Insurance is one of the least fun things to talk about in any discussion about saving money. However, it should be viewed as no less a way to save money than buying needed items cheaply or purchasing a rare coin on EBay at 10% of the coins' real worth. In fact, I enjoy saving money by finding cheaper insurance policies or, changing my current policy to better reflect my risk tolerance.
Most people have insurance on their home, auto, life and, health. You might also have insurance on a boat, jewelry, collectibles or, some other item or items. Insurance can be any number of items but, in order to save on insurance you must first realize what insurance actually represents. Most people buy insurance but, don't really know what they are doing. Insurance is a specific financial tool that exists to keep an individual from having a catastrophic financial loss. A catastrophic loss is different for different people. Someone making $20,000 per year might find that $1,000 is a catastrophic loss whereas, someone making $2,000,000 might find they do not suffer a catastrophic loss until the amount of the loss is at least $100,000. In short, what you make depends on the amount of insurance you buy, in most cases.
Insurance codes and licencing are generally divided up into three major areas: health insurance,life insurance and property casualty insurance. Having run a general agency back in the 1980's (I had a company that hired and trained people to sell for various insurance companies), I have gleaned some ideas in how to purchase policies. I also have personal experience from purchasing most of my current insurances online.
First of all, your insurances can be easily compared and bought online, over the telephone or in person. No matter how you purchase your policy, you must make sure the company you are dealing with is legitimate. I like to search the web several times for a particular insurer. Make sure the same website comes up each time you do a search. Fraudsters on the web will often overlay their website over a legitimate site in order to get you to give out harmful personal information.
A second problem with buying insurance online is that you must make sure the carrier and the policy you are buying is o.k. for the state you reside in. Every state has it's own insurance laws and lists of carriers it approves to do business in the state.
Buying the cheapest insurance does not mean you are getting the best policy for your money. The flip side is that paying the highest price for your insurance does not mean you are getting the best coverage for your price either. I like to select a company based upon recommendations from people who actually had a claim. I bought a low cost personal health insurance policy from a company that was highly recommended by a friend of mine that needed open heart surgery when she was in her mid 40's.
Purchasing insurance online can be great for comparing policies. Internet insurance brokers will often have several companies you can directly compare in terms of price and coverage. When dealing directly with an independent insurance agent you will find that they will often try to sell you the policy that pays them the highest commission. When dealing with salesmen for anything it is good to always play the game of being poor and cheap. The salesman will then finally get to better policies in terms of coverage and price in order to get a sale. Remember, no matter what type of insurance you buy, many times 20-50% of the first years premium goes to pay for commissions.
Insurance companies offer a huge variety of policies that vary greatly in what they cover. However, the bottom line to saving on insurance is the deductible. Legitimate companies that have cut out some corporate costs and pay lower commissions might save you some dollars. But, the bottom line to saving money on your insurance is the amount you are ready to accept as a loss. The amount of your deductible is not just a function of pain but, a function of what you can afford. For example: if you have no health insurance but, have assets you could lose if you get sick then, a $2,000 deductible policy is better than no policy at all.
In summary, you need to decide your tolerance for loss before you start looking for an insurance policy. Most of your savings on a policy will be determined by the amount of commission paid to agents and more importantly, your deductible.
