Are You Paying Too Much For Insurance?

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How much are you paying your car insurance? How about your home owners insurance? Do you know how the rates compare to the other insurance companies? These are questions that you should be asking yourself once a year, just to make sure you know that you’re not overpaying on your insurance.

Insurance? Bor-ing….

You know what? I can’t think of anything that would be more boring to write about than insurance (don’t worry, I’ll keep it short), but there are very few things that are more important than insurance, so bear with me here. It’s for your own good.

Make Sure that You’re Insured

Obviously, everyone needs to have car insurance. It’s the law. But, what type of insurance do you have, and is it right for you?

Car Insurance

If you own a $1,000 car, there’s no reason for you to have full coverage on your car. If you had to, you could scrounge up $1,000 pretty fast in order to buy another car.

If you have an expensive car, you’ll most likely want to have full coverage on your it because it will be incredibly costly to replace. As for the deductible, if you always try to keep $1,000 in the bank at all times, then don’t be nervous about setting the deductible at $1,000. It will save you money every month, and if something does happen to your car, you’ll have that money in the bank.

Now, what if you own a car that’s not a junker, but it’s not exactly brand new? This is the category of my vehicle. I own a Jeep Liberty and it’s worth about $6,000. For this car, it’s all about the car insurance quotes between plans (you also might want to consider cheap contents insurance).

Since I often have at least $2,000 in the bank, I don’t mind a high deductible, but you should get quoted for a lower deductible as well. For me, the $500 deductible was only $7 more per month than the $1,000 deductible. That means I’ll be paying an extra $84 per year for $500 more in coverage. Chances are, something is going to happen to my vehicle in the next 6 years (6*84=$504), so this move is going to pay off.

If you’re a terrible driver and don’t have much in the bank, get more coverage. If you’re a great driver and have a hefty savings account, feel free to go after the higher deductible insurance. You can save some bucks that way.

Other Types of Coverage

Just as an overview, you may want to look into these types of insurances as well. They may not be required, but it may be a good option for your family.

Home Owners Insurance – Your home is probably the most expensive thing you ever bought. This is a must when it comes to insurance.

Income Protection – It protects you against loss of income if you’re unable to work because of accident or sickness. If your emergency fund is low, you might want to consider this, just to be safe.

Long Term Care Insurance– If your savings is sparce and you don’t want to burden your children with your cost of care when you grow older, take a look at long term care insurance. It could be a good option for you.

Do you ever sit down and go over your insurance plans? It’s boring stuff, but it really needs to be done. You never know when something bad is going to happen!

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Money

Derek

AUTHOR Derek

My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.

22 Comments

    • I would suggest that you make it the first thing you do! If not, chances are it’s not going to get done. That’s how it is with me anyway.

  1. If you want to save money, you should should shop around every few years and check out other insurance companies, or go through a broker than they can compare for you. You don’t need to use a big name company you see on TV either, as long as the company has a good rating.

  2. It was definitely worth it for me this year to review my insurance plans. I saved close to $50 each month by taking an hour or two and reviewing/calling to change things.

    Great reminder!

  3. Insurance is critical, everyone needs it. The income protection insurance in case of disability is very important or you’ll be starving after you get hurt and can’t earn money. Health insurance too. I live in Canada, so we pay our health insurance through taxes.

    The thing is, insurance should not be seen as an optional expense. It’s not “can I afford it?” You’ll pay anyway, sometime in your life. Maybe your car won’t be in an accident this year or next, but maybe three years away and then you will have to pay the $1000. If your insurance cost $330 per year for that $1000 coverage then you break even. That’s how insurance works, you’re supposed to break even according to the odds. To get the cheapest rate you have to put yourself into the right group so the odds are calculated right (if you’re not a smoker you don’t want health insurance where your odds are calculated as though you were).
    Alex | Perfecting Dad recently posted..How to Deal With Lying Kids

    • I was actually watching the news the other day and there was an apartment complex that had a power surge. One guy owned a $1,200 television and a $300 gaming system that got fried. He felt that the complex was responsible and owed him money. When asked why he didn’t have content insurance, he said it was because he didn’t have the money….. Really? He could afford a big screen and video games, but couldn’t find $10 a month for content insurance. Wow.

  4. Not enough people have an insurance plan. They just fall into what they think they should do without researching or getting professional advice. Excellent article.
    Hunter @ Financially Consumed recently posted..How Bad Have You Got It?

    • You’re right Hunter. Insurance is super boring for most, so they spend very little time deciding what’s right for them. Bad move.

  5. I do go over my insurance plans, and because of a recent hail storm, I know that even with keeping the highest level of coverage on my truck, im more than 4,000 ahead over the lifetime of the vehicle with my insurance!
    Jeff @ Sustainable life blog recently posted..Work Travel and Exercise

    • Good for you Jeff! You’re ahead of most of us! Great example of having the right insurance plan too!

    • Ha, at least someone else is passionate about insurance! Thanks for pepping up my readers! 🙂

  6. I’m a big believer in insurance – mostly because of my own terrible luck. I agree with you, and I make sure to compare quotes at least once a year. Whenever a policy is up for renewal, I spend some time checking out other options. I’ve actually saved quite a bit of money this way, and also by bundling insurance packages per the guidance of my financial advisor. If only people realized how much money they were losing by being lazy and not comparing!

    • Good for you! I’m surprised how many people are saying that they actually check with the competition each year. I must have quite a few smart readers!

  7. My husband obtained some additional type of car insurance (the name escapes me) for our new car. It is for the first year or so. If the car is in an accident, insurance may not cover the amount on the loan, so this insurance covers the difference.
    Super Frugalette recently posted..Gazelle Bonus Code for August!

    • Sounds like a good idea, but for a bad initial purchase. Have you ever thought about buying a used car with cash? This way, you’d definitely save money because you wouldn’t need to buy that additional insurance.

  8. thanks for reminding me what i need to do…as my insurance rates are just shocking….thanks,i will try it:)

    • No problem Linda! It’s unbelievable how much insurance is going up isn’t it? Crazy…


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