore include:

  • Is there a cheaper insurance company available to you?  If it’s been a while since you’ve shopped around you may want to see what’s available.  Just be careful that you are comparing apples to apples (i.e. same deductibles)
  • Are you adequately covered?  Depending on your situation you may not have enough coverage or you may have to much coverage.  If you’ve spent some money updating your basement you may want to consider a rider that wold cover you in case of a water back-up.
  • Understand your policy.  It’s been so long ago that we took out our homeowners, I really didn’t understand what was all included. 
  • Check your deductibles.  Some things to keep in mind.  What is the lower deductible costing you (or the higher deductible saving you)?  Will you be able to pay the higher deductible if you need to?  What is the value of the car?  There is no right or wrong answer, it’s really all about your risk tolerance.
  • Do you need collision?  If your car is worth $1,500 and you have a $1,000 deductible, it may not make sense to pay insurance to receive $500 “just in case” you have an accident.  If you are considering dropping your collision I would encourage you to ask these questions 1)Do you have some funds to replace your vehicle or will the $500 be crucial in helping you purchase a new vehicle.  2) will you save the money you’ve saved from dropping your collision or will it go into the general fund?  Saving the money to put towards car repairs would be a good way to protect yourself if there is a problem.  Keep in mind that you should always carry liability, in fact some states (like mine) require it.
  • Make sure you are getting all possible discounts.  Usually there are multiple vehicle discounts, good student discounts, driver school discounts, etc that you can take advantage of.  Make sure you get every discount you are entitled to.
Do you have any other suggestions for saving money with your insurance?

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