Still knowing that this expense is flexible can be a relief for someone who is struggling to make ends meets — even if temporarily during a financial crunch or an emergency. But if you decide to go down this path, make sure that you’re diluting the value of insurance. After all, if you are in a financial bind, having decent coverage can help in case of a major illness or accident.
Here are a few points to keep in mind when you’re negotiating your insurance down.
Know what to cover
For certain type of insurance policies — like auto insurance or renters insurances — you may be required to maintain a minimal amount of coverage by law or according to your signed contract. Make sure that you’re meeting these requirements.
In addition, ask your insurance brokers about reasonable amount of coverage for each category. For example, if you have an old car, you may not care if it gets totalled in an accident. But what you should care about is your third-party liability.
Understand terminology and functions
How does a lower deductible impact your monthly premium? What does out-of-pocket mean? What are you covered for and where? These are just examples of what you should be looking for in any policy whether it is health, auto or home insurance.
Your insurance broker or insurance company representative should be able to explain these basic terms and functions, and show you how changing one can impact your costs up or down. If you feel uncomfortable asking many questions, educate yourself first online. Read as much as you can about how a particular type of insurance works. Your insurance company itself should have enough marketing and educational material to share.
Share your goal
Let your insurance broker or company know that your goal is to reduce your insurance cost even if that means compromising some quality coverage. Let them also know that you’d like to know what you’re giving up in return of a lower monthly payment. Then make your decision on whether the compromises are reasonable and acceptable based on your risk tolerance.
If your insurance provider is less than cooperative or unwilling to reduce the costs, go ahead and shop around. Other providers may be willing to work out some cheaper coverage for you — that is still competitive — just to win you as a new customer. Although that may not be a strategy to keep your costs down, and you don’t want to hop from one insurer to another all the time, it could help if you’re trying to bring your insurance costs down immediately.
Bundling all of your insurance policies with one provider also can save you a bunch every year. So if you’ve recently changed to your auto insurance, ask for a bundle that includes your home insurance, as well.
Look at who/what is covered
Are your teen children who just got their driver’s licenses added on all of your cars’ insurance? Reduce your costs by removing them from cars that they don’t drive. Although that might be an inconvenience, it can reduce your costs.
Similarly, in a health insurance policy, pick and choose what you want covered. If you’d never use acupuncture or unlikely to need maternity coverage, don’t pay for policies that cover them. In short, insurance providers provide a variety of policies with an array of coverage, pick and choose based on your needs and your financial ability. A good coverage is what protects you when you need it, but doesn’t cost you more than you can afford in premiums.
By Rania Oteify
