Saving Money on Insurance

Some tips from Independent Insurance Agents and Brokers of America, Inc.

Credit life insurance: Avoid credit life insurance (for new furniture or credit card debt, for example) under most circumstances. These policies, offered by credit card companies and other lenders, extend for the term of the loan and decrease in value over its life. They are designed to protect a third party if for some reason the consumer dies before the loan is paid off. However, they provide no protection to beneficiaries—only to the company that offered the credit or loan.

Deductibles are too low: Owners of expensive homes need to consider whether a low deductible makes sense. If someone steals the TV, it isn’t going to break the bank. Those same consumers need lots of insurance for a total catastrophe, though, or if they get sued. Therefore, they may want to take a $1,000 deductible and use the savings, which can be 10 to 20%, and buy a reasonably priced "umbrella liability" policy to give them $1 million or $2 million of coverage in case they’re sued.

Specific computer insurance policies: Though this coverage may seem like a good idea since so many people now have computers at home, a standard homeowners policy will cover most basic personal computer equipment. Here’s how it works: If you have a home with the structure insured for $100,000, you typically have $50,000 of personal property coverage, including computer equipment not used for business. If used for business, the home insurance policy typically provides $1,500 or $2,500 of coverage for computers. Only people with home-based businesses, laptops used for business outside the home or elaborate high-tech equipment need to consider extra coverage but it’s usually cheaper to buy an endorsement to the home or home-business policy rather than a separate computer policy. (The same concept holds true for cancer insurance or trip-specific life insurance, and other specific policies when in fact broader coverage that is cheaper in the long run might be needed.)