Save Money – Reassess Your Insurance

In this post, we address more money-saving strategies that include giving your home insurance a second look. Included below are tips and tricks to trim expenditures both large and small. If you missed it, our tips for saving money by squeezing the kilowatts can be found here.

SHIELD YOURSELF FROM LIABILITY WITH AN UMBRELLA. Most homeowners policies provide $100,000 in liability protection. A good auto policy should cover at least $100,000 per person and $300,000 per accident for liability. But you may need more. The best way to raise your protection is with an umbrella liability policy. The $250 to $300 annual cost of a $1-million policy could save you more than anything else you’ve ever bought. You may need to have your auto and homeowners coverage from the same company to get the broadest protection, including coverage for risks such as accusations of libel and slander. That may garner a discount of about 10% on each policy.

SHOP FOR REPLACEMENT-COST COVERAGE FOR YOUR HOME. You’ll pay about 10% extra for such a policy–but it will pay the full cost of rebuilding your home. And if you have to make a claim for the loss of, say, your ten-year-old dining-room set, you’ll get the money to buy a new one. Some large insurers are capping replacement-cost guarantees of the structure at 120% to 125% of the amount. You need to know what 100% means. If you doubt your agent’s estimate, get a contractor’s take on how much it would cost to rebuild (see “Home,” Aug.).

FILL GAPS IN COVERAGE OF YOUR COMPUTER AND EXPENSIVE ELECTRONICS. Some homeowners policies have a $5,000 or $10,000 limit on electronic equipment, according to the Insurance Information Institute. Even with replacement-cost coverage, you might need to beef up that limit to cover your computer, big-screen TV, satellite dish, video camera and audio equipment. You can boost you]’ coverage for $50 to $100 per year.

RAISE YOUR DEDUCTIBLE. Frequent small claims could prompt your insurance company to drop you at renewal time anyway. So paying for the small losses yourself could save big in the long run. Raising your deductible from $250 to $500 will cut your premium by about 12%. Raise it to $1,000 and you’ll cut the premium by 24%.