Tips to Get the Lowest Insurance Rates

Prudent insureds know the value of some of the tips shared below.  You would be surprised how many individuals and businesses who pay three times the cost they would be paying if they followed these simple steps.

Be Honest with Your Insurance Company & Agent

Insureds who falsify revenues or fail to provide all household members in an effort to initially lower insurance rates, will ultimately pay the price in the event of an audit or claim.  In the case of business, many business owners become highly upset when insurance carriers audit revenues and payroll, then revise their insurance premiums.  Providing accurate information will allow your agent to shop for the best rates and coverage for your “actual” risks.  Disguising your business activities or areas in which you provide service is not advisable.  In the event of a claim, insurance carriers can require you pay revised premiums (that are non-negotiable) or deny the claim altogether.

For personal insurance, especially with a comprehensive package, disclosing all household members and drivers, scheduling all property including additional dwellings, and providing explanations for all losses, allow the carrier to rate your coverages accurately and predetermine payouts in the event of a total loss.  Failure to disclose any additional risk factors including young drivers, businesses conducted from the home or exotic pets on the premises, may cause higher premiums, denial of claims, or non-renewal of insurance coverage.

Buy policies from same insurer

Many insurers will give you a discount if you purchase two or more types of coverage from them. These discounts are typically offered to customers who buy homeowners, auto and umbrella policies from the same insurer.

Don’t automatically assume, though, that it’s cheaper to put all of your policies under one roof.  Discounts for multi-policy coverage range from 5% to 20%. If the discount is on the low end, you may get a better deal by buying policies from different companies.

Comparison shopping is particularly important if you have dings on your driving record, this is where having an independent agent with access to multiple carriers becomes most valuable.  Some insurers charge much lower rates for people with blemished driving records because they have chosen this area a niche market to provide coverage.

Raise your deductibles

You can significantly reduce premiums for auto and homeowners insurance by carrying a higher deductible. Increasing your auto insurance deductible to $500 from $200 could reduce your collision and comprehensive coverage by 15% to 30%, according to the Insurance Information Institute, an industry-funded educational organization. Increasing your deductible to $1,000 could slash your premiums by 40% or more. Increasing the deductible on your homeowners policy to $1,000 from $500 could lower your premiums by up to 25%. For this strategy to work, you need to make sure you have enough in savings to cover the deductible. Otherwise, you could find yourself unable to pay your share of the cost to repair your car or home.  Remember that the initial savings should be placed in an interest bearing account or kept track of to determine the added value when a claim is filed.

You or your insurance agent should run the numbers to make sure raising a deductible is worthwhile, says Richard McGrath, president of McGrath Insurance Group in Sturbridge, Mass. You should save enough in premiums to cover the higher deductible in three or four years, he says.

Check rates before you buy

The Mercedes SL 65 AMG is a snazzy-looking ride, but be prepared to pay a lot of money to impress your friends. The average annual insurance premium for this roadster is $3,543, vs. $1,091 for a Chrysler Town & Country LX minivan, according to Insure.com’s annual list of vehicles with the highest and lowest insurance rates. Typically, minivans and small and midsize sport-utility vehicles have the lowest insurance rates, while sports cars and convertibles cost the most to insure, Danise says. Since insurance can add significantly to the cost of owning a vehicle, check with your insurer before you go to the dealer’s showroom. Consumer Reports recommends asking your car dealer to show you the “Relative Collision Insurance Cost Information Booklet,” produced annually by the National Highway Traffic Safety Administration.

Likewise, consumers should take the cost of insurance into account when they’re shopping for a home. You may pay lower homeowners insurance premiums for a new home than for the charming 1920s bungalow on the other side of the street. Have you always dreamed of owning a home near the water? Check insurance rates before you buy that beach house. Homeowners insurance rates in some coastal areas have shot up 30% or more since Hurricane Katrina.

Look for discounts

You probably know that a safe driving record will get you a lower auto insurance rate. But did you know you can also get a lower rate by taking the bus to work? Many insurers offer a low-mileage discount for policyholders who drive below an annual threshold, typically 5,000 to 8,000 miles a year. Most states require insurers to give a discount to drivers 55 or older who complete a defensive driving course, and a few require insurers to give a discount to anyone who completes such a course. You may also qualify for a discount if your car contains certain safety features, such as a car alarm.

Discounts can also reduce the cost of adding a teenage driver to your policy. Many insurers offer better rates for teenagers who have good grades. Others will lower your rate if you agree to install a monitoring device that tracks your child’s driving habits.

Homeowners can lower their rate by installing burglar alarms and smoke detectors. Installing a sophisticated home-security system could lower your rate by up to 20%, according to Insure.com.  For most high net worth carriers, sprinklers, a water leak detection system and living in a gated community also provides discounts.  Green homes and other fire and hurricane resistive measures may also result in lower premiums.

Some insurers provide discounts to older homeowners. The reasoning: Retirees are home during the day, so their homes are less likely to be burglarized or damaged by fire.

Maintain good credit

You may think that your credit score has nothing to do with your driving habits, or the likelihood your house will burn down. Insurance companies disagree. They say that there’s a statistical correlation between credit scores and the likelihood someone will file an insurance claim. Consequently, drivers and homeowners with low scores often pay higher premiums than those with pristine credit. Consumer groups have criticized this practice, arguing that it discriminates against minorities and low-income consumers. A few states have enacted legislation that limits insurers’ ability to use credit scores to set rates.

Your best defense is a good offense: Pay your bills on time and don’t carry a large credit card balance. You should also check your credit reports regularly to make sure they don’t contain errors that could hurt your credit score. You can order a free annual copy of your credit report from the three credit bureaus at annualcreditreport.com.

Maintain a good driving record & claim history

Tickets, accidents and claims are some of the main reasons insurance rates are higher for some insureds.  Keeping minor traffic violations or other tickets are your driving records could save you thousands of dollars each year.  Many people do not realize that claims “of any kind” effect your rate.  Filing a claim when your deductible is more or close to the amount of your claim is not advisable.  Always do due diligence to determine the cost of repairs or damages prior to filing a claim.  Finally, filed theft claims are red flags to carriers and put them on alert for potential fraud and high risk factors.  Remember to discuss any losses and potential claims with your agent so they can walk you through the process.

Consult with your agent prior to filing a claim

Many insureds (business and personal) find themselves filing claims immediately when they believe their insurance may provide relief.  This practice is not advisable and harms most clients who do not understand the factors that influence insurance rates.  First, determine if the claim is covered by your policy.  Even where the policy does not cover the claim, the insured is negatively impacted by having the claim filed and thus recorded in their loss history.  Second, determine the  likelihood of whether the claim payout will substantially exceed the policy deductible.  For example, if a commercial auto’s bumper is damaged when an employee runs into a pole, receive estimates from a repair shop to determine the amount of repair.  If the repair value is $750 and the policy deductible is $1000, not only with the claim not be paid by the insurance company because the loss does not meet the deductible, the loss alone if reported will adversely affect your claim history and increase insurance rates.

Written by

Johnte' Archer is the CEO/Agent of Record for J. Archer Insurance Group (Archer Commercial Insurance Group and J. Archer Insurance Services). She received her undergraduate degree from the University of Houston and her law degree from Pepperdine University School of Law in Malibu California.