List and describe several strategies for lowering your costs or premiums when purchasing insurance.
What will be an ideal response?
1. Look for discounts by combining multiple types of insurance coverage from the same company. If you have homeowner's insurance and car insurance with the same company, request a multiple-policy discount. But only buy both policies from the same company if it is providing the best price overall. Many times, it can be cheaper to get your car insurance from one company and your homeowner's insurance from another, despite the multi-policy discounts.
2. If you do something that presents less risk to the company, make sure they know about it. Inform the insurance company if your house has an alarm system or sprinkler system. Make sure it knows if your car has OnStar, LoJack, or another alarm system. You are probably eligible for a discount. Be sure to take advantage of the dozens of discounts.
3. Take advantage of group plans that are available to you if the price is lower than you could get on your own. Most mid-size or large employers have group plans for medical insurance and life insurance, and some even have plans for car insurance and disability insurance as well. If you are a member of an organization such as a credit union, you may be able to participate in its group plans. Again, the key is to shop around and ask questions.
4. Buy directly from the insurance company as opposed to going through a local agent. Companies like GEICO, Progressive, Traveler's, and USAA sell directly to you. You can buy online or speak to a representative using a toll-free number. In either case, you avoid an agent's commission. The tradeoff is that it requires more work from you to fully understand what you are buying. You'll spend more time pouring over long contracts and policies. However, if you're willing to do the homework, you can save on your monthly premiums.
5. Purchase from an independent agent. Some agents only represent a single insurance company. Others can represent multiple insurance companies and shop around for the best price. However, many of the companies they use do not have large advertising budgets, so you may be unfamiliar with them. You have to balance between comfort level and cost.
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