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Cut your insurance costs, not your coverage

Mar 17, 2009 | | Comments Comments Off

Insurance can cost a small fortune, and you may be tempted to cut costs by dropping your policies. That way disaster lies–quite literally.coins_medium

Your coverage is there to protect your from catastrophic expenses that might otherwise wipe you out. The smarter approach: look for ways to reduce your premiums by shopping around, paying more small costs out of pocket and keeping your coverage for the big expenses so you’re able to recover from an accident, theft or disaster.

A few tips:

Insure your house – not value of the land. Your property value has probably plummeted but rebuilding your house will still be expensive, according to the Insurance Information Network of California. Make sure your coverage reflects the rebuilding cost and not the real estate value. To save money, consider raising your deductible to $1,000 or higher, and put an equivalent amount in savings to cover smaller expenses. Also, many insurers offer discounts if you buy multiple policies, such as homeowner and auto insurance, with them.

Rethink your auto insurance. If you’re not driving as much these days–you’re carpooling, working from home or unemployed–you might be eligible for a low-mileage discount. Raising your deductible is another way to trim costs, as is dropping comprehensive and collision coverage on older vehicles. One rule of thumb: if your insurance premium equals 10% or more of the value of the car, it may be time to drop collision and comp. Edmunds.com can help you determine your car’s current value.

Don’t put off buying flood insurance. Regular homeowners insurance doesn’t cover floods. Flood insurance from The National Flood Insurance Program generally runs about $500 a year, but those costs could be higher if you buy later under a higher flood risk.

Shop for service as well as price. Yes, price is important. But should you need your coverage, you also want your claims paid without big hassles. Many states have consumer complaint surveys, such as these at the California Department of Insurance, to help you judge an insurer’s customer service.

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