Lower your insurance costs with Kiplinger's tips

Kiplinger.com, the website of Kiplinger's Personal Finance, recently published a round-up of ways you can lower your insurance costs. While some are spot-on, others could actually cost you more under certain circumstances. Here's a look at their advice. We've spotlighted five solid tips as well as a couple of additional ones that come with caveats.

Shop around. This is good advice for any type of insurance. If you've had the same policy for years, see if another insurer can match or beat the cost. If you've incurred any new expenses (such as adding a teenage driver or an inground pool), definitely shop around. While you've got that policy out, take a look and see if it still meets your needs. You might discover that you were over-insured.

Ask for discounts. For car insurance in particular, this is a biggie. If you drive fewer than 7,500 miles a year, carpool or are willing to take a defensive driving course, you might be able to net a lower rate. Also, tell Junior to keep his grades up; students who get Bs or better are often eligible for a discount.

Don't over-insure. Don't use the market value of your home to determine how much homeowners' insurance you need. Focus instead on the replacement cost: How much would it run you to rebuild in the event of a disaster, plus how much would it cost to replace all of your stuff? Leave out the price of the land your house sits on; this could inflate the total value (and your premium). When it comes to car insurance, figure out if you'd be paying more in premiums for collision coverage than it would cost to replace your car if you drive an older vehicle.

Consolidate your policies. Often, insurers will give multi-policy discounts, so if you have home insurance, life insurance and car insurance with three different providers, it might behoove you to move them all to a single insurance company. This holds true for keeping a teen driver on your policy as opposed to getting him or her their own policy.

Check out life insurance. Life insurance premiums have dropped significantly, so it's a good time to shop for a policy whether you have one already or not. Make your move soon, though; the experts consulted by Kiplinger's say prices are inching back up again, so lock in a good rate while you can.

Raise your deductible. This advice is a bit more questionable. Sure, it lowers your premium if, for instance, you change your auto insurance deductible from $250 to $1,000, but do you really want to be on the hook for $900 worth of damage if you get into a fender-bender? While this can save some cash upfront, figure out your worst-case scenario and ask yourself (honestly!) if you're willing to keep the new deductible amount in an emergency fund that you won't dip into for everyday expenses.

Cut long-term benefits. Again, this saves money up front (according to the article, picking a policy that offers three years costs half as much as one that offers lifetime benefits), but if you've purchased long-term care insurance, will that be worth the peace of mind? While the majority of policyholders never need to tap that lifetime's worth of benefits, if you limit yourself to 36 months' worth of benefits, make sure you've got both a healthy emergency fund as well as a solid family budget plan that includes a worst-case scenario.
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