How to Save Money on Car, Home and Other Insurance Amid Rising Inflation
Ok, guys, I know inflation is a beaten-down word these days. Everything is costing more, from food to gas to flights. Even the word "shrinkflation" has bubbled up again (looking at you, smaller portions at the grocery store!). I was personally a victim of shrinkflation when I had tacos at a well-known chain (not my best moment, I know) and it was as if the lettuce took up most of the filling. Everyone who is a taco aficionado knows that you don't mess with the filling if you want repeat business.
Or consider stagflation, an even worse trio of high inflation, rising unemployment, and stagnation of economic growth. Fortunately, we're not there yet but that would cause even more harm to our country, as experienced in the 1970s.
Regardless, we've been dealing with the highest inflation in 40 years, with the inflation rate running past 8% last month.
Well, what about insurance? Have your insurance rates gone up? Are you itching to find some cheap car insurance rates in hopes of alleviating the pressure on your budget? Well, here are a few ways to save on insurance rates and shop around for the best insurance to help with this inflation headache we are all dealing with.
1) The deductible - Whether you have car insurance, health insurance, or renters insurance, the higher deductible typically means that you pay less in insurance premiums. Why is that? Because the more risk you take on by being responsible for more money in case of a claim, the less of a risk you are to the insurance company. This is why an emergency fund is so critical; it enables you not only to avoid a situation where you'd have to take on debt to take care of a sudden cost, but it also enables you to take on a little more risk, so you save on insurance costs.
2) Bundling insurance for discounts - People always assume cheap car insurance is the best because why pay more for something you don't even want to pay for in the first place? Well, because one day when you have a claim, you don't want them pulling out the 92 pages of disclosures and exclusions on why they aren't going to cover you. Or worse, provide you with a choppy and frustrating experience if you ever have a claim.
Many insurance providers, like Geico, Progressive, and State Farm, typically provide a discount if you bundle your insurance policy with another. For example, you can have your auto, homeowners, and an umbrella policy with one provider, and get a discount. I've even seen instances where adding one insurance made the overall package cost cheaper. That's like free insurance! If only you could bundle your health insurance with something!
3) Embrace minimalism - I can see you rolling your eyes already, since so much on Financial Fives blends minimalism and financial freedom, but hear me out. What is insurance really protecting? Other than life, disability, and health insurance, it's protecting your stuff. I'm not saying go move under a bridge so you don't have to pay renters insurance. I'm saying look at the stuff you have and if it's worth insuring.
One of the key items of insurance coverage when it comes to auto insurance or home/renters insurance is the usage. For auto insurance, the more miles you drive, the more expensive your premium is. This is because the more time you spend on the road, the higher risk you are of getting into an accident. Why else do you think insurance companies ask you to verify your odometer reading? Bike, walk and embrace multimodal transportation.
If you have a two-car household, at least experiment with having one car. In addition, if you drive an expensive or newer car, take a look at the most expensive line item of your coverage. It quite possibly could be your collision deductible. I've seen people drop their car insurance premiums by 30% just by switching to a cheap and more economical car.
For home and renters insurance, ever seen the personal property line item? Have you ever considered if it was correct and if you are under or overpaying for it? The more stuff you have, the higher personal property coverage you are going to want, thus leading to a higher premium. Many insurers want you to have separate insurance coverage for expensive items, such as jewelry, cameras, bikes, and art. Now, do you really want to set up that home theater system? The less stuff you have to insure, the cheaper your premium, so minimalism is truly your friend here.
4) Leverage your most valuable asset: your health - Ironic that I'm writing this as I eat a brownie right? At least I'm making myself feel better because it's healthy, I put mashed black beans, protein powder, and avocado in it. Anyway, back to writing, the reality is you are never going to be as young as you were yesterday. As you read this, this is the youngest you will ever be. What does that have to do with insurance?
Well, do you think life insurance is cheaper when you are 30 or 40? If you plan to have dependents in the future, buy a home, or basically do anything that would rely on your income whether you are still on this planet or not, then you should get life insurance sooner than later. Plus, the healthier you are, the less likely you are at risk of dying early, so the insurance providers give you a break on the premium.
The same goes for disability and health insurance. I have a whole chapter in Financial Fives on how being healthy saves you loads of money over time. The better in shape you are, the less likely you are to get hurt at work or get sidelined due to an illness, right? Well, that makes insurance companies more likely to cover you. Visualize what it would mean to you and your family if you lost your income for an extended period of time, such as 5 years. If you're lucky enough to have employer coverage, is it enough? Better dust off those running shoes!