by Chemain Evans

Did you know that you could be overpaying for your insurance by as much as hundreds of dollars? Most of us have a hard time getting excited about shopping for different insurance, but a little time invested can go a long way in saving you money. Of course, the cost of premiums isn't the be-all-end-all; quality of service, quick response to claims, and financial soundness are all important factors to consider. However, the focus of this article is on getting and keeping those automobile, homeowner/renter, and life insurance premiums down. First we'll discuss some generalities; then we'll get down to some specifics for each category.

Shop around. Shopping around for insurance will take some time, but could save you a good sum of money. Ask your friends, check the Yellow Pages or call your state insurance department. You can also access insurance information for your state on the Internet at http://www.naic.org/state_contacts/sid_websites.htm. States often make information available on typical rates charged by major insurers and many states provide the frequency of consumer complaints by company. Also check consumer guides, insurance agents, companies and online insurance quote services.

This will give you an idea of price ranges and tell you which companies have the lowest prices. But don't consider price alone. The insurer you select should offer a fair price and deliver the quality service you would expect if you needed assistance in filing a claim. So talk to a number of insurers to get a feeling for the type of service they give. Ask them what they would do to lower your costs. Check the financial ratings of the companies with AM Best or Standard and Poor's.

Compare against your current policy. When comparing companies, have your current policy handy when calling so you can compare apples to apples. And if you do find a better policy, absolutely make certain that your new policy is in effect before dropping your old one.

Use a licensed, low-price insurer. You can save several hundred dollars a year on homeowner or auto insurance and up to $50 a year on renter insurance by purchasing from a licensed, low-price insurer. Call your state insurance department for a publication showing typical prices charged by different companies. Then call at least four of the lowest-priced, licensed insurers to learn what they would charge you for the same coverage. If such a publication is not available, it is even more important to call at least four insurers for price quotes.

Use the same insurer for multiple policies. Whenever possible, buy your home and auto policies from the same insurer. Some companies that sell homeowners, auto and liability coverage will take 5 to 15 percent off your premium if you buy two or more policies from them. But make certain this combined price is lower than buying the different coverages from different companies.

Stay with the same insurer. If you've kept your coverage with a company for several years, you may receive a special discount for being a long-term policyholder. This is why it is important to compare against your current policy. Some insurers will reduce their premiums by 5 percent if you stay with them for three to five years and by 10 percent if you remain a policyholder for six years or more. Check to ensure that you are getting the "renewal" discount. But make certain to periodically compare this price with that of other policies.

Look into group coverage. If your employer administers a group insurance program, check to see if a homeowners or auto policy is available and whether it is a better deal than you can find elsewhere. In addition, professional, alumni and business groups often work out an insurance package with an insurance company, which includes a discount for association members. Ask your association's director if an insurer is offering a discount on homeowners or auto insurance to you and your fellow graduates or colleagues. If you are a member of an auto club, such as an affiliation AAA, check with that organization as well.

With those general rules out of the way, let's move on to some specifics.

Auto Insurance

Get your discounts. Make sure you get all the discounts you may qualify for. Check on discounts for safety and security features. Safety features can also lower your payments. Heading the list of money saving safety features is antilock brakes. Check to see if the insurance company you have or are considering gives a discount for this feature. Automatic seatbelts and airbags may also give you premium discounts.

Stay clean. Keep your driver's record clean; avoid tickets, especially moving violations. Drive a car that is less popular with thieves, inexpensive to repair, and/or an older model. When shopping for a new car, check with your insurer about insurance costs as well.

Raise your deductible. Talk to your agent or insurer about raising your deductibles on collision and comprehensive coverages to $500 or more. Deductibles are the amount of money you have to pay toward a loss before your insurance company starts to pay a claim, according to the terms of your policy. The higher your deductible, the more money you can save on your premiums. If you have an old car consider dropping these coverages altogether. Taking these steps can save you hundreds of dollars a year.

Check for a low-risk occupation discount. Insurance companies collect information about what types of people get into accidents. Over the years they have seen trends that show that drivers in certain occupations tend to get into fewer accidents. These occupations are then labeled "low-risk". Since, on average, drivers in these occupations have a lower chance of getting into an accident, insurance rates for them are lower. Check with your insurance company or agent if you are in a low-risk occupation.

Homeowner/Renter Insurance

Raise your deductible. Nowadays, most insurance companies recommend a deductible of at least $500. If you can afford to raise your deductible to $1,000, you may save as much as 25 percent. Remember, if you live in a disaster-prone area, your insurance policy may have a separate deductible for certain kinds of damage. If you live near the coast in the East, you may have a separate windstorm deductible; if you live in a state vulnerable to hail storms, you may have a separate deductible for hail; and if you live in an earthquake-prone area, your earthquake policy has a deductible.

Make your home more disaster resistant. Find out from your insurance agent or company representative what steps you can take to make your home more resistant to windstorms and other natural disasters. You may be able to save on your premiums by adding storm shutters, reinforcing your roof, or buying stronger roofing materials. Older homes can be retrofitted to make them better able to withstand earthquakes. In addition, consider modernizing your heating, plumbing and electrical systems to reduce the risk of fire and water damage.

Get the right amount of coverage. Make certain you purchase enough coverage to replace the house and its contents. "Replacement" on the house means rebuilding to its current condition. Don't confuse what you paid for your house with rebuilding costs. The land under your house isn't at risk from theft, windstorm, fire and the other perils covered in your homeowners policy. So don't include its value in deciding how much homeowners insurance to buy. If you do, you will pay a higher premium than you should.

Improve your home security. You can usually get discounts of at least 5 percent for a smoke detector, burglar alarm or dead-bolt locks. Some companies offer to cut your premium by as much as 15 or 20 percent if you install a sophisticated sprinkler system and a fire and burglar alarm that rings at the police, fire or other monitoring stations. These systems aren't cheap and not every system qualifies for a discount. Before you buy such a system, find out what kind your insurer recommends, how much the device would cost and how much you would save on premiums.

Seek out other discounts. Companies offer several types of discounts, but they don't all offer the same discount or the same amount of discount in all states. That's why you should ask your agent or company representative about any discounts available to you. For example, since retired people stay at home more than working people, they are less likely to be burglarized and may spot fires sooner. Retired people also have more time for maintaining their homes. If you're at least 55 years old and retired, you may qualify for a discount of up to 10 percent at some companies.

Review annually. Review the limits in your policy and the value of your possessions at least once a year. You want your policy to cover any major purchases or additions to your home. But you don't want to spend money for coverage you don't need. If your five-year-old fur coat is no longer worth the $5,000 you paid for it, you'll want to reduce or cancel your floater (extra insurance for items whose full value is not covered by standard homeowners policies) and pocket the difference.

Look for private insurance if you are in a government plan. If you live in a high-risk area -- say, one that is especially vulnerable to coastal storms, fires, or crime -- and have been buying your homeowners insurance through a government plan, you should check with an insurance agent or company representative or contact your state department of insurance for the names of companies that might be interested in your business. You may find that there are steps you can take that would allow you to buy insurance at a lower price in the private market.

Buyer beware. When you're buying a home, consider the cost of homeowners insurance. You may pay less for insurance if you buy a house close to a fire hydrant or in a community that has a professional rather than a volunteer fire department. It may also be cheaper if your home's electrical, heating and plumbing systems are less than 10 years old. If you live in the East, consider a brick home because it's more wind resistant. If you live in an earthquake-prone area, look for a wooden frame house because it is more likely to withstand this type of disaster.

Choosing wisely could cut your premiums by 5 to 15 percent. Remember that flood insurance and earthquake damage are not covered by a standard homeowners policy. If you buy a house in a flood-prone area, you'll have to pay for a flood insurance policy that costs an average of $400 a year. The Federal Emergency Management Agency provides useful information on flood insurance on its Web site at http://www.fema.gov/. A separate earthquake policy is available from most insurance companies. The cost of the coverage will depend on the likelihood of earthquakes in your area.

Ask questions. If you have questions about insurance for any of your possessions, be sure to ask your agent or company representative when you're shopping around for a policy. For example, if you run a business out of your home, be sure to discuss coverage for that business. Most homeowners policies cover business equipment in the home, but only up to $2,500 and they offer no business liability insurance. Although you want to lower your homeowners insurance cost, you also want to make certain you have all the coverage you need.

Life Insurance

The main purpose of life insurance is to replace your income for your family if something should happen to you. If you are single, you probably don't need life insurance. If your kids raised and you have planned well for retirement, you probably don't need life insurance. Anyone with children still at home should carry life insurance, unless an alternative plan is in place.

For savings, choose term insurance. If you want insurance protection only, and not a savings and investment product, buy a term life insurance policy. You will probably be quite surprised at how reasonable it is. There are several companies that can "shop" the rates for you and help you narrow down the field. Select the longest term you can afford and make sure the rates are set for the entire term.

For investment, choose other insurance. If you want to buy a whole life, universal life, or other cash value policy, plan to hold it for at least 15 years. It is, after all, an investment. Canceling these policies after only a few years can more than double your life insurance costs.

Check your public library for information about the financial soundness of insurance companies and the prices they charge. The July 1998 issue of Consumer Reports is a valuable source of information about a number of insurers.