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Keeping your insurance rates low

March 3, 2012

One of my goals this year is to bid out our insurance. Valerie has her rentals with one company and I have mine with another. Between auto policies, PLUP, our primary, rentals, we have over 10 policies. We are both with large companies, but the rates on some things are cheaper with my company and some are cheaper at her company.

How we shopped our rates

I printed off every policy and walked into both our insurance companies. You can get quotes over the web, over the phone and probably a few other ways. I prefer to walk into their place of business. I want to talk to the Managing Broker of the office (the guy or gal whose name is on the front door) – not one of the sales agents sitting in those desks out front. 

I am by no means an expert on insurance and the various kinds of coverage can really vary by company. Here are some of the things we have done to keep our cost down and still maintain adequate coverage:

Keep the Insured value low. This is the value your insurance company puts on your property. This is negotiable and you can cover yourself for what you want. The lower your coverage amount the lower your premium. Don’t go too low because if the place burns to the ground, this is the total coverage you will get. Remember your insurance is for the actual house, not the land it sits on.

Go with Common Construction Replacement Cost. Once you set the insured value at under 80% of your insurance company’s idea of replacement cost, you coverage goes from similar construction to common construction. Similar construction means they replace exactly what you lost. If your kitchen had granite countertops, they put granite back in. Common construction means they replace with common materials for the neighborhood. For me and my rentals common construction is good – I don’t need similar coverage. So I go below 80% of the insurance company’s idea of replacement cost. According to them one of my homes is insured at 39% of replacement cost – their ‘values’ are way too high.

Increase Deductibles to lower your premiums. Another toggle you have is your deductible. Most rental dwelling policies will let you go anywhere from 1%-5%. The higher the deductible the lower your premium will be.  Shop your deductible. Have your agent run quotes at several deductible amounts. I prefer to lower the total insured value and then go with a 2% deductible. Remember your deductible is a percentage of your insured value, so keeping the insured value down also keeps your deductible down in the event you have a claim.

This is just some of the obvious items. There are lots of options and toggles and you really need to sit down with your agent to discuss them all. Explain to your agent that you want to be appropriately covered and not over insured. They love to over insure people. Walk into the office knowledgeable and tell them what you want.

One more piece of advice: Get the cell number for your agent. If you have water damage on a Saturday morning – you don’t want to be stuck with the 1-800 number that rolls over to India. You want your agent that can walk you through any issues.

Related Post:

How we saved $2,000 in less than an hour

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From → Money Saving

One Comment
  1. Melissa permalink

    Chuck thank you so much for detailing your insurance process. I learned insurance can really take a bit out of your profits if you don’t watch it. Insurance agents love to over insurance to make bigger profits. Currently I use 2 different companies (Travelers and Farmers) because they have always given me the best deal and I have built a relationship with the agents so they to are looking out for me bottom line. One thing that I am going to do on Monday morning is to see if I can raise my deductible. Again thanks for another great post.

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