There’s no denying that insurance is an important investment for every US citizen, who owns a car, or a property, runs a business, or simply wants to secure his/her financial future. According to the US Bureau of Economic Analysis, insurers and insurance activities generated 2.9% of the nation’s GDP in 2019, which is equivalent to $630 billion. The US insurance industry also employed 2.8 million people in the same year, according to the US Department of Labor, probably to meet the growing demands of their clients. But that’s the industry as a whole. What the folks who get insured see is the impact on their wallets.
Premium costs, which can be impacted by several factors, can sometimes be a concern for individuals and companies looking forward to reducing their expenses. For example in 2019, annual health insurance premiums for individuals and families increased by 4% and 5% respectively from the previous year, even more than the rate of wage increase (3.4%) and inflation (2%), as per a report by CNBC. And that was before COVID-19.
Being prudent about expenses has always been a sound strategy and it’s even more so as we enter uncertain times. In that context, it is useful to explore effective ways to reduce insurance premiums too.
Car Insurance
Some US insurance companies provided credit or cash refunds to their clients on auto insurance during the lockdown phase. As the citizens drove less and there were fewer road accidents, some insurers offered up to 15% of the monthly premiums as credit or cash refunds to the car owners. In the last week of May, some of these companies announced an extension of the credit through June, as there are still fewer cars on the road, thus reducing the chances of accidents to a minimum. But that’s not the only way to save on auto insurance.
Generally, car insurance premiums depend on the price of the car, the costs of repair, its safety record, and the risks of theft in your neighborhood. You can reduce your premiums by maintaining a good credit record and requesting higher deductibles. If you increase the deductible to $1000, you can enjoy lower costs of collision and comprehensive coverage by up to 40%. However, you should keep that money aside to fulfill a claim, in case there is one.
You can also consider buying your home and auto insurance coverages from the same insurer, as they may give you a better deal on the package. Moving closer to your work area may also help reduce your premium costs, as you’ll need to commute a shorter distance. It’s also possible to change your status from a commuter to a non-commuter to reduce the premium.
Property insurance
There are several ways to reduce your home insurance premiums. For instance, you may consider investing in making your home more disaster-resistant. The less the chance of damage to your property, the lesser could be your insurance premium costs. So, consider installing a storm shutter or building a stronger roof to protect your home against strong winds, especially if you live in a storm-prone area.
You could also consider retrofitting an older home to protect it from massive earthquake damages. This apart, upgrading your utilities and electrical system can reduce chances of leaks or fires, which again reduces the costs of premiums to a significant extent. Further, you should also upgrade the security system and install new alarms or smoke detectors, if needed. All these factors go into securing your home against possible threats, which helps reduce the premium costs as well.
Business insurance
Whether you’re running a small or medium-sized business, insurance matters, and you know it. While thinking about ways to reduce the premiums, you should keep an important fact in mind. Minimize the risks your business faces, and you may enjoy lower premium rates.
Conduct risk management reviews and safety training programs to assess the potential risks and minimize them. Such endeavors help reduce the possibility of accidents, which prevents huge hikes in premium rates. You should also ensure proper security measures for your employees. Identify and address potentially dangerous work environments. And, of course, never hide anything from your insurance agent or broker. Last but not least, you should categorize your employees properly to ensure that the right cover is procured for the right employees. One-size-fits-all may mean less than necessary cover or more than ideal premiums.
If you wish to reduce your premium rates, and who doesn’t, you should focus on minimizing risk areas. The lower the threat, the lesser premium you will have to pay. So, whether you want to reduce your home, car, business, or any other insurance premium rate, you should work towards identifying, isolating, and mitigating the potential threats. Consider insurance as a protection against accidental damage and not damage caused by your carelessness. That way, you’ll remain protected without breaking your bank.