Reducing Your Insurance Premiums

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In today’s world, insurance may be necessary, but those ever-increasing premiums are probably enough to make you wish you could do without. While self-insurance might be an option for some, most likely you’d rather find less drastic ways to keep your premiums affordable.

Here are tips to help you shave a few dollars off the cost.

Shop around. Start by using your state Department of Insurance web site to find companies with good ratings and adequate financial strength. You want to be sure the company you choose is going to be around to pay any claims you may have—and that they’ll be able to do so with a minimum of fuss.

Next, call local agents or go to individual company web sites to check rates. Have your current declarations page handy. This shows the coverages you’re currently paying for, and lets you make an apples-to-apples comparison between policies.

Raise your deductible. Higher deductibles—the amount you pay out of pocket—usually result in lower premiums. For instance, if you’re willing to write a check to replace a lightning-damaged television, you might consider raising the deductible on your homeowner’s policy.

A possible drawback: You’ll have to maintain enough assets to cover the difference between the increased deductible and what the policy will pay.

Tip: Think about your risk tolerance as well. Saving money is less important than maintaining your peace of mind.

Delete coverage that’s no longer applicable. An example of this technique is dropping collision coverage on an older vehicle that may have nominal remaining value. What to consider before taking this step: By eliminating insurance protection, you’ll be responsible for replacing your vehicle if it’s destroyed in an accident. Do you have sufficient assets or income?

Another consideration: Your loss history, or how many claims you’ve made in the past. Dropping coverage is generally easier than re-instating it.

Other ways to reduce premium dollars include checking multiple policies for duplicate coverage, taking advantage of flexible spending arrangements offered by your employer, and establishing a health savings account. Exploring available options takes time, but the savings could be well worth the effort.

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