Beating Broke

Personal Finance from the Broke Perspective

Clever Tips for Saving Money on Insurance

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Saving money is a topic that is on most people’s minds. Whether it’s spending less on groceries, powering down the utility bill, or shopping for the cheapest gas, there are plenty of great tips floating around the internet. You may have tried some of them yourself, hopefully with great results. However, there is always room for improvement when it comes to balancing the family budget.

If you are taking a hard look at your budget, you’ll need to categorize the ways you spend money. Some monthly costs are fixed, and others are flexible. Likewise, some costs are “needs,” while others fall partway into the “wants” category. Insurance is definitely a “need,” but there are ways to trim down the monthly bill. Read on for a few clever tips to help you keep saving money on insurance.

Own Less

They say the more you have, the more you have to take care of. It’s true. Owning things comes with responsibility, which invariably leads to an outflow of cash. For instance, if you currently own three vehicles, consider selling the one you rarely use. You’ll put money in your pocket from the sale, and you will save on your monthly auto insurance premium. Other possessions can be pared down, as well. Homes, valuable collections, and expensive equipment can all be downsized in the interest of saving money.

Pay a Higher Deductible

A quick look at online insurance plan comparison tools will show you that monthly premiums are lower when a plan has a higher deductible. Shouldering a $1,000 deductible is basically like insuring yourself. If you are a safe driver, you never leave the coffee pot on when you leave the house, and your home has an alarm system, go for the higher deductible and keep saving on insurance premiums. On the other hand, if you have a history of recklessness and you’re always strapped for cash, paying more per month and having a lower deductible might be in your best interest.

Ask for an Annual Review

Because a lot can happen in a year, it is wise to take an annual look at your insurance needs. As your family ages, your needs will change. Children become teenagers with a driver’s license, which can result in higher auto premiums. However, when they grow up and move out, you may qualify for lower premiums again. As you and your spouse age, your insurance needs will change too, especially if you decide to downsize your possessions.

Shop Around Every Year

Shopping for insurance has gotten easier, thanks to the internet. If you feel like you are spending too much, take a moment to use an online tool and shop for a better deal. Learn more about your options, and make an informed decision. You may be surprised at the money you can save each month.

Learning how to save money on your monthly expenses can be a lot of fun. After all, a dollar saved is a dollar earned. Saving money on insurance is simpler than you might imagine if you use the tips mentioned above.

Why We Don’t Plan to Renew Our Homeowners Warranty

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Our house came with a homeowners’ warranty.  The realtor we worked with, noting that our air conditioning unit was 18 years old, told us to make sure to keep up with the warranty because that would cover the cost of replacement on our central air unit.

At $650 a year, keeping up with the homeowners’ warranty to replace a $4,000 to $6,000 central air unit that was on its last legs sounded like a good deal.

Homeowners’ Warranties—Buyers Beware

Last year, one week into home ownership, our hot water heater died, and we got a glimpse of how the homeowners’ warranty worked.

Homeowners WarrantyI was not impressed.

We had to work with a specific company, I’ll call Company A, designated by the homeowners’ warranty, to replace the hot water heater.  Company A asked me to call my home owner’s insurance to see if they would pay to have a different company, Company B, come clean up the water damage.  (We had very little water damage, but Company A’s repair man assured me we’d get mold, even though we’re in Arizona with very little humidity.)  Luckily, I didn’t do that because Company B wanted to charge us $1,000 to clean up the water.

Clearly, Companies A and B must have had kickbacks with one another for business referrals.

Also, I thought we’d only have to pay the $75 service fee to get our hot water heater replaced, and then the homeowners’ warranty would pay the rest.

Wrong.

We still had to pay $375 more for parts and repairs that weren’t covered under the homeowners’ warranty.

The homeowners’ warranty paid $650, so that year, despite the annoyance and out-of-pocket expenses for the hot water heater replacement, the policy paid for itself.

Homeowners’ Warranty Will Only Help If the Appliance Dies

This year, after much thought, especially considering the bad experience with the hot water heater, we decided to renew the policy.  We paid another $650.

And then, our air conditioner started the march to a slow death.

First, it worked over time, running all the time, but it couldn’t seem to cool the house.

When our next electric bill came, it was $120 higher than usual.

But, the homeowners’ warranty wouldn’t pay anything for the air conditioner unless it was not working at all.

We called our own repair person and paid $200 to have two pounds of Freon replaced.  Two months later, and the cycle is repeating itself.  The air conditioner is working constantly, but the house is not cooling.  I’m guessing we are already out of Freon.

Now, we’re faced with a choice.  Wait for the unit to die so the homeowners’ warranty will cover the cost of the replacement, or replace it ourselves.

If we wait for the unit to die, the homeowners’ warranty may cover the majority of the cost, but we would have no say in the company doing the work or the replacement unit.  Meanwhile, we will keep paying to replace Freon and having higher than usual electric bills until the unit dies.

Or, we could replace it ourselves and stop the flow of wasted cash and energy caused by the old air conditioner.  We could choose the company we want to work with and what model we’d like as a replacement, the more energy efficient, the better.

While a homeowners’ warranty can save people money, in the long run, for us, it seems to be too much of a hassle and too restrictive to keep up with.

Do you have a homeowners’ warranty?  If so, do you find it valuable?

Will My Homeowner’s Policy Cover Damage to My Friend’s Belongings?

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Homeowner’s insurance is a necessity for anybody who owns a home or has a mortgage. The policy will protect you in the event that your home is damaged from any number of factors beyond your control, including storms, fire, falling trees, wind damage, and more.

Your home is a huge investment, and it’s important to protect its value. If a storm damaged your home so badly that it would cost you a fortune to fix, not only would you have lost the value of the home to the storm, you’d still have a mortgage on a property that is no longer worth what you owe. For all of these reasons, it’s important to have homeowner’s insurance.

An HBF homeowner’s insurance policy not only protects the physical structure of your home, but also its contents. Policies differ on what they cover—you always get what you pay for—but for the most part, your home’s contents are covered in the event of a storm or similar event damages the home so badly that valuable possessions inside are also damaged. For instance, if a tree smashed through your roof and allowed rainwater to pour in, damaging expensive electronics, you would likely be covered.

So your homeowner’s policy would be pay for a new roof, new flooring, and a new TV to replace the one that got washed away. Insurance companies encourage the insured parties to keep a detailed list of valuable items in the home along with receipts so there’s no question about what is in the home when it comes time to file a claim.

But does your homeowner’s insurance policy cover the belongings of visitors to your home while they are staying with you? Let’s say you have friends or family staying with you for the weekend, and a burst pipe floods the guestroom soaking everything on the floor, including your brother’s brand new laptop. Can you get your homeowner’s policy to pay for a replacement? In general, yes, your brother’s computer is covered under the policy and is eligible for a claim.

However, to make sure there are no hiccups in the claim process, it’s important that you contact the insurance company to request this coverage to begin with. Some policies may include coverage for guests and other visitors by default, but many policies will need to have this coverage added to it as a separate rider.

So you’ll have to decide if visitor and guest coverage is worth it to you to pay a little bit more. If you frequently have guests over that tend to bring expensive items like electronics or jewelry, it might make sense to make sure you have the proper coverage. Covering your visitor’s possessions would certainly put your mind at ease if you’re worried about theft, for example. However, it might also be redundant if your guests already have their personal belongings insured by their own policy. Your choice depends on how frequently someone visits your home and what they tend to bring with them.