Save Advice on Insurance with These Tips from Source Oen
Each month Source One will provide some tips to save money in various ways. These tips will be brought to you by our own internal team, this month’s tip focuses on saving money on insurance policies and was provided by Jenny Tsai, Project Analyst.
Insurance companies have successfully marketed their product utilizing a powerful human emotion as the catalyst for driving sales. Fear. By selling “peace of mind” to consumers, insurance companies have effectively and sublimely communicated that their products are undeniably necessary, unquestionable, and non-negotiable. The truth is that most consumers are over insured through several insurance products and there is something that they can do about it.
The four main types of insurance products are Auto, Home, Health, and Life and Liability insurance. This article will point out several areas that are commonly over insured in Auto insurance. By applying the principles taught in this article in analyzing all insurance products, consumers can effectively free up extra money for savings, bills, or other investments.
One key to identifying over insurance is to look for areas where the same product is purchased in multiple policies. For example, many auto insurance companies issue lengthy policies with additional services that are not transparent to consumers unless the they look for them. Emergency Road Service is a great example. Emergency Road Service coverage typically covers an individual with a flat tire repair, battery boost, fuel, lockout service, two and other minor mechanical repairs to get a non-operational vehicle moving. If the consumer is an AAA member or has an On Star subscription, these services may be covered with their memberships.
Another example of where over insurance occurs is when consumers purchase car rental insurance. Many auto insurance policies or credit card companies (as long as it is used for the rental car) offer limited coverage on rental car damages. A phone call to either company prior to renting a car can save a substantial amount of money.
A final example of where there may be over insurance in auto policies may be in personal injury protection coverage (PIP). This coverage reimburses for medical and funeral bills stemming from auto accidents regardless of who is at fault and is mandatory in some states. However, this coverage may be duplicated if consumers and their passengers have health, life, and disabilities policies. By exploring PIP coverage details against other insurance that may be active, consumers can effectively lower or eliminate duplicate coverage.
It is important to keep in mind that insurance products are similar to all consumer products in the market. In a free market where there is ample competition, outside of monopolies, consumers are never locked into one company. Review insurance policies regularly and update products with life events to minimize over or under insurance. Verify that the rates provided by the insurance companies are indeed competitive with “shop around” techniques and leverage the market insight to negotiate additional discounts. Many companies are willing to issue discounts to avoid losing a customer.
Exploring individual and family insurance products in detail with the insurance representative may pay off in substantial savings over time. By verifying that there are no duplicate services or redundant coverage, insurance premiums may decrease significantly. Review insurance policies regularly with every major life event, budget review, or other predetermined financial review frequency to confirm that the active insurance products are sufficient and necessary. Put some more money back in your pockets by eliminating over insurance.