10 Ways to Save Money on Insurance

Author: Kailey Hagen | November 23, 2020

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Get the coverage you need without breaking the bank

You might never need to use your insurance coverage, but if you do, you really need it. Going without might seem like a calculated risk, but if you're not willing to pay for a new home, a vehicle, or a doctor bill entirely out of pocket, you want to have an insurance company willing to back you up in a crisis. Plus, if you have a mortgage or auto loan, your lender will likely require proof of insurance.

Technically, your insurer sets the price of your policy, but there's a lot you can do to ensure you get the coverage you need at a reasonable cost. Here are 10 tips to get you started.

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1. Shop around

Comparing prices from several insurance companies is the best way to find a great deal. While all consider more or less the same factors, they weigh the various components of your application differently, which can result in different prices.

Some insurance companies also use price optimization -- a practice that involves charging higher rates to customers the insurer believes won't seek out a better deal elsewhere. While some states have banned this, not all of them have, and it can cost you more than any supposed loyalty discount your insurer gives you. The simplest way to avoid this is to get a few quotes from competitors once or twice a year and jump ship if you find something better.

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2. Choose a higher deductible

A deductible is what you pay out of pocket when you file a claim while a premium is the monthly amount you pay to your insurance company for its protection. The two are inversely correlated, so when you choose a higher deductible, you score lower premiums. This could save you money over the long term if you don't file claims too often.

If you're worried about high out-of-pocket costs, put aside the extra money you're not spending on premiums each month into a savings account where you can access it when you need it. Do this until you've saved enough to cover your full deductible.

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3. Bundle insurance

Most people need multiple types of insurance, and many insurance companies give you a discount for purchasing several policies with them. This is a pretty easy way to save on coverage you were going to buy anyway, and you can usually get a quote for all your policies at once so you don't have to enter your information multiple times.

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4. Pay in full

Paid-in-full discounts are another common discount many insurance companies offer. If you have the cash on hand to do this, it's usually a smart play. You won't have to worry about budgeting for future monthly payments, and you'll save a little extra on your coverage.

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5. See what other discounts are out there

Insurers offer a variety of other discounts for things like being claim-free, having a security system in your home, or having certain safety features in your vehicle. These affect the rate you qualify for. Your insurance company should automatically apply the discounts you're eligible for when you get a quote, but it doesn't hurt to call and ask to see if there are any more opportunities for you to save.

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As long as you pay them off each month, credit cards are a no-brainer for savvy Americans. They protect against fraud far better than debit cards, help raise your credit score, and can put hundreds (or thousands!) of dollars in rewards back in your pocket each year.

But with so many cards out there, you need to choose wisely. This top-rated card offers the ability to pay 0% interest on purchases until late 2021, has some of the most generous cash back rewards we’ve ever seen (up to 5%!), and somehow still sports a $0 annual fee.

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6. Maintain continuous coverage

Insurance companies are more likely to charge you a higher rate if you've let your insurance coverage lapse for a time. You can avoid this by renewing your existing policy or purchasing a new policy before your current policy expires. You can find this date on your insurance card or policy documents.

Some companies will also give you a discount if you get a quote several days before your current policy expires, so this is another way to score some easy savings.

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7. Review your coverage limits annually

Even if you plan to remain with your current insurer, you should review your coverage limits at least once per year. You may realize there are some extra riders on your policy you no longer need and you can cut them to save some money. Or you may realize you need more coverage than you've had up until now.

Purchasing extra coverage may cost you more in premiums, but it's important to make sure you have enough at all times or else you could cost yourself a fortune when you need to file a claim.

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8. Maintain a good credit score

Your credit history is one factor insurance companies consider when evaluating your application. They use it as a measure of your responsibility and a poor credit score could mean a higher rate for you.

It takes time to raise your score, but if you focus on paying all of your bills on time and limiting how much credit you use every month, you should see it rise over time. If you don't have a credit history or your score is bad already, consider a secured credit card to help you begin building a responsible credit history.

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9. Reduce your risk of filing a claim

It's common knowledge that insurance rates often go up after you file a claim, so you should look for ways to reduce those odds. See if there are simple things you can do, like installing hurricane shutters if you live in an area that's prone to hurricanes, that could protect your home from damage and possibly score you a lower insurance rate at the same time.

Some insurance companies also give you discounts for making certain updates to your home's systems, like redoing your roof. If you're planning a renovation, consider checking with your insurer to see if you qualify for a lower rate.

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10. Think carefully before filing a claim

No matter the size of the claim or whether your insurance company denies it, it can still affect the rate you pay the next time you renew your policy. So think carefully before you submit a claim to make sure it's worth it. If it's only a few hundred dollars, you may be better off paying out of pocket and preserving your claim-free record rather than dealing with the headache that comes with dealing with your insurance company.

You should also review your policy terms carefully before you submit your claim to make sure the loss is actually covered. For example, certain things like flood and earthquake damage aren't covered by a traditional home insurance policy, so there's no sense in filing a claim for those. You may need to purchase a supplementary insurance policy to make sure you're fully protected against these disasters.

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As long as you pay them off each month, credit cards are a no-brainer for savvy Americans. They protect against fraud far better than debit cards, help raise your credit score, and can put hundreds (or thousands!) of dollars in rewards back in your pocket each year.

But with so many cards out there, you need to choose wisely. This top-rated card offers the ability to pay 0% interest on purchases until late 2021, has some of the most generous cash back rewards we’ve ever seen (up to 5%!), and somehow still sports a $0 annual fee.

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Focus on finding the best value

While price is undoubtedly important when choosing an insurance company, it takes a back seat to coverage. Don't skimp on coverage to get a lower rate or you could end up facing a huge bill when your insurance provider denies your claim.

Compare all of your options, decide which offers the most coverage and the best customer service at the best rate, and go with that plan.

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