As I’ve mentioned in previous posts, at the beginning of this year I thought I had my financial life in good order, but I was wrong. The more I searched for ways to improve my finances, the more opportunities I found. Over the past few months, I’ve learned of a number of new ways to earn or save some money. One of my motivations to start this blog was to create an easy way to share these opportunities with family, friends and others seeking to optimize their finances.
This article is the second in a series of posts about the actions I have taken to save or earn more money. The first was about increasing the amount of interest I earn on my savings.
Winning Personal Finance Move #2
Procrastination is the Enemy of Winning
I hate dealing with insurance companies. Sure, it may only take 15 minutes on the phone to get a quote, but I’ve always found the process painful. They ask you 100 questions about your car, house or whatever you are insuring. For many of those questions, I don’t know the exact answer. “No sir, I have no idea how old the furnace is on my house, it does keep the house warm in the winter though.” When I don’t have an answer to a question, I fear that I’m costing myself money due to my lack of knowledge – or going to get screwed if anything goes wrong by making my policy invalid.
Whenever I hear the slogan “15 minutes, could save you 15% or more…” I focus on the word “could.” Sure, they could save me some money but the other alternative is they save me no money, I waste my time and end up with a headache. I always thought: why bother getting new insurance quotes anyway, I already have insurance? I shopped around and priced it out once, I bet I already have the best policy for me at a great price.
I was wrong…again. I should have focused on the “or more” part of their slogan.
At this point, it had been around 9 years since I price shopped my car insurance. Since I’ve been trying to find ways to decrease my expenses without impacting my lifestyle, I called around and got a few quotes. First, I realized that while I had enough insurance to meet the state minimums, I was not protected as much as I wanted to be. It turns out, after 9 years your life changes a little. Who would have guessed? I decided to increase my coverages. Now, I hear you thinking: here it goes, he called to save money and ended up buying more coverage and paying more. Wrong. I did buy more coverage but I am now paying $471 less per year than I was before. I’m not sure if I should have been happy about my savings or mad at myself for not doing this earlier. I guess it’s a little of both. By the way, we only have one car so this savings was just on one vehicle.
OK, so I realized I missed an opportunity with my car insurance but I was not going to make the same mistake again. I may be dumb but I’m not stupid. Next, I called for a few quotes for homeowners insurance. I purchased my house two years ago and shopped around a bit at the time so I figured, there is no way I can save much. Yet again, I was wrong. I increased my coverage slightly and saved $316 per year. It turns out that my homeowners insurance shopping two years ago was not so great. I guess that makes sense, life was pretty crazy back then. I had been trying to secure a new policy in a rush to get it to the mortgage company so we could close on our home. I’m really glad I did not wait 9 years before re-evaluating this policy.
Combined, I saved $787 on home and auto insurance. I call that a big win!
If you decide to do this yourself here are 5 quick tips:
- Make sure you are dealing with reputable companies that will pay in the event of an accident. Remember, if the insurance company does not pay after a disaster, why are you paying for insurance?
- Have the agent walk you through each component of your coverage. Make sure you understand what each represents and then decide if you need it and how much you want. Ask if they think there is any coverage you are missing. Listen to what they have to say and evaluate each coverage type for yourself. The folks on the other end of the phone are helpful but they are salespeople after all.
- Ask what discounts you may be eligible for. I was eligible for a multi policy discount, one for being an alumni of my university along with many others.
- Ask how changing your deductible could impact the price of your policy. If you have a large emergency fund and/or other liquid assets, you may be able to handle a higher deductible that will save you on your premiums.
- Shop around at least three different vendors. The quotes that I received from different vendors varied drastically on the same coverage.
If you interested in reading about more about saving on car insurance, you can check out this great post.
I used a small portion of the savings to purchase an Umbrella policy. This type of insurance is not expensive and provides coverages above and beyond what is offered by my home and auto policies. It will help me sleep a little better at night. If you would like to read more about this type of policy, check out this post from Nerd Wallet and/or this one from Time.
What about you?
If it’s been over a year since you shopped for your policies, you may have some serious savings available. From now on, I’m going to check with my current insurer for discounts and call a few external vendors for rates every time my policy is up for renewal. Getting the invoice from the company will be a great reminder to shop around. If I’m still satisfied with my current policy, I can pay it with confidence. When was the last time you price shopped for your car or home insurance? Let us know in the comments if you were able to save some money on insurance. I’d love to learn that one of you saved more than my $787 combined savings! Good luck.