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The trouble is, for a lot of folks, buying insurance can be a complicated endeavor. After all, choosing the right deductibles and coverage options are not intuitive processes, so there are plenty of opportunities for even the savviest consumers to get confused when it comes time to finally buy coverage. Heck, even I still do on occasion.


With that in mind, here are 18 tips to consider the next time you find yourself shopping for auto, home or life insurance:


Auto insurance tips

Auto insurance guards against expensive repair, medical and liability costs that can result from major accidents. Trivia time: Did you know some form of it is required to legally drive in every state but New Hampshire?

  • Consider dropping your collision and comprehensive coverage. Well, that is, assuming your car is paid for and at least 6 years old. Continuing coverage on an old vehicle may mean you end up with less money than it takes to replace it, because insurance companies generally pay the depreciated value of most older cars.
  • Purchase uninsured motorist coverage. One in seven U.S. drivers carries no insurance at all. For that reason alone, you should have uninsured motorist coverage that's similar to your primary policy in terms of liability limit.
  • Don't buy your teenagers a car. It's true; insurers assume teens will drive less when they don't have their own wheels.

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Life insurance tips

Life insurance protects your family by providing for your dependents in case you die prematurely.

  • Be sure you really need it. If you don't have dependents, you probably don't need life insurance.
  • Don't buy life insurance for a period longer than you have to. Life insurance is important when you are younger and have a family that depends on your income. For most folks, that means it's necessary only until their youngest child has left the nest, although some may prefer to keep it until their last child has graduated from college.
  • Consider buying term life insurance. A term life policy is the most cost-effective way to cover your dependents if you die unexpectedly. On the other hand, whole life insurance is expensive because you're paying for insurance plus the overhead that comes with the added investment component.
  • If possible, buy your life insurance when you're young. Term life insurance premiums are ridiculously cheap for folks under 40. However, once you reach 50, premiums begin to increase substantially. I bought a 30-year $500,000 term life policy when I was in my 20s, and the low annual premium has remained the same since the day I bought it.
  • If you do need it, buy your life insurance from a reputable company. Make sure you only buy from a reputable insurance company that is financially sound. You can evaluate insurance companies through major insurance rating agencies such as Moody's or Fitch.

Homeowners insurance tips

Homeowner policies shield you from losses due to theft, and fire or other damage to your home or personal property. They also provide accident liability coverage.

  • Be sure you're getting all the homeowner discounts you're entitled to. In addition to senior discounts, many insurance companies offer homeowner policy reductions for deadbolts, fire extinguishers, sprinkler systems, smoke alarms and security systems that report to a central station.
  • Raise your credit score. Believe it or not (maybe because it is an indicator of personal responsibility), many insurance companies now give lower rates to homeowners with good credit histories. (Estimate your credit score for free.)
  • Keep your home well-maintained. For example, updating aging electrical and heating systems as needed can reduce the risk of fire. And following building codes when remodeling bathrooms and kitchens can reduce the risk of water damage and other plumbing-related problems.

General insurance tips

  • Comparison-shop. Identical risks are often priced differently from insurer to insurer, so always shop around. Thankfully, Internet shopping is relatively painless.
  • Know what you're buying. If you don't understand certain benefits, terms or conditions, always ask your insurance agent to explain them to you.
  • Occasionally re-evaluate your insurance needs. Review your insurance annually. Life-changing events such as the birth of a child, divorce, retirement and income reductions usually call for coverage updates or additions.
  • If you have a lot of assets, consider getting an umbrella policy. An umbrella policy covers you beyond traditional-policy liability limits.
  • Raise your deductibles. Folks don't like to make claims under $1,000 because they're rightly afraid it will raise their rates, so why pay a premium for lower deductibles if you aren't going to take advantage of them?
  • Be sure you're taking advantage of every available insurance discount. In addition to the homeowner deals previously mentioned, many insurance companies offer discounts for being a safe driver, being a good student, working "low-risk" occupations and being a loyal customer.
  • Combine coverage. Bundling two policies with the same company can often result in insurers chopping premiums by as much as 20%.

Although people pray they'll never have to use it, buying insurance is something that we all have to do as responsible adults. These tips should make that task a lot easier and, more important, help ensure you're properly covered if you ever do have to file a claim.

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