Auto Insurance, Homeowners Insurance, Money Management
November 21, 2019
Listen to Podcast Episode:
In response to an overwhelming number of you who asked, this podcast of Ask Suze Anything is all about saving you money on home and auto insurance.
Welcome to another edition of Ask Suze Anything. This is where you write to AskSuzePodcast@gmail.com, that's S-U-Z-E, and you ask a question. Now, I read every single one of them. Sometimes I answer personally, sometimes they are chosen to be answered here on the podcast, and sometimes I just read them and I go, well, I've already answered those a lot, they just have to listen to previous podcasts. But today I want to do something different and what I want to do differently is this. So many of you, for some reason, and I'm not exactly sure why, you are writing in and asking me this question, Suze, how do I save money on my home insurance? Suze, how do I save money on my auto insurance? So this Ask Suze Anything is an entire session on how to save not a little money, but a lot of money on your home and car insurance. Because let's think about it. The biggest monthly expense that you have, most likely, is your mortgage payment or your rent payment. After that, it is your car payment. So you have these two great assets that you love that are valuable, and you have to insure them. So then your next largest monthly payment is usually the insurance that it takes to insure your home or your car. So here's where we're gonna start.Let's say you have a home and I don't care if it's you even have a home where you're renting it, an apartment, you even need renters insurance. You have to be insured people. So, therefore, you have a home, you also have a car. Here is the question. Are both those insurance policies with the same insurance company? Because if they are not, you are paying far more for insurance than you would have to than if they were with the same company. Listen, when you combine your property, your home, your condo, you're renter insurance with your automobile insurance, you can reduce your overall premium significantly. What is significantly? Well, up to about 40%, do you think that's worth doing this? I do. This technique is called packaging. Now you might need to shop around as you want to know that you are with the company that gives you the greatest reduction if you give them both your home and your car. But that is something that you need to look into.So here's the next question I want to ask you. Is your insurance agent an independent broker or are they affiliated with a specific insurance company? Whenever you are shopping for insurance and I don't care, actually in this case, what kind of insurance it is. You want an independent broker. What is an independent broker? They are somebody who can sell you any insurance policy that's on the market today. They're totally independent, they don't have to be loyal to just one company. When you have an insurance agent that's affiliated with a specific company, that is the only thing that they can sell you. An independent broker has to represent at least six financially strong insurance companies. Just because they're independent doesn't mean that they're licensed to sell with all these different companies. So you never want to work with an independent broker unless they represent at least six financially strong insurance companies. Now, when you do that, how much can that save you? I got news for you, it is possible that it could save you up to 50%.OK, let's keep going here. Now, here's the next question. You have these insurance policies and almost every single insurance policy has a deductible, especially your home insurance. So is your deductible $1000 or higher? What is it, everybody? Think about it, what is your deductible? The higher your deductible, the lower your premium will be. And since most of you are never going to file a homeowners claim, or if you do, it will be so infrequent. Really, think about it, have you ever claimed yet? If you could just take advantage of the savings each year by having a high deductible, I can't even begin to tell you how much money that will save you. The truth is, the day of filing small claims where something happens, the window breaks, but you don't file a small claim anymore. You wait until something big happens and that is because that every time you file a claim, chances are your premium might go up or they can cancel you. So let me just give you an idea with home insurance, OK?If you had $1000 deductible, you might see a decrease in your premium of about 24%. A $2500 deductible, maybe a 30% deduction or $5000 deductible a 37% decrease. Thes are not insignificant amounts of money. And the same is true, by the way, for your car, your automobile insurance. So the higher the deductible on your car, it could save you, possibly up to 40%. The other thing I just want to say is you know that I want you to keep your car for at least 10 years, or longer if it's working. So the idea of you driving an older car is not only for you to save money because you now own it outright and your saving money. In terms of you're not getting a new car, and a new car, a new car, and spending $300, $400, $500 a month just to drive a new car. The whole idea of driving an older car is not only to save money because you're not making payments anymore, but it also should apply to your auto insurance. So listen to me. If your car is worth less than a few thousand dollars, I want you to drop full coverage on that car and put this money away for a new car. If your car is worth more, you can increase the deductible to $1000. If you file a claim, you'll pay more, but you will have saved premiums every year. Am I making sense to you? So again, that alone, if you did that on your car, especially an older car, that could save you up to 40%.Next, let's go to your home now. Do you have a new home? You know, do you have a home that's really less than maybe 10 years old, eight years old? If you do, then you really need to make sure that your insurance company knows because they really like insuring newer homes than the ones that are older. Because new homes come with a discount because of the newer the home, the larger the discount in their opinion. So, usually, once a home is built and now it's older and it gets older, let's say, 12 years older, then the discount stops. Now, this could save you really about 30% or less. However, if you have a brand new home, maybe you just did renovations, make sure your insurance agent knows. Also, do you live in a gated community? If you live in a gated community, make sure your insurance company knows, because they can give you up to a 10% discount because that gated community helps protect you against theft. You know, we've had a lot of storms lately, so maybe you've gotten storm shutters or new gutters or something like that? Whenever you make an improvement to your home, you make sure your insurance agent or company knows about it because they just might give you a home improvement discount. These are really important things for you to know.Now I'm going to go to cars. When it comes to cars, can you just be a safe driver? Can you simply not speed? Can you not do things where you know, you're in a hurry, so you just go for it, and you think it's going to be OK. Because really, when you have a major violation on your report, it could be there for at least 10 years, and one accident or ticket will increase your premiums for like three to five years. So, if you're a safe driver, it could save you up to 60%. And you have to keep track of the number of miles that you drive. Because if you're not driving a lot each year, like truthfully, I only drive maybe if the car is lucky 4000 miles a year, I let my insurance agent know. So when you don't drive a lot, then you have less of a chance of being in an accident, and that can shave up to 30% off of your premiums. Also, do you and your spouse or significant other have separate insurance policies? Do you? Well, if you do, you shouldn't. So if you want to save a substantial amount on your car insurance premiums, you need to put all cars on the same policy so that you can get a multicar discount, that can save you up to 50%.Obviously, it used to be, does your car have safety and anti-theft features? Well, guess what, most cars do today, so that saves you money. But you also have to know that if you have a high school or college student on your policy, and if that student is enrolled for a time with a 3.0 or better GPA average, than they qualify for a good student discount with most insurance companies, that can save you up to 10%. Because if you put a kid on an automobile insurance policy oh, watch what happens to your premiums. And one more with this one, which is, are you a teacher? Are you an engineer, are you a scientist, a physician or a CPA? There are certain occupations that are favored by auto insurance companies due to the statistics that if you're any one of those things, I don't quite get it, they tend to file fewer claims. So just make sure that your agent knows that what your occupation is and just ask them if you're insurer offers a discount for what you do. You might find that switching insurance companies is necessary to get that discount because not all insurance companies offer these discounts. How would you know to even ask them if you wouldn't listen to the Women and Money podcast?Now a few other things when it comes to insurance. Can you just make sure that your FICO score or your credit score is good? Because there are still many states out there that your car insurance premium is based on your insurance risk score that is calculated exactly the same way as your credit score. And, if you do not have a good credit rating, you're going to pay more money, so a good credit rating could easily save you up to 10%. Also, do me a favor and once you find a company that you like, your car insurance is there, your home insurance is there? Can you just try to renew with the same company each year? Because each year that you're with them and you haven't filed a claim that could save you another 10%. So the longer you stay with an insurance company and remain there when you don't have any claims, so loss-free, then the less you will pay. So don't be tempted to change to a new company just because of this or that, because in the long run, the longer you stay, the less you pay.Oh, that was kind of a good, Suze, the longer you stay, the less you pay, I like that. Also, I just want to say a few more things, which is this. I know that a lot of you are really tempted just to pay your insurance every month. Have you ever totaled the difference between what you are paying at the end of a year when you pay it every month versus what you would pay if you paid it twice a year or once a year? The difference can be significant, it can be anywhere from 8% to 10%. It's a lot, so just look at that. Because if there's any way that you can say, you know what, every penny counts and I have to count every penny. So I have to make sure that on one of the highest monthly expenses that I have if I could just simply save, are you kidding me? Do you have any idea how that would mount up? Even if it was $200, $300, $400 a year, that's still more money than you had than if you just didn't take advantage of all of these things.So, you know, I just finished a book, and it will come out in March of next year. And one of the keys to this book really is to do what? For you to spend less so that you can save more. So many times you say to me, Suze, what's the key to a good retirement? Suze, what can I invest in? Suze, what should I do? And the answer is, spend less. The less you spend, the more money you can save. The more money you save when you're spending less and less, the more your money can go for what you need it to go to, or for what you want it to go to, and the less you need in your retirement accounts to generate income to pay for those expenses. So all of this is about learning how to save money on expenses that I know each and every one of you have. So now get with it and start saving some money. In providing answers neither Suze Orman Media nor Suze Orman is acting as a Certified Financial Planner, advisor, a Certified Financial Analyst, an economist, CPA, accountant, or lawyer. Neither Suze Orman Media nor Suze Orman makes any recommendations as to any specific securities or investments. All content is for informational and general purposes only and does not constitute financial, accounting or legal advice. You should consult your own tax, legal and financial advisors regarding your particular situation. Neither Suze Orman Media nor Suze Orman accepts any responsibility for any loss, which may arise from accessing or reliance on the information in this podcast and to the fullest extent permitted by law, we exclude all liability for loss or damages, direct or indirect, arising from use of the information. To find the right Credit Union for you, visit https://www.mycreditunion.gov/. Interested in Suze's Must Have Documents? Go to https://shop.suzeorman.com/checkout/cart/index/.
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