Insurance

You don’t have to change insurance companies every time you see a commercial on T.V. promising to save you 15 percent in 15 minutes. However, it’s a good idea to periodically review your coverage because various events in your life can have a dramatic and significant impact on the premiums you pay. Insurance companies are all state regulated, and they all contribute to a guaranty fund so you have some kind of protection if the insurer ever runs into financial difficulty. Even without state guaranty protections, most insurers are in a good financial position and buy insurance from other insurance companies (called “reinsurance”) to protect against insolvency. With that said, updating your insurance is a good idea if:

You Inherited Family Heirlooms

Getting an old piece of furniture is an excellent reason to call your insurer, and even shop around with other insurers, and get an updated policy quote. Antique furniture is often not covered under your base policy. You must purchase a special rider from many insurance companies to protect those valuable family heirlooms.

The rider comes at a cost and this is where shopping around may be beneficial for you. Your once affordable policy could quickly become very expensive if you are insuring antique couches, chairs, ivory heirlooms, or jewelry.

You Had a Baby

When you have a child, you should make sure your health, life, auto, and homeowners policies are adjusted accordingly. This is especially true if you or your spouse decides to stay at home and work from there. Your homeowner’s policy may not cover you working from a home office, or you may need to add additional coverage or be rated differently based on the fact that you no longer work outside the home. Your car insurance may also need to be adjusted based on the fact that you drive fewer miles to work or have a little one in the back seat now.

You Got a New Pet

Homeowners insurance must normally be adjusted when you buy a pet. Puppies, and even cats, can cause significant damage to rugs, stairs, furniture, and baseboards. Some insurers have pet liability coverage. If you want damage resulting from your pet to be covered, you have to update your policy before any damage occurs. It’s surprising how many people try getting coverage after a pet has done its damage, but this won’t work; your insurer will just deny coverage.

Surprise Rate Increases

Insurers don’t always tell you that they are not the cheapest option in your state. It’s to their benefit to keep you as a customer. You’ll only find out how expensive they really are by shopping around for new coverage. Some insurers do offer excellent premium rates, but may offer special discounts based on certain “life events.” Milestones like graduating from college, having a baby, or reaching a certain age may come with perks like reduced premiums for auto and homeowners coverage.

Some companies suffer from “rate creep.” This is where your premiums increase gradually over time without you really realizing that you’re paying more for coverage than you need to.

Some insurers are used as adverse risk insurers or “insurers of last resort.” These insurers will insure practically anyone, so their risk pool is filled with high-risk people which drives up your premium costs. If you’ve had numerous speeding tickets, you may only be able to get insurance from one insurance company in your state. You’ll pay a really high premium for that coverage but at least you have insurance. Over time, your speeding tickets won’t be factored into your premium rates so you could benefit from changing to an insurer with a better risk pool.

You Bought a New Vehicle

Buying a new vehicle can, and often does, dramatically change your premium. Generally, the newer the vehicle, the more expensive your premium is. With that said, you shouldn’t shy away from buying a new vehicle if that’s what you want. Ask for discounts for having the VIN number etched into the glass, an anti-theft device installed on the vehicle, and for having completed a safe driving course.

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Image by Stuart Miles