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Insurance is one of those products most if not all of us purchase, but very few if any of us look forward to writing that monthly/annual check required to keep the policy in good standing. This article will address some key ideas showing “How to lower my insurance rates” by examining three products: Homeowners insurance, Auto insurance, and health insurance.
The average cost of homeowners insurance is $1,631 per year or $135.92 per month, according to the 2021 Nerdwallet’s analysis report.
Factors such as location, home value, coverage levels and discounts will determine your homeowners insurance price.
- Location—Insurance premiums vary based on location. For example, states at a higher risk for severe weather like hurricanes and tornados will generally have a higher premium due to the increased risk of property damage. Additionally, location within a state is one of the biggest factors that can affect home insurance price. In densely populated urban areas, real-estate prices and construction costs tend to be higher, and the coverage needed is directly tied to the value of your home.
- Home Value—High real estate prices usually lead to paying more for home insurance because it will cost more to rebuild your home.
- Coverage Levels—Homeowners policies have three different levels of coverage: actual cash value (Home worth minus depreciation), replacement cost (Cost to rebuild your home), and guaranteed replacement cost (Cost to rebuild even if the cost exceeds the policy limits).
- Discounts—A few common discounts are as follows:
- Home safety devices (Any system in your home that protest against fire or theft will often decrease insurance premiums). Examples include: Fire extinguishers, indoor sprinkler systems, fire alarms, burglar alarms, professional monitoring devices, security cameras and deadbolt locks.
- Multi-policy bundling (Combining home insurance with auto insurance or another insurance type) can save money on your policy.
- New construction—Discounts for newly constructed homes are very generous, so if your home is new, check with your insurance provider about a possible discount.
Auto insurance and more specific auto insurance premiums are always a hot topic. Everybody is looking for a way to reduce their auto insurance premiums. Here are a few ideas:
- Shop Around–Prices vary from company to company, so it pays to shop around.
- Before You Buy a Car, Compare Insurance Costs—Car insurance premiums are based in part on the cars price, the cost to repair it, it’s overall safety record and the likelihood of theft.
- Ask for Higher Deductibles—Deductibles are what you pay before your car insurance kicks in. The higher the deductible the lower the cost. Before choosing the higher deductible, be sure you have enough money set aside to pay if you have a claim.
- Reduce Coverage on Older Cars—Consider dropping collision and/or comprehensive coverage on older cars. If your car is worth less than 10 times the premium, purchasing the coverage may not be cost effective.
- Buy Auto and Homeowners Insurance from the Same Insured—Most insurers will give you a break if you buy two or more types of policies. You may get a reduction for more than one vehicle insured with the same company. Some insurers reduce rates for long time customers.
- Maintain a Good Credit Record—Most insurers use credit information to price auto insurance.
- Take Advantage of Low Mileage Discounts—Some companies offer discounts to motorist who drive a lower than average number of miles per year.
- Other Discounts—Companies offer discounts to policyholders who have not had any accidents or moving violations for a number of years. You may also earn a discount for taking a defensive driving course. Young drivers on a policy may qualify for lower premiums if they maintain good grades, take a driver education course, or for being away at college without a car.
If you’re wondering how to save money on your premiums for individual and family health insurance, these strategies may be helpful.
- See if you are eligible for the Tax Credit Subsidy—If you buy your own health insurance, you may get help paying for it from the government. The Advanced Premium Tax Credit Subsidy lowers your monthly payment. When shopping for a plan, you will be able to see if you qualify for lower costs.
- Choose an HMO—When you choose a PPO you can select the doctors you want without a referral, in and out of network for services, and still be covered. This freedom is paid for with higher premiums. With an HMO, one primary care physician coordinates your care. You need a referral to see specialists, and there is no out-of-network coverage except in an emergency. That is how an HMO lowers health care costs and your monthly premium.
- Choose a Plan with a High Deductible—A deductible is the amount you pay for health care services before your health insurance begins to pay. The higher the deductible, the lower the premium.
- Choose a Plan That Pairs with a Health Savings Account—Health savings accounts, or an HAS, are accounts that you use to pay for medical expenses. You save on taxes with a health saving account because the money you put in and take out is either tax free or tax deductible.
I have just presented a few ideas that could provide helpful strategies for reducing your monthly insurance outlay. Keep in mind, the lists are not all inclusive but a way to get started.
I look forward to reading your comments and don’t forget to share this article with friends and family.