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.

Do You Compare Your Finances to Others?

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I belong to several Facebook groups, and recently, a woman in one group asked the seemingly innocent question, “What do you pay for cell phones and car insurance?”  She added, “We pay $180 a month for our cell phones and $345 a month for our car insurance.”

Say what?

When you read that number, you automatically think one of two things–“Wow, she’s paying a fortune for cell phones and car insurance!” (that was my initial thought), or, you think, “Sounds about right.”

Comparing FinancesA few of you may even think she’s getting a good deal.

My husband and I each carry a cheap cell phone from Tracfone that is for emergencies or occasionally checking in with one another.  We don’t spend any more than $10 to $20 a month on them.  Our car insurance is about $55 per month.  (We only have one vehicle.)

After reading how much this woman spent, I was feeling pretty good about myself.  But why?  I really don’t know her situation.  Her cell phone plan might include cell phones for the whole family.  Her car insurance is likely for multiple cars.  Maybe she has teenage drivers, or maybe she or her spouse has gotten a ticket recently.

Besides, I have no idea how much money she makes.  These bills might not be that extravagant in relationship to her income.

There’s really no point comparing my situation to hers.  To do so would invite complacency toward my own budget at best, and a loosening of the purse strings at worst because, hey, other people are spending a lot more than me.

The Only Time You Should Compare Your Spending to Others

Generally, I try not to compare my spending or budget to others.  Circumstances vary widely, and knowing another person’s exact financial situation is difficult.  Too often, especially online, we get a snapshot of someone’s finances and think we see the whole picture when we don’t.

We make assumptions of our own financial situations based on others.

Ultimately, we need to strive to do the best we can do with our own budgets.  To beat ourselves by spending less and/or saving more than we did the month before or the year before.

The only time it makes sense to look at someone else’s finances and spending is when they are doing considerably better than you, and you want to learn from and emulate them.  For instance, I knew my husband and I were spending too much for groceries.  One blogger I read has grown a large garden and planted fruit trees so that she can feed her family of 9 for less than $300 per month.  (Yes, you read that right.)

I know I won’t  ever have a grocery budget of $300 per month, but reading her techniques and strategies has encouraged me to cut my grocery budget and try to spend less.  It’s even inspired me to try out once a month shopping to reduce costs.

Ultimately, we shouldn’t compare our finances to others, but if we’re going to, we should only compare to those we wish to emulate.

Do you look at other people’s spending to make you feel better about your own or to motivate you to improve your finances?

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.