There are many factors that go into the price that you pay for your insurance. In the past few years, insurance companies have gotten very creative at taking into account hundreds (if not thousands) of factors when pricing their insurance. There have always been discounts for having alarms, low mileage driving, insuring multiple cars or multiple policies with one company, being accident free, young drivers having good grades or taking driver education. But lately, insurance companies have started offering discounts for things such as taking a policy out a few days in advance, having good credit rating, not owning dogs, having a laundry room outside instead of inside or on the bottom floor instead of the top floor, being a AAA member, being an AARP member, being a chamber of commerce member, having a college degree, being an employee of a certain business and the list goes on and on. Sometimes consumers love to criticize or argue about the validity of a discount for which they don’t qualify. The reality is that all insurance companies look for factors that make a risk more profitable – and if they can show that those factors make a tangible difference in the frequency or size of claims, they can offer a discount. It’s not my intention to defend any of these discounts, but I do want to let you know about them and qualify you for each and every one you deserve. All companies do NOT offer the same discounts – so having an independent agent (such as myself) search through the many discounts offered by the many different companies will help you to find the company that offers the discounts for which you qualify and in turn help you find the best premium.
I always laugh when I see some insurance company advertising that they have discounts for multiple cars, safe drivers or multiple policies because basically all they are telling you is that they are exactly like every other insurance company – just about every insurance company in existence offers these discounts. It’s the other lesser known discounts mentioned earlier that make an insurance company unique and where you can save some money based on your own particular situation.
THE MOST IMPORTANT THING YOU CAN DO TO SAVE MONEY ON YOUR INSURANCE, in my opinion, is something that is hardly ever mentioned in any insurance advertising and many times not even brought up by your insurance agent – paying your insurance bill.
Tip #1 – Paying your insurance bill:
Insurance companies offer a multitude of options on how to pay your premium and usually each different option has a different total cost for your insurance. That $5 monthly installment fee doesn’t seem like much when you were able to get your policy started for such a low down payment, but over a 5 year period it will cost you an extra $300 per policy. So if you have 4 policies and pay $5 a month each for the convenience of monthly bill, you pay an extra $1200 in insurance over 5 years – probably enough money to insure one or two of your cars free for a year.
Most insurance companies will give you the best rate if you pay the premium all at once for the year. The next best is usually if you have it automatically withdrawn from your checking account. Look into the different options offered by your insurance company and choose the best one – you’ll probably save a nice amount! Another fairly new discount insurance companies offer is when you are taking out a new policy with a company, there is a discount offered for taking the policy out in advance of the date you want the policy to begin. This is kind of a tough one to explain but basically an insurance company will give discounts to those customers who are NOT “last minute shoppers”. The number of days in advance usually range anywhere from 7 days to 30 days for this discount and discount is usually anywhere from 5% to 10% and also usually stays on the policy for the life of the policy. So this discount could save you hundreds (if not thousands) over several years. The best way to explain is to give an example – If you want your policy to be effective on December 1st, then don’t wait until November 30thto take the policy out. Start shopping in advance and get all the paperwork done anywhere from 8 to 30 days in advance and most companies will give you a lower rate for not waiting until the last minute.
Another huge “money drainer” to avoid in insurance is paying your bill late. Insurance companies are allowed to charge you extra money for paying your bill late and/or for reinstating your policy if it cancels due to non-payment. An important thing for the consumer to know about their insurance bill is that you need to think of it as the same type of bill as your house or car payment – you MUST know when it is due and pay it even if you don’t get the bill!!! “I never got a bill” will NEVER work as an excuse for not paying your bill with the insurance company (just like it won’t work with your house or car payment). The insurance company has certain requirements by law on how and when to bill you HOWEVER that doesn’t mean that they have to follow the mail truck to your house and make sure you open the bill. Bills get lost in the mail, delivered to the wrong house, people steal your mail and, yes, on occasion a person might even get a bill and not pay it and then think that they can just say they never got it – well, guess what – it won’t work and it can cost you lots of money. Make sure you know when your bill is due and also make sure you have some type of system to keep track and prove that the payment was made. An option many companies offer now is to bill you through email. Just keep in mind that not getting the email still won’t work as an excuse for not paying your bill. Even if you have automatic withdrawal and some mistake is made and the withdrawal doesn’t go through, the insurance company can cancel your policy for non-payment.
The granddaddy of all payment mistakes is to let your policy cancel. Once your policy cancels and you go as little as one day without insurance, the results can be extremely costly not only in insurance premiums but also with fees/fines to the state (in case of auto insurance). You can also create problems with your mortgage company in the case of home insurance. In the case of life insurance, medical insurance and/or disability insurance it can also mean a requirement to re-qualify for the policy. In addition to these costs, if you happen to have a loss while your policy cancels, you will have the additional cost of paying for the loss yourself which could be huge in the event of an accident in your car or home that is your fault. Insurance companies typically include a discount of anywhere from 40% to 100% or more for people who take a policy out with them who have existing insurance. You never really notice this discount when you switch insurance companies because most people qualify for it so it’s just the norm. However, if you ever let your policy cancel and then try to get it reinstated with the same company or get insurance with a new company, you will get quite the shock when they give you the new price and it’s double or triple what you were paying. If you live in a state where auto insurance is required by law (like AZ), you will also have issues to deal with on a legal level for owning a car and not carrying insurance. Presently, all insurance companies are required by law to report to the state any time a person’s insurance policy cancels and the state will normally require you to carry a SR-22 filing on your insurance if you have a lapse in coverage. I won’t go into all the details of exactly what this is now but just suffice it to say that you won’t be happy with all the extra money a lapse in coverage will cost you.
I can’t stress enough that late payments and cancelled insurance can literally double or triple your insurance bill and can cost you this extra money for years. It is ALWAYS a very bad situation when this happens, the customer is always unhappy and looking for some way to blame it on someone else – but trust me, it will not work – you and only you are responsible for paying your bill on time and you can try to blame the insurance company, the bank, the mailman or your agent but “the dog ate my homework” will not work with the insurance company or the state. Another very important thing for you to know is that your insurance agent and/or insurance company will probably not call you and tell you when your payment is late or cancels. “Back in the day” this was a very common practice for agents to give a courtesy call, but recent court cases have made this a thing of the past. Unless an agent can somehow guarantee that they will call every customer 100% of the time, then they can be held responsible and also could be in trouble for discrimination if they don’t call. So nearly every agent and company are now instructed not to make these courtesy calls. So don’t think that it’s because we don’t like you or you aren’t important if we don’t call you if your payment is late or policy is cancelled – it’s just not something that we can do in the present legal climate.
Hopefully this information has been helpful for you. I will be happy to answer any questions you have about this or any other insurance matter.