IMPORTANT NOTE and DISCLAIMER: The following is a list of options which may help to reduce insurance costs. It is general in nature and is not intended as personalised advice. We strongly recommend talking to your insurance adviser before making any changes to your policies.
One of the questions which inevitably comes up when we are talking to clients about their insurance needs is; how can we reduce the cost of insurance. In this post, we take a look at some of the ways that you can reduce your insurance costs without losing important benefits.
- Read your policy. As with all legal contracts, it’s important that you read your policy so you know what’s covered and what isn’t. Pay attention to policy changes that come in the mail. If you have questions, ask. And make it a habit to review your policies every so often to be sure you understand them (and check whether anything has changed).
- Don’t duplicate coverage. Know which policies provide which benefits. If you have a AA membership, for example, you don’t need towing coverage on your car insurance. And if your credit card doubles the warranties on the things you buy, don’t pay for extended warranties. I try to go over my policies once a year to remind myself of my coverage. (I’m a forgetful guy!) I recommend you do the same.
- Consolidate. Get all of your insurance from one provider. Insurance companies often give a discount if you have multiple policies with them. Plus, this saves you the hassle of having to pay more than one company.
- File fewer claims. Don’t penny pinch your insurance company. If you file claims for every little thing, they’ll raise your rates. Insurance is meant to cover unexpected large losses, not every ding your car gets from shopping carts.
- Shop around. To find better rates, harness the power of the web. A quick search for car insurance will throw up a number of options.
- Buy only what you need. Insurance agents are happy to sell you more coverage than your situation calls for. Do some research before you buy. Figure out how much and what kind of insurance you need, and don’t let the agent talk you into more than you need.
- Raise your excess. The excess is the amount you pay on a loss before the insurance company kicks in money. For example, if your car takes $400 in damage because you drive over a curb and you have a $250 excess, you pay the first $250 and your insurance company pays the rest. It’s up to you where to set the excess, but the lower your insurance excess, the higher your premiums. Ask yourself how much you can afford to pay if something goes wrong; more specifically, how much is too much? Set your excess just below “too much”.
- Increase your wait period. Similar to an excess. For income protection increasing your wait period before the policy kicks-in can reduce premiums quite significantly. There is a BUT here – make sure you have sufficient funds to cover you during the period you are not covered by insurance.
- Take care of the things you insure. One of the best forms of insurance is routine maintenance. A well-maintained car is less likely to have an accident due to mechanical failure. If you take care of your house, it’ll weather the ravages of time. And if you exercise and eat right, you’ll get cheaper life and health insurance.
Source: This post is adapted from an article originally published on the web site “Get Rich Slowly“