Looking to reduce your insurance rate? You’re not alone. Inflation is making it increasingly difficult to keep up with rising costs — especially in the area of personal and commercial insurance. As one of the most essential expenditures, insurance is a big-ticket item that threatens to break any budget, but luckily there are ways around this. How can you reduce your personal and commercial insurance rates?
#1: Increase deductibles
Your deductible is the amount of money you’re responsible for paying before your insurance company will start to help. Most people choose a high deductible in the hopes of saving money on their premiums, but that could be a big mistake. In order to understand how deductibles can affect your bottom line, it’s important to understand how they work.
Typically, a high-deductible plan requires lower monthly premiums, whereas a low-deductible plan will have higher monthly payments. For example, if you have an accident that costs $2,000 and your insurance company covers $1,000 and you have a deductible of $1,000, then you would be responsible for the first $1,000 and the insurance company would be responsible for the last $1,000. On the other hand, if you had a plan with a lower deductible and an accident occurred that cost $2,000 but your deductible was only $100, then you would be responsible for the first $100 while the insurance company covers the remaining $1,900.
Don’t choose a high deductible just because it offers you a lower rate; sometimes your out-of-pocket payments can be more than you bargained for.
#2: Take advantage of discounts
One of the easiest things you can do is call your insurance company when your policy is about to renew and ask about any new discounts you might be able to get. If the company has come up with any new ways they’re willing to reward their loyal customers, this is the time to find out about it! The representative on the other end of the line should be able to tell you whether you qualify for any new discounts or not—and if so, how much they’ll save you.
Some companies offer a discount for enrolling in paperless billing. Other companies will give you a break if your car is equipped with certain safety features or if your house has certain fire-safety precautions in place. Ask about these kinds of discounts before your renewal date and see what kind of savings you can get.
#3: Bundle policies when you can
Bundled policies are offered by most insurers today, so combine your car and home insurance and get a good discount. Bundled policies are two or more insurance policies combined into a single contract. If you already have the same company for both your car and home insurance, check with their customer service department to see if it’s possible to bundle them for a discounted rate.
Again, many companies offer this bundled coverage—however, they don’t all have the same discounts. So when it comes to combining policies, it’s important to compare your options from several different providers and make sure that what you’re getting is actually worth it.
#4: Only insure what you need
When you’re starting out with a new business or launching a new product, it’s tempting to get as much protection against risk as possible. After all, you’re not sure what you’ll need in the future—you might end up needing commercial property insurance, flood insurance, business interruption insurance, and more. But that kind of over-insurance can drive up your rates and make it difficult for your business to grow.
There are three major types of commercial insurance: property coverage, liability coverage, and business interruption coverage. Property coverage protects your business from financial loss due to things like fire, theft, vandalism, and natural disasters (earthquakes, floods). Liability insurance protects your company from lawsuits that could be brought by customers or vendors who claim injuries on your premises or injuries caused by your products. And business interruption insurance covers any losses suffered when your company is forced to shut down due to another event (a fire) or when you suffer a loss of income due to something that happens to your employees (a car accident).
Don’t underinsure yourself or your business, but make sure you’re only covering what needs to be covered.
Overall, make sure to comparison shop for insurance and keep the tips above in mind. Remember that you have great power as a consumer to ask questions, request quotes from multiple insurers, and negotiate on price. You can get cheaper insurance if you know how—arm yourself with information and get down to business.