Whether it’s regular oil changes, furnace filters or annual visits to the dentist, savvy consumers know that preventative maintenance can prevent costly repairs later. Insurance is another item that should be on your routine maintenance list.
Here’s the challenge: No one wants to think about insurance unless they have to. But at least once a year, it’s important that you do a quick review to make sure you have the right amount of coverage at the best price.
Some of us have to learn these things the hard way. I really don’t know how many years we paid for a special endorsement to cover my husband’s photography equipment on our home insurance policy. Of course, it was a good idea when he was a photographer. But this rider rode for many years after selling the equipment.
And then there’s my friend, Lucy, who got sick of me nagging her and agreed to buy her car insurance. Within 15 minutes of calling an insurance broker, she got a quote for identical coverage at $500 less per year. Her problem was the loyalty she felt for the agent she had been with for 13 years. But $500 is a lot of money, so she called to tell him she would be moving to cheaper pastures. “Wait,” pleaded the agent. “Give me a day to try and beat that quote.” He did so and rewrote his policy for $600 less per year with no change in coverage.
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As your policies need to be renewed, take some time to shop around.
Car insurance. As your cars age, your insurance needs change. Consider age and health when choosing your deductible. You probably want a high deductible on an older car that doesn’t make sense to fix a fender bend.
Changes in the number of young drivers included in your policy, the distance you drive to work and where you park your car will also significantly affect your premiums. Find out about other discounts you may be entitled to, such as being a good driver or a good student.
Home Insurance. If you are a landlord, take an inventory of your belongings once a year and adjust your content coverage accordingly. Review all endorsements and addenda. Update or delete as appropriate. Carefully research any changes the insurance company has made to your coverage. You want to know about it before disaster strikes.
Remodeling, renovation and major purchases like appliances should be considered in your policy. A new roof or security system can actually lower your premium.
Life insurance. How you update your life insurance depends on the type of policy you have. For term life insurance, quickly compare premiums to see if yours are still competitive, especially if your insurer is increasing them more than expected. Term insurance is cheap these days, so take advantage of it.
For whole life insurance, get rid of riders you no longer need. If you find that you don’t need as much coverage as you’re paying for, apply for a reduction in the face amount (a “partial surrender”). Watch for additional charges and if you see them, request that they be waived or negotiated lower.
When making changes to insurance coverage, never cancel a policy until you are sure that its replacement is in full effect. You don’t want to risk the slightest hedging gap.
Mary Hunt, founder of www.EverydayCheapskate.com, writes this column for Creators Syndicate. Submit comments, advice or questions on its website. She will respond to topics of general interest through this column, but letters cannot be answered individually.