Insurance Insurance Basics

10 Ways to Save When Shopping for Insurance

There are good reasons to go shopping for insurance. It will help you save money, protect your belongings, safeguard your family’s future and protect you from risks. Shopping for insurance can also make the claims process easier when something happens.

If you find the idea of shopping for insurance intimidating and confusing, you are not alone. The secret to a less stressful insurance shopping experience is knowledge. Knowing what to ask and who to ask can help take reduce confusion, and will ensure you come out of the process with a good deal on great coverage.

Here are 10 ways to save money when shopping for insurance:

1. Work with a professional

The internet is a great place to read the news and gather information. It’s also a great place to buy all sorts of merchandise, but insurance is not always one them.

There is no substitute for a qualified, knowledgeable, licensed professional who will not only sit with you answering your questions but will be there down the road. When you work with a “live” agent while shopping for insurance you are working with someone from your community who counts on referrals from happy customers to grow his or her business. That means they will be there for you to answer questions, assist with claims, and periodically review and update your policies to make sure you always have the right protection in place.

Find an agent you will be comfortable working with. An agent you can talk to without feeling embarrassed or intimidated, and an agent who understands your concerns and is able to honestly answer your questions.

Check their references, years of experience, and license status. A solid, stable relationship with a professional insurance agent can last for decades, reducing or eliminating the insurance headaches.

2. Use buying guides

The first person to correctly point out that knowledge is power was Francis Bacon and, while he was not talking about shopping for insurance, he might as well have been.

The more you know and understand about insurance, the more power you have in the decision-making process. Buying guides are great resources for gaining a thorough understanding of different insurance types. An insurance buying guide can cover anything from homeowners’ basics, or it can be very specific such as a discussion of alternatives to the Affordable Care Act.

It’s always best to look for buying guides that are unbiased and written by someone with practical knowledge and expertise. Unbiased guides are usually written by someone who is not trying to sell you a product. An unbiased buying guide will do its best to present the pros and cons of your options and will do it in a way you can understand.

Since insurance policies are legally binding contracts, it’s best to consider guides prepared by someone such as a licensed agent or attorney who understands the laws and will provide accurate information.

3. Don’t shop price alone

Shopping for any kind of insurance and basing your decision on price alone can lead to disaster. Insurance premium costs are linked very closely to the amount and type of coverage and small differences in what is covered and what is not can translate into large differences in price when shopping for insurance.

Unlike things like potatoes or gold, insurance policies may be for the same amount on the declaration page with many more items on the exclusions page, which is why it’s important to understand the different parts of an insurance policy. Insurance is one of the products where the least expensive is very rarely the best buy.

4. Compare when shopping for insurance

There can be actual differences in cost for the same coverage from different insurance companies but the only way to know for sure is to compare.

Side-by-side insurance policy comparisons can be relatively simple to fairly complicated, depending upon what type of insurance you are comparing. Life insurance is pretty straight forward and homeowners insurance can be complicated because of all of the separate coverage limits and exclusions.

The best way to compare two policies is with a spreadsheet with three columns. In the first column list all of the covered items for each policy. Where they are the same such as wind damage on a homeowner’s policy lists them once and at the top of the following columns enter the name of the insurance company.

Then go down the list and place an X or the coverage amount for each item. When you are done you will be able to scan the list for differences and be able to make an accurate comparison.

5. Ask questions when shopping for insurance

There are three rules to follow when asking an insurance agent or company representative questions about insurance in person, on the phone or online when you’re shopping for insurance.

Don’t be shy – The surest way to not have your concerns addressed is to not ask the question in the first place. If you’re not sure about something, ask. If you don’t understand the answer, ask for it to be explained a different way. The job of insurance agents and insurance company representatives is to answer your questions, so ask.

Get it in writing – If you get an answer to a question that seems to contradict what the policy says or is just not in the policy at all, ask for the answer in writing. Get the response on letterhead and make sure it is signed by a licensed agent or authorized representative. Keep the written answer with your policy so that in the event of a claim you will have proof of what you were told.

Don’t worry about it – This is not an acceptable answer to any insurance question. One of the benefits of insurance is peace of mind and that requires you to have actionable information.

6. Don’t under insure

Be careful not to allow concerns over cost to cause you to end up with too little coverage when shopping for insurance. This applies equally to all types of insurance because what you don’t pay for now you will have to pay for later when you will likely be less able to do so.

Under insuring your home, health, car or your life can lead to much larger problems when you put your insurance to the test by filing a claim.

A common way people under insure is by using high deductibles to lower premiums on property insurance like homeowners, automobile, and health insurance. The safest way to go is to limit deductibles to what you know you will be able to realistically pay out of pocket in a worst case scenario.

7. Don’t over insure

An overabundance of caution due to fear or anxiety can make you overcompensate and buy more insurance coverage than you need.

Over insuring the value of your home and personal belongings will result in higher premiums without any increase in benefit. Insurance companies will not pay more for a claim than they have too regardless of how much excess insurance there is.

8. Know your rights

Insurance consumer protection laws begin protecting you before you ever sign a contract or pay a premium. You can’t be bullied or pressured into a decision about insurance coverage. It is illegal for an insurance agent to offer you inducements, such as commission rebates or cash payments for your business when shopping for insurance.

Most states have a 10-day free look for new insurance coverage. In most cases you are allowed to cancel your insurance during the free look period and have your premium refunded, unless you placed a claim.

You have a right to dispute the amount your insurance company is willing to pay for a claim if you feel your damages are not being fully paid for. You have the right have an independent public adjuster review your damages and the insurance company’s offer and if they find in your favor they can negotiate with the insurance company to get you what you deserve.

Finally, you have the right to file a complaint with your state’s insurance department if you feel you are the victim of fraud or inappropriate treatment.

9. Ask about discounts

Discounts come in a variety of shapes and sizes, from safe driving discounts for drivers with no violations or claims in recent years to age based discounts such as those for drivers 50 and older. All are worth checking for when shopping for insurance.

Not all discounts are advertised which is why it is essential that you ask. Some examples of changes in your home, car and lifestyle that can result in discounts are:

  • Adding fire extinguishers
  • Installing smoke detectors
  • Installing CO2 detectors
  • Quitting smoking
  • Losing weight

Ask you agent or insurance company representatives what can be done to lower your rate without changing your coverage for each type of insurance you have.

10. Check the record

You should check the record of your agent and the company or companies he represents when shopping for insurance.

Start by asking your new insurance agent for references that you can contact and then contact them to find out if they are happy with the service they have received. Your state insurance department may have a publicly searchable database where you can look for complaints or disciplinary actions.

Check the AM Best rating of each insurance company you are considering doing business with when shopping for insurance. AM Best rates the financial soundness of insurance companies and companies with an A rating or better will have sufficient resources and stability to be around to pay your claims.

Look to customer satisfaction ratings by companies like JD Power to get an idea of how the insurance company has treated other customers in the past for things like claims processing and customer service.

About the author

Frank Addessi

Frank Addessi has been a serial entrepreneur and a licensed insurance agent for more than 20 years. He writes primarily about personal finance, small business and all types of insurance. His work has appeared on websites such as Smart Asset and The Simple Dollar. He can be found on his website

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