Insurance companies first and foremost are in the business of making money (like most other companies). My opinion is only buy insurance for big ticket items car, house, business, etc. Use it for emergencies only. For smaller items, use a credit card that doubles your warranty, up to one year, at no extra cost (don’t forget to pay the full balance monthly). Stores offer warranty plans because it is a big money maker for them and the salesperson often makes a healthy commission too (you’ll know if they are pushing the extended warranty). Don’t fall for it.
Car & House Insurance
Remember the more you pay for insurance, on average the more money you will lose and the more money the insurance company will make. My car and house insurance was recently up for renewal. Every year when I get the papers I call my insurance company and go over my plan. This year I saved about $500 by removing some unnecessary items and updating general information. Here are some tips:
- Increase your deductibles: By increasing your deductibles you will lower your insurance costs. Invest all money you save, but keep some equity readily available to cover deductibles when accidents occur.
- Get an association rate: many associations and groups have preferred rates. Always inquire.
- Shop around: different insurance companies calculate insurance premiums differently. You may be able to get the same (or better) coverage somewhere else for less money.
- Bundle your home and car insurance: Most insurance companies offer a discounted rate if you have both home and auto insurance with them.
- Forget the home alarm system: you will get a discount on your insurance if have an alarm system, but it will only cover a fraction of the alarm service cost. Ditch the alarm system – buy a safe for valuables that can’t be replaced, buy better locks, lock your doors when you are home, buy your own security system or computer camera(s), start or join neighbourhood watch, increase your total home insurance coverage, or put an alarm company sticker in your window. There are many ways to improve home security without having the additional monthly expense.
- Park in the garage: if you can, clean out your garage and park you car in it. It is better for your car and it will greatly reduce the chance of auto theft.
- Pay your mortgage: you can save a large percentage of your home insurance if you don’t have a mortgage. Fast track mortgage payments and you will not only save a huge amount of interest, but you will save on your home insurance too. Notify your insurance company as soon it is paid, to maximize savings.
- Fight vehicle related infractions: if you get a ticket that adds point to your driver’s license (e.g. a speeding ticket) always fight it. Most of the time you can get it reduced or eliminated. Companies that specialize in this have upfront costs, but these costs are normally recouped (and them some) in reduced fines, and lower insurance rates.
- Read your insurance policies then call: when life changes or upon insurance renewal, always review your policy and call your insurance company to go over your coverage with them. Ask them questions like where can I save money? How much can I save by increasing this deductible? Insurance companies want to keep your business. They will help you find ways to reduce your bill, while keeping a level of coverage you are comfortable with.
These are just a few suggestions, I am sure there are countless others. Most importantly, don’t renew your policies blindly, ask questions, shop around, and take action. A few minutes of your time can have a huge payback!
Be Happy, Live Long, and Prosper!
engineering wealth 