Last week we went into our insurance agent’s office and had a face to face meeting to review our homeowners and auto insurance policies. This can also be done over the phone, but I like to sit down and look at all the numbers on the computer with my agent and make him make 15 different changes one at a time to see what effect each has, separately and combined. I knew that I wanted to make one big change on both our policies (raise the deductible) but I ended up making a few other ones as well, some of which lowered our premium and some which raised it. But the overall result was lower premiums for the coming year. Most of the changes we made were to our auto insurance, and we looked at these factors:
Collision coverage: We had collision coverage on both our vehicles. I am very attached to collision coverage. our agent showed us how they valuate cars, and basically, the 1996 Corolla would end up valued at about $900 (give or take). Removing collision coverage on that car was basically like giving it a $900 deductible, since that was the most they would pay out in damages no matter what happened to the car. So we removed collision on the Corolla.
Deductibles: We had $250 deductibles on both cars. Removing collision on the Corolla eliminated the deductible question altogether, and we raised the deductible on the Saturn to $500. I wanted to go to $1000, but my spouse is more cautious and considering our current financial state, $500 made more sense.
Liability: We actually raised our coverage here – we had a maximum payout of $25000 per person injured if we caused an accident (not us, the other people), and we raised that to $100000. Medical costs keep going up and we don’t want to be liable as much as possible if something were to happen.
Plan options: We actually upped our plan to one that has multiple accident forgiveness (meaning, no rate change if we have an accident) and a deductible reduction. We upped it for the deductible reduction, basically. Every year without an accident, our deductible on the Saturn goes down $100. This plan also has 5% cash back of our premium paid every 6 months. We weren’t planning on doing that at all. The rest was basically preplanned in my head before the meeting, but when we looked at that plan, the difference in premium was about 5% from what we would be paying on our current plan (with the other changes already incorporated) and if we didn’t have accidents, we’d get 5% back each 6 months. Why we decided to go with it was because it reduces our deductible and just in case we have an accident, it protects our premium. One accident would shoot our premium up higher than the overall savings of the other plan.
Overall, we ended up with a $20 per 6 months savings for our auto policies, with a potential of $45 per 6 months savings if we remain accident free.
Then we looked at our homeowners insurance, and simply raised the deductible from $250 to $1000. This saves us about $40 per year. We actually could make our deductible as high as $7500 and plan to someday, but not yet. That is several years of saving away.
Overall, yearly our savings is about $80 between the two policies, with an additional $25 cash back every 6 months if we have no at-fault accidents. So a guaranteed $80 savings with potential of $140 saved per year. Not bad for a fifteen minute meeting.