How to get the best Auto & Home Insurance Rates

When money is tight, it’s tempting to skimp on insurance coverage and hope that nobody sideswipes your car or breaks into your home. If disaster strikes, though, going without insurance could make it even harder to recover. And in many cases, insurance isn’t optional: most states require drivers to carry a minimum level of auto insurance, and mortgage lenders usually require borrowers to have homeowners insurance.

You can buy a lot of protection without spending a lot of money. Life insurance rates have been dropping for years, mainly because people are living longer. Consumers who are willing to shop around can find a wide assortment of discounts and deals on home and auto insurance.
Consumers who take the time to shop around could save hundreds of dollars a year, says Amy Danise, senior managing editor for Insure.com.

Many insurers will give you a discount if you purchase two or more types of coverage from them, Danise says. These discounts are typically offered to customers who buy homeowners, auto and umbrella policies from the same insurer, but a few companies offer discounts on life insurance, too,
Danise says.

Don’t automatically assume, though, that it’s cheaper to put all of your policies under one roof, says Joel Ohman, a financial planner and founder of InsuranceProviders.com. Discounts for multipolicy coverage range from 5% to 20%. If the discount is on the low end, you may get a better deal by buying policies from different companies, Ohman says.

Comparison shopping is particularly important if you have dings on your driving record, Danise says. Some insurers charge much lower rates for people with blemished driving records, she says.

You can significantly reduce premiums for auto and homeowners insurance by carrying a higher deductible. Increasing your auto insurance deductible to $500 from $200 could reduce your collision and comprehensive coverage by 15% to 30%, according to the Insurance Information Institute, an industry funded educational organization. Increasing your deductible to $1,000 could slash your premiums by 40% or more. Increasing the deductible on your homeowners policy to $1,000 from $500 could lower your premiums by up to 25%. For this strategy to work, you need to make sure you have enough in savings to cover the deductible, Danise says. Otherwise, you could find yourself unable to pay your share of the cost to repair your car or home.

You or your insurance agent should run the numbers to make sure raising a deductible is worthwhile, says Richard McGrath, president of McGrath Insurance Group in Sturbridge, Mass. You should save enough in premiums to cover the higher deductible in three or four years, he says.

The Mercedes SL 65 AMG is a snazzy looking ride, but be prepared to pay a lot of money to impress your friends. The average annual insurance premium for this roadster is $3,543, vs. $1,091 for a Chrysler Town & Country LX minivan, according to Insure.com’s annual list of vehicles with the highest and lowest insurance rates. Typically, minivans and small and midsize sport-utility vehicles have the lowest insurance rates, while sports cars and convertibles cost the most to insure, Danise says. Since insurance can add significantly to the cost of owning a vehicle, check with your insurer before you go to the dealer’s showroom. Consumer Reports recommends asking your car dealer to show you the “Relative Collision Insurance Cost Information Booklet,” produced annually by the National Highway Traffic Safety Administration.

Likewise, consumers should take the cost of insurance into account when they’re shopping for a home. You may pay lower homeowners insurance premiums for a new home than for the charming 1920s bungalow on the other side of the street. Have you always dreamed of owning a home near the water? Check insurance rates before you buy that beach house. Homeowners insurance rates in some coastal areas have shot up 30% or more since Hurricane Katrina.

You probably know that a safe driving record will get you a lower auto insurance rate. But did you know you can also get a lower rate by taking the bus to work? Many insurers offer a low mileage discount for policyholders who drive below an annual threshold, typically 5,000 to 8,000 miles a year, Danise says. Most states require insurers to give a discount to drivers 55 or older who complete a defensive driving course, and a few require insurers to give a discount to anyone who completes such a course. You may also qualify for a discount if your car contains certain safety features, such as a car alarm.

Discounts can also reduce the cost of adding a teenage driver to your policy. Many insurers offer better rates for teenagers who have good grades. Others will lower your rate if you agree to install a monitoring device that tracks your child’s driving habits, Danise says. Homeowners can lower their rate by installing burglar alarms and smoke detectors. Installing a sophisticated home security system could lower your rate by up to 20%, according to Insure.com.

Some insurers provide discounts to older homeowners, Danise says. The reasoning: Retirees are home during the day, so their homes are less likely to be burglarized or damaged by fire.

You may think that your credit score has nothing to do with your driving habits, or the likelihood your house will burn down. Insurance companies disagree. They say that there’s a statistical correlation between credit scores and the likelihood someone will file an insurance claim. Consequently, drivers and homeowners with low scores often pay higher premiums than those with pristine credit. Consumer groups have criticized this practice, arguing that it discriminates against minorities and low income consumers. A few states have enacted legislation that limits insurers’ ability to use credit scores to set rates.

Pay your bills on time and don’t carry a large credit card balance. You should also check your credit reports regularly to make sure they don’t contain errors that could hurt your credit score. You can order a free annual copy of your credit report from the three credit bureaus at annualcreditreport.com.
Author, Sandra Block