The following steps can help you save hundreds of dollars on your car and home insurance premiums without sacrificing the quality of coverage. Don’t just keep your insurance on autopilot — see if you can take these relatively simple steps to save money. Some of these moves can also help you protect your car and home and reduce the risk of having a claim.
1. Get credit for all the discounts you deserve. You won’t get some discounts unless you let your insurer know you qualify — for example, if you work in certain professions (some insurers offer discounts for teachers or law enforcement professionals), are retired, carpool regularly, maintain low mileage, or if you belong to certain professional or alumni associations. See if your insurer has a list of discounts on its website (some vary by state) or ask your insurer or agent what you need to do to qualify.
2. Get good grades. If you have a teenage driver, then your premiums are probably through the roof. But maintaining good grades can make a big difference. If you have a child in high school or college with a B average or better, your premiums may drop by as much as 25%. Insurers generally offer the break to full-time students under age 25. Ask your insurer what evidence you need to provide to qualify for this discount.
3. Sign up for special programs for teenage drivers. There may be other steps to take to reduce your premiums for teenage drivers. Most insurers offer discounts for taking drivers’ education classes and some offer breaks for participating in special programs. For example, drivers under age 25 who have no at-fault accidents can get a discount for completing State Farm’s app-based Steer Clear program.
4. Find out about money-saving classes for adults. Some insurers don’t just offer breaks for teenagers; they may also give anyone a discount who takes a defensive driving course, or may offer a break for drivers age 60 or older who take an accident-prevention class. If you’ve received a ticket, you may be able to avoid a rate increase by going to traffic school (sometimes in person or online) — your options may be listed on your ticket or at your state’s DMV website.
5. Save with a data-tracking program. If you have low mileage and safe driving habits, you can save money on car insurance by signing up for a data-tracking program. With these programs, such as State Farm’s Drive Safe & Save, Progressive’s Snapshot or Allstate’s Drivewise, you use a smartphone app or plug a device into your car that tracks your mileage, the time of day you drive, and whether you brake hard or accelerate rapidly. You may get a discount just for signing up, and your rates my drop by 10% to up to 50% if you have good habits and low mileage. Find out whether your insurer will increase your rates if you have risky behaviors (you can usually check your status online before the policy renews).
6. Shop around, especially after life changes. The company that had the lowest rate last time you shopped for insurance may no longer offer the best deal for you. Compare rates from several insurers if you move, get a new car, if your teenager starts driving (or moves away), or if you get married. It’s also a good idea to reshop your insurance every few years even if nothing has changed because some companies raise rates at a faster pace than others. An independent insurance agent can help you compare rates from several companies — see TrustedChoice.com for links to agents in your area. You can also get price quotes from insurers that don’t sell through independent agents, such as State Farm, USAA and Geico. Most state insurance departments provide lists of insurers doing business in the state; find links your state insurance department at the National Association of Insurance Commissioners’ map.
7. Boost your deductible. Increasing the deductibles on your collision and comprehensive coverage from $500 to $1,000 can cut your premiums by up to 20% and prevent you from filing small claims that could cause your rate to raise. Use some of your premium savings to build up your emergency fund so you’ll have money to cover the deductible if you end up having a claim.
8. Bundle your coverage. You could get a discount of up to 20% if you buy your car and home insurance from the same company. You could get an additional discount if you add an umbrella policy to provide liability coverage on top of your car and home insurance.
9. Get a safe car. It helps to check out insurance costs before you buy a new car. Specifics vary by insurer, but you can see one company’s relative costs by model with State Farm’s Vehicle Rating Tool. The Insurance Institute for Highway Safety shows insurance losses by make and model. Cars with high losses generally have higher premiums.
10. Improve your credit score. Insurers have found that that people with low credit scores tend to have more insurance claims. Insurers in most states can use your credit score when setting your premiums, and raising your credit score could save you money. Check your credit reports for errors that may be hurting your score and for other ways to improve — you can check your report from each of the three credit bureaus for free every 12 months at m AnnualCreditReport.com. Pay your bills on time and keep your balances low compared to your credit limits.
11. Drop unneeded add-ons. Sometimes towing and rental car coverage can be helpful, but some people are paying for redundant coverage. If you have towing through an auto club or through your car manufacturer, you may not need to pay for additional towing through your insurer. If you have an extra car or take public transportation to work, you may not need to pay for rental car coverage. Review the cost of all of the add-ons and decide which ones are worthwhile.
Where not to skimp: Don’t skimp on liability insurance. Even though the state minimum liability requirements tend to be low, you could be exposing yourself to hundreds of thousands of dollars in risk if you injure someone in an accident. Insurance experts tend to recommend getting at least $300,000 per person and $500,000 per accident in liability coverage, and you can even add an extra $1 million on top of that with an umbrella policy. See the Insurance Information Institute’s Understanding Your Auto Insurance Coverage for more information.
12. Get discounts for home improvements. Ask your insurer for a list of home improvements that can result in a discount. You may get a break on premiums if you install storm resistant windows or storm shutters, or if you use certain roofing materials or if your new roof meets the “fortified” standards. The discounts vary by company and by state. Florida, for example, has an extensive list of hurricane loss mitigation home improvements that qualify for insurance discounts.
13. Install home monitoring systems. You may get a discount for a variety of home monitoring systems that can help you avoid claims. Most insurers offer discounts for installing a home security system that connects directly with the fire or police department, and installing leak detection devices that either shut off the water automatically or alert you to water leaks that could cause expensive water-damage claims. You may also get a discount for installing an permanent home generator that turns on automatically if the power goes out. Before you install any of these systems, ask your insurer for details about the requirements to qualify for the discount.
14. Find out if you qualify for other discounts. Some home insurers offer discounts for retirees, people in certain professions, and members of certain professional or alumni organizations. You may also get a discount if your home is less than 10 years old, if you live in a gated community, or if you’re part of a homeowners association. Ask your insurer for a list of discounts.
15. Boost your deductible. Home insurance companies can raise your rates or even drop your coverage if you file a series of small claims. Increasing your deductible from $250 to $500 or $1,000 can save you up to 25% on your premiums and could prevent you from filing small claims that could backfire. Set aside some of your savings in an emergency fund so you don’t land in debt if you do have a claim.
16. Pay your bill in full. Insurers often give you a choice of paying your premiums in monthly installments or paying for the full policy period at once (usually six months of coverage). Your premiums will usually be lower if you pay in full.
17. Bundle home and auto. Having both car and home insurance with the same company can give you a multi-policy discount of up to 20%. You may get an extra discount on all of your policies if you add umbrella liability coverage, too.
18. Shop around for coverage. Just like with car insurance, the company that offered the lowest home insurance rate when you last shopped around may no longer have the best deal for you — especially if they’ve received a lot of claims in the area from storms or other disasters. You can work with an independent insurance agent who deals with several companies (go to www.trustedchoice.com to find one in your area) and contact companies that only sell directly or through their own agents (such as State Farm and USAA). Most state insurance departments have a list of insurers offering coverage in your state — see the map at the National Association of Insurance Commissioners for links. It’s also especially important with homeowners insurance to find a company that isn’t likely to hassle you if you have a claim. You can look up the insurer's complaint record at the NAIC’s Consumer Information Source (click on “property/casualty” for home and auto insurance). The “closed complaint ratio” shows the insurer’s complaint ratio relative to the national average.
19. Check the home’s claims record before you buy. An insurer may charge higher premiums for homes that have a history of claims — even if they were made before you bought the house. You can check the home’s CLUE report (which stands for Comprehensive Loss Underwriting Exchange) to find out about the home’s claims before you buy. Ask your real estate agent to ask the seller for a copy of the “Home Seller’s Disclosure Report” which excludes personal information (you can’t order a report yourself on a home you don’t own yet). Finding out about the home’s claims can also alert you to problems, such as frequent water damage claims.
20. Save money on flood coverage. Homeowners insurance doesn’t cover flooding, so you need to buy a separate policy if you want to protect against that risk (and your mortgage company may require you to get flood insurance if you live in a flood-prone area). In the past, the National Flood Insurance Program was pretty much the only game in town. But in some areas, private insurers are entering the flood insurance marketplace and offering lower rates or higher coverage limits. Ask your agent or state insurance department about flood insurance coverage options in your area.
Where not to skimp: Don’t skimp on the amount of coverage for your home. Keep in mind that the coverage should be based on the cost to rebuild your home, which is different from the home’s market value (the market value includes the value of the land). Let your insurer know if you’ve made any home improvements or additions and if you’ve used high-quality materials, so the insurance can pay to rebuild the home to the same level. Some insurers send an appraiser out to assess the value and take pictures of the home’s details, which can help if you have a claim. Also keep an inventory of all of your possessions — go through your house with your smartphone and take a video of every room, including opening closets and drawers, so you’ll have evidence of your possessions if you have a claim.
Schedule a consultation with an expert at Saturday Insurance to get all your questions answered.
Saturday Insurance Services, LLC (“Saturday” or “Saturday Insurance”) is a licensed, digital insurance advisor. All tools, quotes, and information provided by Saturday are for educational purposes only and based on the limited information, if any, provided by you. We urge you to consult with your financial and tax advisors before making any purchase decisions. All quotes and estimates are non-binding and are not to be construed as a guarantee you will be able to purchase insurance. Availability of insurance and final pricing is determined solely by our insurer partners and subject to their review and acceptance of a completed application. All product guarantees are subject to the claims-paying ability of your insurer.