Rising prices have been widespread over the past few years, and home and auto insurance premiums have not been the exception. The increase in severe weather events along with supply chain disruptions and high labor costs have all contributed to higher premiums.
And although inflation has cooled in recent months, home and auto insurance premiums are still expected to go up. It’s predicted that home insurance premiums will rise by 9 percent nationwide, while auto insurance premiums are expected to rise 8.4 percent by the end of the year.
Fortunately, there are steps you can take to potentially lower your premiums while maintaining coverage.
Don’t compromise on coverage to save money
The first thing that might come to mind is, “Can I reduce my coverage and pay less?” But we don’t recommend doing that. Having the right coverage for your home and auto can protect you from financial hardship if the unexpected were to happen. Emergencies can be expensive, and being underinsured is not worth any savings on premiums.
Home insurance will pay for repairing or replacing your home and personal property in case of damage due to a covered event or theft. It also covers the cost of living somewhere else while your home is being repaired and even protects you if you are responsible for injuring someone or damaging their property. If you rent rather than own your home, you can get renters insurance to protect your personal property and obtain liability coverage.
Similarly, auto insurance covers damages to your car and pays for property damage and injuries to others if you are found at fault in a car accident. It also protects you if you get hit by a driver with no or not enough insurance coverage.
Tips to review your home and auto policies
Just because you need home and auto insurance doesn’t mean you have to overpay for it. Shopping around could help you save hundreds off your home and auto insurance.
If you are thinking of reviewing your insurance policies, here are some tips to consider.
- Select the right coverage. After reviewing your current policy, consider if you need to add or subtract coverage. For instance, in this quickly appreciating real estate market, your home could be underinsured. Also, some standard policies may not cover all the risks associated with your home type and location, so you might need to purchase additional coverage (i.e., flood, earthquake, etc.).
- Review reimbursement options. In addition to the type of coverage, you’ll need to consider the type of reimbursement you’ll want to receive should you make a claim. Are you comfortable with having coverage for actual cash value (i.e., the value of your home or property minus depreciation), or does replacement cost (i.e., the cost of buying a new, similar item) serve you better? Replacement reimbursement is more expensive than actual cash value, but your payout with actual cash value will be smaller and may not be enough to replace lost property.
- Choose the right deductible amount. If you’re looking to reduce your premium costs, increasing your deductible can help, but be aware that you will have to pay more out of pocket before insurance kicks in.
- Research insurance companies. When researching new insurance companies, be sure to look at consumer satisfaction surveys, claims handling and the overall financial strength of the company. For example, you can check J.D. Power’s consumer satisfaction surveys or credit ratings from agencies such as AM Best or S&P.
- Compare policies carefully. Be careful when you compare policies as they might not offer the same coverage as your current policy, especially if one is cheaper than the other.
- Hire an insurance broker. If the process of shopping around seems daunting, consider reaching out to a local independent insurance broker who can help you review your current coverage and potentially find better or more affordable options. Plus, since they are local, they are likely familiar with the types of coverage that would be appropriate for your area.
While changing your home and auto insurance can be a hassle, the money you save can help you achieve your financial goals faster.