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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Think twice before cutting insurance

A Poor Bet

ARA Content

A shaky economy and high unemployment are leading some people to put off purchases and look for more ways to spend less.

With the Insurance Information Institute estimating a nationwide average of $764 for home insurance and $831 to insure a vehicle each year, you might be tempted to scale back. But you could pay a price later for your penny-pinching today.

Deborah Fester of QBE Regional Insurance recommends looking for savings in your policies that won’t leave you shortchanged, or even bankrupt, in the event of disasters or accidents. She says canceling insurance policies to save money is a bad idea.

“We’re seeing so many people choose to just not pay their insurance premiums because they’re strapped for cash,” says Fester. “This only makes it worse when you try to reinstate insurance after letting policies lapse. Many companies look at how long a customer has gone without insurance, and the result could be rates double or triple what they were before.”

Worse, she says, being uninsured when you’re involved in a major auto accident or your home goes up in flames can wipe you out financially.

Fester offers five tips you should discuss with your insurance agent to keep your home and vehicles protected while keeping extra cash in your pocket:

1. Bundle home and auto coverage. Ask about premium discounts for multiple policies with one company. Some insurance companies will reduce premiums by 5 to 15 percent if two or more policies are purchased.

2. Raise insurance deductibles. Raising the homeowners deductible from $500 to $1,000 could save as much as 25 percent annually, says Fester. A higher auto deductible could save 15 to 30 percent or more each year. Often this savings more than covers increased deductible costs.

3. Reduce coverage on older cars. Consider reducing or removing collision or comprehensive coverage on older or seldom-driven cars, especially if they’re worth less than 10 times the amount you’re currently paying for insurance. Fester notes it might be worth keeping the much less expensive comprehensive coverage to pay for windshield replacement or repairs.

4. Take inventory. Regularly review your possessions to make sure you’re not paying for insurance you don’t need. If you’ve sold a lot of your gold jewelry, or your antique radio collection is worth much less than it was, reduce or cancel your floater. A floater is additional insurance to pay full replacement value if the item is stolen, lost or damaged.

5. Dig for the discounts. Investigate additional discounts based on your age or employment status. Those 55 years or older and retired may qualify for up to a 10 percent discount at some insurance companies. A strong credit rating may also help lower insurance costs. “We always encourages people to order free credit reports each year to make sure the information is current and accurate,” says Fester. “Credit cards you don’t use should be canceled because the open line of credit counts against you.” Don’t be afraid to ask if your insurance company gives breaks for:

• Good students with a 3.0 or higher GPA

• Taking a driver training or defensive driving course

• Low annual mileage

• Vehicle safety equipment such as anti-theft devices, air bags and daytime running lights

• Home security devices

• Hail-resistant roofs

• Updated heating or cooling systems or other home renovations

• A long-time customer

• Paying policies in full