Purchasing insurance coverage for our vehicles and homes is something that all responsible adults must do.
Most states in the U.S. require you to carry some form of auto insurance that meets the minimum required liability standards. This is usually for bodily injury, property damage, personal injury protection, and uninsured motorist protection.
Although homeowners insurance is not necessarily legally required, since almost everyone finances their home using a mortgage, the lender will require it. (They don’t want to lose their asset.) But even if they didn’t, it would still be a good idea to have home insurance coverage simply for the fact that if a disaster were to happen, you’d be okay.
Thankfully when it comes to purchasing insurance, there are lots of options with many different reputable companies. To make sure you’re getting the best deal, follow these steps the next time you plan to renew your coverage.
Know What Level of Coverage You Need
Step one is to review your current policies. Make yourself aware of what level of insurance you have in all respects. Take note of your deductible levels, bodily injury, comprehensive, and all others. Note also if your auto coverage works in conjunction with your health care coverage to offer you a discount.
Don’t forget to take note any special services you have or regularly use such as rental car reimbursement or towing. I can’t tell you how many times we’ve had a flat tire or locked our keys in the car, and been glad we had an emergency service to dial.
Get Three Quotes (Minimum)
Once you know how much insurance coverage you’re shopping for, the next step is to go online and get at least three quotes. Getting a minimum of three quotes is the absolute best way to ensure that the prices you’re receiving are adequate. The more quotes you receive, the easier it is to detect what the “average going rate” is or should be.
These days, the Internet makes it very easy to go to any number of insurance providers. All you have to do is type in a few fields and – boom – you get an instant quote. With less than 30 minutes of work, you can compare the prices of the top three insurance providers.
Compare Your Quotes Line By Line
While reviewing your quotes, don’t forget to compare apples to apples.
Often times the default settings for insurance companies differ from one another. For example: One company might automatically set your default deductible to $500 while another might make it $1,000. One could be broad form while the other is basic; which would of course lead to very different out of pocket expenses on your part depending on the circumstances of your auto accident. Sometimes some companies automatically tack on extras like car rental reimbursement and towing while others do not.
To really get the best comparison, literally put them side-by-side make sure each line item is the same. Not only will this step help you determine which policy really is the best priced, but it may also help you identify a type of coverage that was missed (or that you really wanted).
It would be unfortunate if you were to get into an accident only to find out that you forgot to include the towing feature!
Actually Speak to an Agent
Once you have all three quotes the best price, feel free to call and talk to an agent directly.
In almost every situation I could think of, speaking directly to an agent has helped lower my insurance premiums – in some cases by more than $100 off what the Internet price was. This is because a good insurance agent will be able to tell you all the best hacks for getting the lowest price.
For example, they might be able to give you a discount if you belong to certain groups or credit unions. They can also tell you about the benefits of a multi-policy discount. The last time I called my agent, she informed me of a substantial discount if I paid my policy off all at once instead of breaking it out over the next 6 months.
More Policies = Better Discounts
Speaking of a multiple policy discount, since insurance companies love to sell, it may be beneficial for you to know that if they think you will purchase more than one policy, they will be willing to give you a pretty substantial discount.
Therefore, whenever possible, try to bundle auto and home together to get the very best deal. I have done this for my last two companies and it helped to knock the original price down by almost $500.
Give Your Current Provider One Last Try
Once you have the best price from a leading competitor insurance company, feel free to call your current company and see if they can do better. I’ve had offers where my insurance was $600 less than what my renewal cost was going to be. Whether I switched companies or got a competing offer from my current company, either way, I’m going to win!
Most insurance companies would rather offer a huge discount to retain current customers than to try to market to new ones. Your leverage, of course, is to have that official competitor offer at a major discount. By having it in writing, you have all the proof that they need that you were not bluffing and are prepared to switch providers.
Shop Around Every 24 Months
If you stick with any insurance provider long enough, you’ll notice every time your policy is up for renewal that it gets higher and higher. This is because as time goes on, the introductory discounts fall away and the real price starts to set in.
When that happens, it’s time to shop around again. Personally, I like to repeat our process above approximately every two years. Usually if you switch more often than 24 months, some insurance companies may not want to take you for fear that she will be a flight risk. By giving it a little bit of time and keeping a clean record, there’s really no reason you shouldn’t be able to command the best price each and every time.
This post appears courtesy of Mr WM from My Wealth Manifesto, a personal finance blog that is dedicated to discovering as many money-hacks as possible.