Your Money_ The Missing Manual - J. D. Roth [112]
Consolidate. Insurance companies often give a discount if you have multiple policies with them. Plus, this saves you the hassle of having to pay more than one company.
Read your policy. As with all legal contracts, it's important that you read your policy so you know what's covered and what isn't. Pay attention to policy changes that come in the mail. If you have questions, ask. And make it a habit to review your policies every so often to be sure you understand them (and to check whether anything has changed).
Don't duplicate coverage. Know which policies provide which benefits. If you have a AAA membership, for example, you don't need towing insurance on your auto policy. And if your credit card doubles the warranties on the things you buy, don't pay for extended warranties.
File fewer claims. Don't nickel-and-dime your insurance company. If you file claims for every little thing, they'll raise your rates. Insurance is meant to cover unexpected big losses, not every ding your car gets from shopping carts.
Tip
To increase the odds of a satisfactory settlement when you file a claim, be sure to document your losses well. And it's perfectly acceptable—good even!—to negotiate if you think the insurance company's settlement offer isn't fair (and their first offer almost never is). Be persistent.
Take care of the things you insure. One of the best forms of insurance is routine maintenance. A well-maintained car is less likely to have an accident due to mechanical failure. If you take care of your house, it'll weather the ravages of time. And if you exercise and eat right, you'll get cheaper life and health insurance.
These tips can help you save on most types of insurance. Still, not all insurance advice can be generalized; each type of insurance has its quirks. Let's look at specific ways to save on three common types of insurance: auto, home, and life.
Your Money And Your Life: The Best Insurance Is Self-Insurance
Warranties are a form of insurance: When something is under a warranty, the store or company you bought it from will fix or replace the item if it breaks or malfunctions during a specific period of time.
Warranties may seem like a good deal, but according to the Washington Post (http://tinyurl.com/WP-unwarranted), Americans paid $15 billion for warranties in 2004. Of every $100 spent on extended warranties, only $20 was paid out in claims. So when you buy an extended warranty, you're basically throwing away 80% of your money.
Fortunately, there's a better way to protect yourself—and lower your overall insurance costs: Instead of paying somebody else to insure your new TV, computer, or digital camera, pay yourself! Open a named savings account (see Targeted Savings Accounts) and call it something like Personal Insurance. Then funnel money into the account whenever you find a way to save on insurance elsewhere.
For example, use self-insurance to replace service contracts and extended warranties. Take the amount you would have paid the store and put it into this savings account instead. The best part of this plan is that if you don't end up needing the money you've set away for self-insurance to fix stuff, you can use it for other things; if you'd paid for an extended warranty, that money would be long gone.
Self-insurance isn't just a good strategy for appliances. Try raising the deductibles on your auto and home insurance policies. Then take the difference between your old premiums and your new premiums and put it into your self-insurance account every month. It won't take long for you to have more than enough to cover the deductible.
It's worth paying