Insurance can feel like the ultimate indignity: You shell out real-life cash just in case, at some point in the theoretical future, something bad happens. Here are a few ways to ease the month-to-month agony caused by being, like, responsible.
Aim High (on Your Deductible): One fundamental precept of the insurance biz: “Higher deductible” equals “lower monthly premium.” Don’t be stupid about this -- your health insurance is probably not the place to play around. But if your house gets vacuumed up by a tornado or flooded off the map, is it really going to matter if you’re on the hook for the first $1,000 in damage rather than the first $500? Same goes for auto insurance. “A lot of times, the difference in premium between a $500 policy and $1,000 is going to be pretty dramatic,” says Mike Barry, a spokesperson for the Insurance Information Institute (III), an industry think tank.
Stop Smoking: This could make a huge change in your health and life insurance costs. Yeah, it’s a moralistic police state. Them’s the breaks.
Keep Your Credit Clean: Insurance companies know that customers with bad credit are statistically more likely to file claims, so they charge them more.
Drive Cheaper: The model and age of your car pack a major effect on how much you pay for auto insurance. Your brand-new Subaru Impreza WRX may make you feel like a World Rally Championship driver, but it’s also the fourth-most expensive car to insure on the American market according to 2006 rankings. (Why? Only your actuary knows for sure, but safety isn’t necessarily the determining factor. Accident rates, repair costs, and base price also help set prices.) Perhaps you should check out the Volvo XC90 or the glamorous Buick LeSabre -- both among the top 10 least expensive models to insure.
And say you have an old beater that you use as a second car to go from home to your commuter lot -- III’s Barry suggests paring down costs there, perhaps by forgoing collision insurance, if it’s optional on older cars in your state.
Dial Down Stealth Deductibles: Home insurance policies in different regions often carry different specialized, separate deductibles. On the East Coast, for example, a lot of policies specify separate deductibles for wind-storm damage. If you’re willing to chance being responsible for the first 10 percent of possible repair costs instead of, say, the first 1 or 5 percent, that can lower your overall home-insurance premium.
Fortify Your Compound: According to Barry, most states require that insurance companies offer premium discounts to homeowners who, and we quote, “take proactive loss mitigation steps.” If you buy storm shutters, install a more secure front door, or otherwise make your fortress more impregnable, you could deserve money back.
Shop Around -- and Keep Shopping Around: We know, we know. Articles like this always include the wizard advice to “check prices on the Internet” and “look for great deals.” But seriously, price-comparison websites like insweb.com allow you to enter a little information about your needs and learn a lot about how wildly rates can vary on similar policies from different companies.
by Zach Dundas
3/3/08
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