Seize Some Big Savings Opportunities

Physician's Money Digest, August31 2003, Volume 10, Issue 16

Kiplinger's PersonalFinance

According to a recent report, auto and homeownersinsurance premiums are expectedto rise a combined 9% this year. Fortunately,if you're willing to do some research,you can save hundreds—perhaps eventhousands—of dollars on premiums. Andin some cases, you can realize savings onyour life insurance premiums, besides whatyou'll save because of falling rates.

CAR INSURANCE

You're probably not aware of all the discountsthat can be applied to your autoinsurance premium. For example, manyinsurers offer multipolicy discounts as highas 15% if you have both home and autoinsurance with them. And if you own morethan 1 car, you might be eligible for a 10%multicar discount. Some insurers even offera 10% good-student discount for teenagedrivers who maintain at least a B average.

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Another way to reduce your insurancepremium is to make adjustments to yourcollision and comprehensive coverage. Forexample, the article obtainedquotes from State Farm for a 40-year-oldmarried couple in Indianapolis, Ind, whoowns a 1996 Ford Taurus and a 2002 FordExplorer. With $250 deductibles for collisionand comprehensive on each car, theywere paying an annual premium of $1636.

However, by raising the collisiondeductible on the Ford Explorer to $1000,they shaved $174 off their premium.Dropping both collision and comprehensiveon the older Taurus further reducedtheir premium by an additional $320, for acombined savings of nearly 30%. The generalrule of thumb for collision and comprehensivecoverage is to consider droppingthem when a car is worth less than 10times the cost of coverage.

In addition to these money-savingtechniques, before you purchase insurancemake sure you comparison-shop.Many state insurance departments publishrate comparisons online. If your statedoesn't provide that information online,online insurance marketplaces, such aswww.insweb.com, can help you comparepremium quotes.

HOMEOWNERS INSURANCE

You can start to lower your homeownersinsurance premium by taking toheart the expression, "don't sweat thesmall stuff." For homeowners, smallclaims can do nasty things to an insurancepremium. More importantly, manyinsurers are dropping customers afteronly 2 claims. Increasing your deductiblenot only reduces your premium, but it alsoprovides incentive not to file a claim.

The other benefit of keeping yourclaim record clean is that many insurerswill offer discounts to claims-free policyholders.For example, if you're claims-freefor 3 to 5 years, State Farm willreduce your premium by 5%; for 6 to 8years, the discount is 10%; and for 9years or more, a 15% discount is applied.Allstate offers a similar benefit: a discountof 7% for each claims-free year,with a maximum discount of 35%.

LIFE INSURANCE

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The article notes that, unlikeauto and homeowners insurance,life insurance premiums have beendeclining. One reason is that life expectanciesare increasing, and the longerpeople live, the longer they pay premiums.But insurers are also looking moreclosely, and more favorably, at theirhealthiest policyholders.

In short, healthy lifestyles translateinto dollar savings on your life insurancepremium. A 45-year-old man, nonsmoker,would pay $719 a year for a 20-year,$500,000 policy listed on www.insweb.com, but a smoker would pay $2146. So,if you've recently undergone a majorlifestyle change (eg, you quit smoking),let your insurer know. The dollar savingscould be significant.

Comparison-shopping made easy:

As with home and auto insurance,always remember to comparison-shop. Checkout www.insweb.com, www.quotesmith.com, and www.accuquote.com for helpfulcomparisons of rates and underwritingcriteria. It usually takes less than 5minutes to obtain a quote using theseonline sources.