Tips on Cutting Your Insurance Costs

July 14, 2009 — -- If you're considering dropping your insurance policies to cut costs in these tough times, you might want to think twice. Dumping these plans isn't always such a good idea and could cost you more money in the long run.

"Good Morning America" contributor Wendy Bounds offers tips to help you trim your bills without giving up protection altogether. Check out her advice below.

Getting Deals on Insurance

Some 60 percent of American households have changed or are considering changes in their insurance. Nearly one-third would consider making cutbacks this year, according to one recent study.

Insurers for everything from automobiles, home, life and health are offering competitive deals.

For example Allstate's Web site advertised that folks who switched their auto insurance over from a competitor saved $473 a year on average. Recently, there was a "save $300 now" on auto insurance TV commercial for 21st Century Insurance.

To get the best deal comparison shopping is critical. Online sites such as insure.com and ehealthinsurance.com can give quotes on health insurance.

Netquote.com, for instance, boasts that it can help save up to 35 percent on home insurance while accuquotelife.com says it can save as much as 70 percent off life insurance.

Esurance.com is running a program called "operation savings" in which it says it can save you hundreds on your auto insurance.

One note of caution: The lowest price isn't always the best deal. Check for complaints against an insurer, and many state insurance departments release rankings that take complaints into account.

The Types of Insurance You Should Keep

They are five types of insurance you cannot do without: health, auto, home/renter's, disability and life insurance. Expenses associated with a catastrophe in these areas can cost you more than what you'd save getting rid of the policies.

If you have a mortgage, for instance, you must have insurance. Renters shouldn't think they are immune from fire, flooding or hurricanes and should look into policies that cover personal belongings.

If you've got dependents like a spouse or kids, life insurance is also something you don't want to forgo altogether.

A minimum amount of auto insurance is required, though how much varies by state. It may be tempting to give up health insurance if you are buying it on your own, but one medical emergency or long-term illness could wipe out your assets.

Best Ways to Save on Insurance

Brush up your credit score because this can help lower your premium.

Increase your deductible because having some sort of coverage is better than nothing and this can bring down premiums.

Bundle your policies into one provider because they often offer discounts for this.

Be loyal if you find a good deal. You can get discounts for sticking with the same provider for several years.

Pay promptly. Automatic payments or paying the whole bill upfront can cut back on convenience fees that some providers have.

Easy Ways to Save on Car Insurance

Increase your deductible. You could raise it from $200 or $500 to $1000 and lower your rates. Even having it very high, say $2,000, is better than having no insurance at all.

What's your car worth? Is it really worth keeping collision and/or comprehensive coverage?

Ask for discounts. Being a safe driver can help, as can having low mileage. Sometimes an advanced professional degree or being a teenager with good grades can also get you lower rates.

Don't speed. Tickets for moving violations can raise your premiums.

Easy Ways to Save on Homeowner's Insurance

Being 55 or older might help you get a discount because you are home more, making the house more occupied and thus safer.

Modernizing your house can help you save. If you've upgraded electrical, plumbing or heating, this can help.

Installing an alarm system can lower costs.

Also, have construction costs gone down in your area? If so, you might be able to lessen the amount of coverage because you could rebuild more cheaply.

Finally, cut riders on jewelry or silverware that you no longer need.

Insurance You May Not Need

Travel insurance: if you are planning a long and expensive trip, but you hear rumors of layoffs at your company, travel insurance can be a great safety net in case you lose your job. Also, if you or the kids were to get sick, you could lose a lot of your deposits, which is roughly 10 percent of the trip.

Umbrella insurance protects you in case you get sued for something like someone slipping on your front walk, or you accidentally hit someone with a 9-iron on the golf course.

In this economy, people are feeling a lot more litigious. You can typically get $1 million of umbrella insurance for about $125 a year.

Wedding insurance: some policies out there protect you if the weather is bad. But honestly, do you really want to try and reschedule everyone?

Put the money toward a tent and some heaters instead.

Rental car insurance: you might be covered under your existing auto policy, or under your credit card. Many gold cards have such protection. Just hold on to your receipts.