In 2018, personal insurance and pensions cost Americans an average of $7,296. That represents an increase of 7.8% from the previous year. It’s also $465 higher than what consumers shelled out in 2016.
All these prove that insurance is becoming more and more expensive in the US.
However, that doesn’t mean that lowering insurance costs is already an impossible feat. There are many ways to reduce your expenses, aside from comparing policies and quotes.
Ready to learn how to lower insurance premiums and save money in the long-term? Then read on, as we’ve rounded up some of the most important ones in this list.
Table of Contents
1. Cut Auto Insurance Costs By Planning Ahead
- Drive defensively. It’s true that you can’t do anything about other drivers on the road, but making a conscious decision to practice safe driving can lower your insurance. By avoiding accidents, you avoid filing claims which keeps your insurance premiums from going up. Additionally, your insurance provider might offer discounts for safe drivers.
- Get all your insurance in one place. When you work with an independent agent, you can a variety of insurance options in one place. This means you can find policies that fit your lifestyle and budget while still taking advantage of multi-policy discounts.
- Consider insurance costs when you purchase a vehicle. If you’re planning on buying a new car, the cost of your insurance should be a part of your final decision. For example, sports cars or vehicles with special safety considerations (like high roll-over risk) often cost more to insure.
2. Protect Your Home From Disastrous Fires
Fires are common in the Bay State, with 25,504 reported cases in 2018. Of these, 16,169 were structural fires, while 2,465 cases were for vehicles. All in all, however, these disasters resulted in $228.90 million in direct property damage.
That makes property fires a huge but often preventable insurance risk factor. Since there are ways to reduce your fire risks, they also give you a way to reduce your insurance costs.
Smoke alarms can protect your home from fires (and your wallet from high insurance costs). However, it’s essential to test them at least once a month, as low battery power can make them fail to go off. Testing them takes only a few minutes, but a single, tiny flame can turn into a massive fire in 30 seconds.
Also, note that the responsiveness of smoke alarms depends on their specific type. For example, ionization-type alarms are often better in detecting flaming fires. In contrast, photoelectric alarms are usually more responsive to smoldering fires.
High-quality smoke detectors cost more, but they are responsive to both types of fires. That makes them a smarter choice over more traditional sensors. Plus, they are much less prone to “false” alarms, so they won’t cause disturbances.
3. Flood-Proof Your Property
A 2018 study found that at least 90,000 homes in Massachusetts are at risk of flooding. Over a third of these households are in Boston alone. If things don’t improve, the Bay State is at risk of $63 billion in property loss for these houses alone.
As such, even if you may not legally need flood insurance, you should still consider getting a policy. You may able to get it for less if you buy it from your homeowners’ insurance provider.
Before you finalize your purchase, though, be sure to ask the insurer if they do offer discounts. Find out if you need to follow specific requirements when flood-proofing your home.
Making your home more resistant to floods can lower your risks and potential losses. As such, the insurer may provide you with more favorable insurance premiums.
Have a Backflow Prevention Valve Installed
One way to flood-proof your home is through a sewage water backstop. These backflow prevention valves can help prevent sewer mains from backing up. They can help protect the lowest area of your home (such as the basement) from flooding.
Modify Your Landscaping
Assess your property to see which areas are at the most risk of flooding. These are the lowest sections, but slopes or inclines can make things worse. If you can’t modify the flood-prone area itself, see if you can change elements that may be making it more at risk.
One example is an area of your lawn that slopes down to your house. In this case, the incline can direct heavy rains straight into your home.
Another example is not having water channels that separate the lawn from your house. Garden soil can quickly get soaked during heavy storms, making it unable to hold in a lot of water. The water that it doesn’t absorb can then flow into your home.
A good way to keep these risks at bay is by digging depressions in the ground near external walls. These channels can help direct stormwater runoff away from your home.
Another option is to consider switching to a gravel or brick driveway. These porous surfaces allow more water to seep into the ground instead of running off. You can also increase your garden soil’s absorbability with mulch materials.
4. Don’t Hesitate to Reach Out to an Insurance Agent
An insurance agent’s job is to help you locate the best insurance policies. With their aid, you can quickly access more offers and deals than if you worked alone. Moreover, agents often have access to discounts that the general public doesn’t.
In addition, experienced insurance agents can help curate coverages tailored to your needs. They can further assist you by doing not only the search for insurers but also obtaining quotes. From there, you can go over the quotes to compare them and see which one best suits your budget.
5. Shrink Business Insurance Costs With the Right Strategy
- Drop unnecessary coverage. Some insurance companies automatically stick every business with a one-size-fits-all policy to cover a variety of risks. This is great if you actually need the coverage, but you never should have to pay for insurance you don’t use. For example, not every business owner needs professional liability, building insurance coverage, or loss of use. Discuss the features of your business insurance policy with your insurance agent to ensure you’re not paying for more coverage than you need.
- Find packages or custom coverage options. It’s common for a business to require more than one type of commercial insurance. You may need business property insurance and worker’s compensation insurance, or a combination of other plans. Many insurance providers offer the opportunity to bundle the commercial policies you need into a business owner’s policy (BOP) or help you customize a commercial package to suit the needs of your unique business. Packaging insurance policies together often leads to a cheaper rate than buying each policy separately.
- Reduce risks with programs and training. Filing insurance claims often lead to insurance hikes. While you can’t (and shouldn’t) avoid using your insurance when it’s needed, you can take measures to minimize risks and prevent accidents. Theft prevention programs and disaster preparation plans can help you and your employees prepare for the unexpected and minimize damage when an issue arises. Investing in additional safety training can prevent accidents before they occur, and keep your insurance premiums down. Additionally, some insurance companies might provide discounts for business owners who participate in risk prevention efforts.
6. Account for All Major Life Changes
Your insurance needs change along with major life changes, such as if you get married or have a new baby. These can also include buying a new car, getting rid of an old vehicle, or purchasing a boat or motorcycle. Let’s not forget revamping your home, adding a new room, or selling off expensive articles.
All these are life changes that can either cause an increase or decrease in your insurance costs. A growing family, for instance, also means that you need more home, life, and health coverage. The same goes for buying another vehicle, although you can get a new policy for less if you buy it from the same insurer.
If you retired or sold an old vehicle, you may still be paying for it if you forgot to inform your insurer. This is also true for cases wherein you’ve sold a few personal articles but never took them off your policy.
All these are good enough reasons to review your insurance policies every year. A careful analysis of your coverages will reveal areas that you can potentially trim or even get rid of. These changes, in turn, can help you remove a considerable chunk from your insurance costs.
7. Bundle Them Up
Bundling two or more insurance policies usually come with a discount of 20% to 25% or even higher. It’s one of the biggest insurance discounts and is also the reason many switch providers. It’s an excellent method to reduce insurance costs, so long as you need to buy multiple policies.
The concept is straightforward, too: just buy at least two policies from the same insurer. The most common policies bundled together are homeowners’ and auto insurance. However, you may also qualify for the discount if you bundle boat, motorcycle, or pet insurance.
In addition to saving money, you also get to save time when you purchase from one provider. That’s because most insurers have online platforms that give policyholders access to everything. You can pay premiums, modify policies, or file claims through a single website or app.
Plus, you can usually request an insurer to schedule your premium payments together. Meaning, you’d pay for everything at a single, selected schedule date. This may help make it easier to manage your payments and finances, as you would only have one due date to keep in mind.
8. Deter Crime to Enjoy Insurance Discounts
In 2018, an estimated 87,196 cases of property crimes occurred in Massachusetts. Larceny-theft accounted for the majority of these, with a total case count of 66,728. There were also 6,606 vehicle theft cases, with the remainder being burglaries.
Massachusetts may be one of the safest states in the nation, but as you can see, a lot of crimes still happen here. That’s why insurers favor policyholders who do their best to safeguard their assets. Meaning, they provide discounts to their clients who use innovative security technologies.
At home, such technologies can include burglar alarms or whole-house security systems. You may also qualify for such discounts if you have CCTVs or remote monitoring services.
For your car, the top crime deterrents to consider are alarms or full security systems. You may also net a bigger discount if you install a GPS tracker in your vehicle.
9. Pave the Way for Tailored Insurance Policies
Customizing policies based on specific needs can help lower insurance costs. This is especially true for families with specific coverage needs and varying risks.
For example, if you have a new teen driver, it may be more affordable to list your child in your policy. You may be able to further reduce insurance costs by choosing only one car for your kid to drive. Things can become more expensive if you let your teenager drive multiple vehicles.
What about if you have a teen driver who’s about to become a full-fledged adult? In this case, it’s time to drop them from your policy so that they can get a separate one. The fewer the number of people included in your policy, the lower your costs will get.
What’s important is to review each of your policies to see which coverages you need and which ones you don’t. Drop those that are no longer necessary, such as coverage for a super old car or one that you’ve already sold. At the very least, there may be some aspects that you can reduce, such as deductibles.
10. Boost Your Credit Score
Improving your credit score is one of the best ways to lower insurance costs. Best of all, this tactic works on almost all types of insurance coverage, be it homeowners’ or vehicle. Plus, having a higher credit score will help you secure better loan rates when buying a new car or home.
Creditworthiness and Insurance: The Link Between the Two
Now, you may be wondering what exactly your credit report or score has to do with lower insurance costs. The answer is that the more creditworthy a person is, the lower the odds of that individual filing a claim. Researchers also found a link between good financial management and reduced claim risks.
Keep in mind that high credit scores show how well consumers manage their finances. They pay their dues on time, and they only take on debts that they can afford to pay back. They often have good consumer behaviors, which puts them at a financial advantage.
All these establish and indicate that they are responsible consumers. Insurers then take this as a sign that they’re responsible homeowners or drivers, too.
In the eyes of insurers, a responsible homeowner conducts regular home maintenance. They also assume that a responsible driver follows a strict vehicle maintenance program. Because of these, such consumers are less likely to need to file a claim.
So, the higher your credit score is, the more favorable your insurance rates can get.
How to Raise Your Creditworthiness
The first step on how to reduce insurance costs with your credit score is to check your credit report. You can get up to six free copies of it every year through the Equifax site. That’s on top of the usual free copy of your Equifax, Experian, or TransUnion reports.
One of the most important reasons to check your reports is to ensure that they are error-free. Credit reporting errors, after all, still happen to about 20% of US consumers.
Paying off credit card debts and loans (such as home or auto loans) will also raise your credit score. Keeping your debts manageable, such as if you avoid taking on new large loans, can also help.
Start Lowering Insurance Costs Today
As you can see, lowering insurance costs doesn’t have to end with discounts alone. Best of all, the tactics we discussed above won’t just help you reduce your policies’ premiums. They also help protect your assets, which, in turn, benefits you in the long-run.
Ready to lower your insurance costs while ensuring you still have enough coverage? Then please feel free to get in touch with our team here at LoPriore! We’ll be happy to help you find the best insurance policies that also meet your budget.