Time to Cut Expenses: Look at Insurance

Feb. 16, 2009 — -- Tough times call for hard looks at where our money is going and how we can save. A couple weeks ago I wrote about how you can cut your car insurance payments without cutting your coverage.

Now I want to expand on the topic and give you several other surprising ways you can save on various kinds of insurance.

In a recent survey by the Independent Insurance Agents and Brokers of America, 24 percent of households responded that they had already made changes to their insurance coverage to save money. Good job, guys.

It would be wise for the rest of us to consider doing the same. Oddly enough, it is because of the recession that you may be able to save. Here are some examples.

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If you are one of the 3.6 million people who have lost their jobs, that probably means you are no longer commuting to work. And if you used to drive to work, that means you probably drive far fewer miles now. Lower mileage often means lower premiums.

If you used to drive more than 10 miles to work, you paid serious money to cover your car during that drive. A 25-mile commute costs even bigger bucks. Ask your agent whether you qualify for a lower rate now that you drive less. For many people, this could mean a savings of $150 to $200 a year.

You should definitely carry enough homeowner's insurance to fully cover you in a disaster. And, remember, even though your home's value may be down because of drooping real estate values, homeowner's insurance is based on the cost of rebuilding the home, not based on market value.

Still, there is a way to save. You've heard it before: raise your deductible.

You don't want to make a bunch of small claims against your homeowner's policy anyway, because insurance companies track this and may decide not to renew you because they consider the claims frivolous. Raising your deductible up to $1,000 -- or even higher -- could save you 10 to 20 percent. That's an annual savings of up to $125, based on the average national plan.

And if you still have your home and auto plans with two different companies, now is the time to get off the couch and place a call. Buying your home and auto policies from the same company is often worth discounts of up to $400 annually.