Cut Your Insurance Bill: Insider Tips for Better Rates

Insurance rates are rising just about everywhere. In my home state of Colorado, homeowner’s premiums have gone up an average of 10% just in the last year, and, according to Insurify, New Jersey car insurance premiums have spiked 20% in that time.

“Annual increases in the double digits are generally expected in today’s market,” says insurance expert Travis Hodges. “But if you experience a sudden price increase without a clear explanation or reason, it may be a red flag that you’re overpaying.”

For example, I recently helped my mom shop around for a new policy. The result: her insurance is now nearly half of what it was, without reducing any coverage. How is that even possible?

I asked some experts, and here is their advice for lowering insurance premiums.

Why Insurance Premiums Increase Despite Not Filing a Claim

Premiums go up for myriad reasons, including increased claims in your location, general inflation, rising material, labor costs and medical costs. “There’s also a climate risk,” says insurance analyst Matt Brannon. “More frequent severe storms and wildfires increase insurer payouts, which affects regional rates.”

Reasons Your Insurance Quote Might Be High

In general, your insurance rates will be higher if you make frequent claims, have a gap in coverage or have a lower credit score. For homeowners, the condition and materials of your home, including its roof and siding, are also factors. For auto, accidents or infractions will raise your rates dramatically. Your vehicle type and demographic (such as being a teenage driver) are also factors.

Tips to Get the Best Insurance Quote

Review Your Coverage

Every year, look over your policy to make sure it still fits your coverage needs and financial situation. That includes checking if your homeowner’s insurance reflects current rebuilding costs, and deciding if you still need full coverage on your aging car.

Also, if you get a high renewal bill, call your agent and ask what changed, says personal finance expert Eric Croak. “Sometimes just that conversation can eliminate that $350 increase, because more times than not, it’s only one coverable item on your policy that needs to be tweaked.”

Shop Around

Get quotes annually from at least a few companies. “It definitely helps,” says insurance expert Melanie Musson. “As you get older and your life circumstances change, a different company may be better for you than it was the year before.”

To streamline the process, Musson recommends using a website that automatically generates quotes from multiple insurance agencies. “Just keep in mind that you will get more email responses in the aftermath than you ever imagined,” she says. You can also gather quotes from individual companies online or call an independent insurance agent who can help with the process.

“Make sure you are quoting the same coverage limits and deductibles, so you’re comparing apples to apples,” says Brannon. “Otherwise, a lower premium may reflect lower liability limits or a higher deductible, which is not necessarily a better deal.”

Bundle Policies

It can help to bundle your home, auto and specialty insurance policies with a single insurance company. That will generally get you a discount on all of them. “But it might make more sense to decouple them if you receive significant savings from a specialist in that area,” says Croak.

Ask About Other Discounts

Many insurers offer safe driver discounts, as well as occupational discounts for military, medical workers, engineers, scientists and law enforcement, says insurance agent Vlad Cherchenko. “If you have teenagers, look for carriers with a reputation for taking care of them, and ask about student discounts. Most carriers have a discount for kids with great grades.”

Change the Primary Insured

Try switching the primary insured name on your policy to someone else — such as a spouse, child, parent, sibling, or life partner. “If they have better credit or accident history, it will likely lower your premiums,” says Cherchenko.

Install Home Safety Features

Security systems, impact-resistant roofing, fire-resistant siding, water sensors and other upgrades can lower your home premiums. “Homeowners should weigh both the upfront cost of improvements and the long-term savings potential,” says insurance specialist Travis Hodges. “Also, consult with an insurance expert to understand which home improvements will have the greatest impact on insurance rates.”

Sign Up for Telematics, Maybe

Many insurance companies offer a discount for equipping your car with devices that monitor your driving habits, aka telematics.

But, sometimes that backfires, says legal expert Yosi Yahoudai. “A lot of drivers don’t realize how much of their vehicle’s telematics data is now influencing insurance decisions, from rates to claim denials,” he says. “Insurance is no longer just about your driving record. It’s now about your data, your environment and how insurers calculate all of that into risk.”

Upsize Your Deductible

A higher deductible means lower payments, but it also means if something happens, you’ll pay more out of pocket. “The right deductible depends on factors like financial cushion, risk tolerance and how often a homeowner expects to file claims,” says Hodges.

Consider Redundancies and Riders

Between home, auto, umbrella and other policies, check to see if you have redundant coverages. If so, you can save money by dropping the ones that overlap, says Croak. Also, reconsider optional riders. For example, “Ask your agent to explain why you have a $250 claims filing threshold on home, and if it truly benefits you to file small claims,” he says.

FAQ

Why can insurance have such different costs depending on the company?

It mostly comes down to the company’s business strategy, says Brannon. Some companies may be growing in a state, while others may be pulling back. So if you get a high quote from one company, it could mean that, as a whole, that company is trying to reduce its business and exposure in your area.”

Also, insurance companies have different end goals for their consumers, says Cherchenko. “Some carriers focus on ironclad coverage, others focus on having low monthly rates. Look for carriers that focus on your end goals,” he says.

Does my credit score really affect my insurance premiums?

Usually. Insurers use credit-based insurance scores, which are heavily correlated with traditional credit scores. They’re especially interested in aspects such as how reliable your payment history has been, says Brannon. “Drivers and homeowners with poor scores tend to pay more for insurance, all else being equal,” he says.

However, if you live in one of the following states, there are limits on how your scores can affect your rates: California, Michigan, Hawaii, Maryland, Massachusetts, Utah and Oregon.

About the Experts

• Vlad Cherchenko is the founder of Cherchenko Insurance Agency and Insurance Sales Lab. He is also one of Farmer’s top insurance agents.
• Matt Brannon is a senior economic analyst of insurance trends at Insurify online insurance services.
• Travis Hodges is managing director at VIU by HUB online insurance services.
• Eric Croak here is a personal finance expert and president of Croak Capital, an Ohio-based fiduciary financial firm.
• Yosi Yahoudai is co-founder and managing partner at J&Y Law in Los Angeles, where he’s handled thousands of car accidents over 15 years.
• Melanie Musson is an insurance and finance expert at Clearsurance.com online insurance services.

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