Property & Casualty Insurance

by Sean Bryant on April 30, 2012

There are some things in life that are necessary.  If we want the privilege of driving, we must maintain auto insurance.  The same goes for the privilege of buying a new home.  It may be cumbersome, but keeping adequate coverage is a smart thing to do.  By understanding the insurance, and knowing where one can cut costs, consumers can be even smarter about this necessary evil.

When searching out insurance for the first time there are a few things to watch out for.  The first is look at well-known companies that have a good reputation.  There are a lot of insurance companies that pop up offering outstanding rates.  Unfortunately one of three things will happen.  The insured will file a claim that the insurance company will refuse to pay due to some technicality in their paperwork.  Or the insured will have the insurance, and after one year their rates will skyrocket.  If the insured does not find another company, they will be on the hook paying the higher rates.  Or the insurance company will go under; keeping all the premiums they have already collected.   In order to avoid this, finding a good company that has strong financials is essential.

Before settling with one company the insured should make sure they have proper coverage.  This means understanding the limits of liability, the deductibles, and all the other nuances that come with insurance.  For those who use a broker this is why they have a job.  They should be explaining to you what the coverage is for, and how much you will need.  After that, they can check several different insurance companies and find the best rates.  This saves you time, and money.

When it comes to getting the coverage, there are many ways to get a discount.  The easiest is to have multiple policies with one carrier.  For homeowner’s insuring the house and the car(s) with the same company is a no-brainer.  For those who rent, they should look at renters insurance.  This policy will often give them enough of a discount on their auto insurance that they will not even notice the renters policy.  Other discounts a broker should discuss with you are those for good grades, owning a home (even if it is not insured through the same company), safe driver, and good credit (yes, even your spending habits will affect how much you pay for insurance).

Once a person has determined exactly what they want, which carrier, and applied all their discounts their premiums might still be a little too high.  Rather than lowering their coverage, or raising their deductibles, the insured should look at adding more insurance.  While the premium will not come down, often more insurance can be added at little to no cost (giving the insured more protection for the same amount of money).  If nothing else, finding another carrier could yield lower premiums.

Insurance is necessary to help indemnify someone if there is an accident.  It is necessary for peace of mind.  Paying attention to the coverage one is getting, and being willing to negotiate a better rate is the easiest way to save money on premiums.  If you have not priced out coverage for your insurances in the last two years, now is the time to do so in order to make sure you are not overpaying.

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Sean Bryant

Sean Bryant created OneSmartDollar.com in 2011 to help pass along his knowledge of finance and economics to others. After graduating from the University of Iowa with a degree in economics he worked as a construction superintendent before jumping into the world of finance. Sean has worked on the trade desk for a commodities brokerage firm, he was a project manager for an investment research company and was a CDO analyst at a big bank. That being said he brings a good understanding of the finance field to the One Smart Dollar community. When not working Sean and he wife are avid world travelers. He enjoys spending time with his daughter Colette and dog Charlie.
  • Yes insurance is a necessary evil in our lives. We may not like how these companies operate, but they can be a lifesaver in an emergency. I think it’s a very good idea to use a broker to help get the best rates. Unfortunately where I live the government runs the auto insurance. So we miss out on the chance to save money by bundling auto insurance with other forms of insurance. Plus we are forced to pay whatever they demand.

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