.png){kind=small}
Use these DIY budgeting tips to get the most out of your home and auto insurance.
You’re insured? Awesome! But it doesn't end there.
It’s super important to check your property and casualty (home and auto) insurance often. Every three - five years, in fact. You need to check under the hood to make sure you’re getting the most out of these plans. Review your policies to find:
1) If you have proper coverage
2) If you’re paying the right amount for insurance premiums
3) If you’re working with a reputable company. (This helps ensure you’re receiving the best coverage out there while still staying cost-effective. 💰)
What’s the benefit in this? More money in your pocket and the right protection in the event you need to your insurance! More than likely, this exercise will lead to a savings on premiums while improving coverage. This process can be painless and well worth your time.
Let’s get started.
Gather the declaration pages, called dec pages, of each of your insurance policies. Yep, we’re talking home, auto, umbrella coverage and any other coverage like jewelry or collectibles. These 1-2 pages summarize your coverage, conditions and premium costs. You receive these with your initial insurance binders—they’re typically the first few pages of your policies.
#Protip: Contact your insurance company or insurance broker and ask them to send you your dec page for each policy. This way, the pages are easy to forward over email. Don’t worry; this is a standard request, so you should have no issue getting them. What to tell them? Something along the lines of "It's been a while since I've taken my policies out to bid. Can you send me all of my dec pages so I evaluate things?" Bonus: sometimes this will put your broker or insurance carrier on notice that if they can do better with their coverage, now is the time to earn your business. Often, they'll take this as a warning to up their customer service game.
Evaluate your current coverage, read the dec pages and consider your needs. You’ll want to compare costs to see which kind of coverage is the best and most budget friendly for you. Have a sense of keeping the coverage you have or considering what needs to be changed.
When you have a chance to talk to the insurance companies or brokers, ask questions! Your broker will answer your questions, and they can be a major help. If you don’t understand your coverage, ask! We all need a refresher on those seemingly complicated insurance terms.
Send your dec pages to three to four insurance companies. Ship these bad boys off to a handful of companies to evaluate your coverage, premiums and carrier. Ask if they see any gaps in your coverage and have them provide a quote. We also recommend getting a quote from an insurance broker and asking if they see any gaps, too. Independent brokers will typically send your pages out to three to four insurance companies themselves, giving you more quotes to evaluate (without having you send them out yourself!). The more, the merrier. A broker will then do their own review on your behalf and bring you their recommended carrier and policy.
But keep in mind that not all insurance companies compare apples to apples. At the same time that this practice can help you save, insurance companies have also been seen to cut coverage benefits to offer a lower premium. Make sure you ask your broker or representative to review each bit of coverage to make sure the insurance company is comparing similar benefits.
Consider the risks of a lower premium. lower premium may come with the cost of lower coverage—not necessarily a good thing! Don’t try to negotiate down on home coverage saying that your home is not worth the cost the company is trying to insure. They quote the actual replacement value, which is what it would cost to rebuild. This value may be more than what you think your home is worth or what Zillow states your home is worth. (We all know Zillow ain’t always right!) This is not the time to try to save on annual premiums by arguing your home value. You definitely want to ensure you’re prepared in the event of tragedy.
Consider umbrella coverage. This is extra liability insurance to help protect you from major claims and lawsuits. An umbrella policy/additional liability policy goes beyond your homeowners liability coverage and helps protect your current assets and future assets. It’s typically inexpensive, usually a couple hundred dollars per year per million dollars of coverage. Typically, we like to see umbrella coverage close to the current value of your total assets.
It may seem excessive, but it’s definitely worth the low cost if you have a net worth or expected net worth of over $500,000. Now, more than ever, umbrella coverage is is incredibly important, especially if you may be the target of a lawsuit (ahem, do you have a pool, watercraft, trampoline, off road vehicles or appear to have family or personal wealth, etc.?).
Consider jewelry/collectible insurance. Coverage on jewelry such as an engagement ring is a personal preference. If it gives you peace of mind to insure items like this, then it may be worth it for you! If the idea of sending out a premium for jewelry coverage makes you crazy, by all means, forego the coverage.
Final Evaluation. You’ve put in all the hard work, and now your quotes have arrived! If you did your homework, you’ll know what to look for. Coverage from each company should look very similar to each other with minor differences like annual premiums.
If you are comparing the same coverage from each company, your final evaluation will simply be to compare the costs of premium and carrier reputation/strength.
Evaluate each carrier. Recognize that the company with the lowest premium may not be the right insurance for you, even if it has the same coverage as another company. You need to consider each company’s strength, reputation and customer service before making a final decision. Ask around and read online reviews. Again, do your research.