Insurance Plan – As much as we all dread the sight of premiums in our mailboxes, insurance is a necessary evil. Insurance coverage, whether for life, auto, home or health, enables consumers to shift the risk to the insurance provider.
Contrary to what many of us believe, insurance companies do not have carte blanche to charge any amount they please. Insurance carriers are subject to states’ Department of Insurance (DOI) regulations.
They must submit their financial statements and proposed insurance rates to the Department, along with a list of criteria they expect to utilize in setting the amount of the premium. The DOI must first approve those rate-determining factors, which are required to be non-discriminatory and based on well-founded actuarial principles.
Consumers should research the various insurance products and compare insurance rates since these vary significantly from one company to the next. To obtain the most suitable insurance policies for their needs, they should also compare insurance plans and insurance coverage, focusing in particular on benefits, exclusions and limitations.
It is important that prospective purchasers understand the insurance policies under consideration and determine whether the coverage is suitable for them. The best insurance rates are those assigned to an insurance plan offering the insured optimal, comprehensive coverage at an affordable price.
Since numerous factors come into play in setting insurance rates, Americans have considerable control over the premium that they pay. There are many ways for consumers to qualify for a low insurance rate and save money:
1. Multiple Policy Discounts
By purchasing their insurance policies (i.e. auto and home insurance) from the same company, customers will qualify for a multi-line discount. Many insurance providers offer a combo policy or package for auto, personal liability, and home insurance coverage.
Consumers should shop around for the insurer extending the most attractive multi-policy discount for their insurance needs. By buying their property and casualty insurance from the same insurer, they can save up to 15% on their auto and home policies.
2. Lower Installment Fees
By purchasing multiple insurance policies from the same company, consumers will have only one bill to write and thus avoid separate installment fees. Policyholders with one bill will pay only one installment fee and typically save more than $100 annually in installment fees.
3. Higher Insurance Deductible
Most insurance plans and policies require a deductible, or an amount to be paid by the policyholder before the provider will cover the claim. By raising the deductible on their policy, consumers will pay lower insurance rates.
4. Affinity Discounts
Insurance-seekers should avail themselves of special discounts offered by insurance companies. Many companies offer affinity discounts (AARP, Sam’s Club, AAA). Some auto insurers provide “good student” rebates to young drivers with a high grade-point average.
5. Group Insurance
Consumers should take advantage of group insurance plans (i.e. Chamber of Commerce), which usually boast lower insurance rates. A myriad of employee groups, associations, and organizations also provide discounted insurance plans to their members.
6. High Credit Score
Another efficacious strategy to decrease the insurance premium is to improve one’s credit rating. In today’s marketplace, nearly all insurance providers take credit scores (FICO scores) into account when setting insurance rates.
Individuals with low credit scores generally pay more than those with a good credit history. Credit inquiries, delinquent payments, liens, judgments, and bankruptcies adversely impact credit scores and raise insurance premiums.
Depending on the type of insurance(s) they are applying for, consumers may benefit from a reduction in insurance rates on the basis of a variety of factors:
1. Life Insurance
2. Auto Insurance
Amount of deductible
Location (Lower premiums for farm use than for city use)
Amount of coverage requested
Auto make and age of the vehicle (i.e. luxury car or an ordinary sedan)
Driver’s gender and age
Driver’s claims history
Gaps in coverage (which lead to higher insurance rates)
Enrollment in an insurance point reduction or defensive driving course
Number of cars insured with the same company
3. Home Insurance
Price of home
Safety features such as dead bolt locks, alarms, smoke detectors, and fire extinguishers
4. Health Insurance
Amount of deductible or co-payment