Are You Overpaying for Insurance? Common Overcharges and How to Spot Them
What if you were losing money every month and did not even know it?
Chances are that you have automobile insurance, homeowners insurance, or business insurance. Maybe you even have all three. And while these policies are very different, they all have one thing in common: They are intended to help you protect your most valuable investments.
However, no two policies are exactly alike. What is ideal for one person may not be ideal for another, and that can lead to you paying too much for your coverage. Worried that you might be overpaying for insurance? Keep reading to discover how to identify and correct the most common overcharges.
Understanding How Insurance Companies Calculate Premiums
Depending on the policy, your premiums may be set based on a variety of factors. This includes driving record, location, age, and even gender. Making changes to where you live, what you drive, or other things may naturally increase or even decrease how much you pay.
What Causes Insurance Premiums to Increase Without Notice?
Filing a claim almost always increases how much you pay each month. Even if you do not file, though, changes to your driving record (like getting tickets) may increase your auto policy. Premiums may also increase if your credit score drops, if you buy a more expensive vehicle, or if you move to a more dangerous area. In some cases, your monthly cost may increase simply because you had previous discounts (like a good student or good driver discount) that no longer apply.
Top 5 Common Overcharges That Could Be Inflating Your Insurance Premium
You cannot always control the factors that increase premiums. However, there are some very common insurance overcharges of which you should be aware. And if you can identify and address these overcharges, you can ultimately lower how much you pay each month.
Wondering how to lower policy premiums in the easiest way? Below, you will find more information on how to find and dispute overcharges.
1. Premiums Based on Outdated Information (Driving Record, Vehicle, Etc.)
The first step in identifying insurance overcharges is to identify outdated information and update your carrier. Updating them about your current driving record, vehicle, credit score, and anything else that has changed can help lower your premium while also helping the carrier customize the best policy for your current situation.
If you own a business, has something changed that could decrease your payment? Have you improved or upgraded your risk management score with employee training or adding new security measures? Do you have fewer employees, making your workers comp lower? Have you strengthened your financials over time, making you less of a risk? All of these things could result in better pricing.
2. Underinsured or Overinsured: Are You Paying for Coverage You Do Not Need?
Nobody wants to be underinsured when they get into a car accident or face a natural disaster, but this causes some people to take out more coverage than they actually need. For example, you can drop comprehensive and possibly even collision policies from very old vehicles (just make sure you understand full coverage versus liability-only), and you can remove certain optional riders from your home policy as well as excess dwelling coverage (you only need enough to rebuild the house from scratch).
These are some of the main reasons you may be paying too much for homeowners insurance.
3. Hidden Fees and Unnecessary Add-Ons
When identifying insurance overcharges, it is important to look for unwanted hidden fees and remove unnecessary add-ons. You may, for example, be paying extra fees for installment car payments and even more fees for credit card payments.
In terms of riders, you may want to remove underinsured/uninsured motorist protection from older vehicles, and you should consider removing earthquake and flood riders from your home policy if your area rarely or never experiences these disasters. The idea that these are necessary for everyone is one of the biggest debunked home insurance myths.
4. Not Shopping Around for Better Rates or Discounts
Overpaying for coverage almost always begins with not reviewing all of your options. You can get free quotes from most carriers and can switch most policies whenever you want. To save the most, you should do an insurance premium comparison between all the quotes you get. When you have narrowed it down to your top three, contact these carriers to see who offers the best discounts for further savings.
5. Failing to Update Your Policy with Life Changes
Sometimes, saving money on coverage is as simple as updating your carrier about major life changes. For example, you should let them know when you get married, buy a home, have a child, and so on. In many cases, this can result in insurance policy adjustments in your favor. And in all cases, the updated info will help you and your carrier pick out the policies most suitable to your current needs.
How to Identify If You Are Overpaying for Insurance
Now you know more about common insurance overcharges and how they can increase how much you pay. But do you know how to review your own policies for, say, an auto insurance overcharge? Without this knowledge, you may be stuck continually paying too much.
Fortunately, it is easy to review your coverage and, if necessary, make insurance policy adjustments. Below, you will find a few easy strategies to help you start saving money right away.
Reviewing Your Insurance Policy for Hidden Charges
Those wondering how to correct insurance mistakes must first review their policy from top to bottom. First, be sure to drop any excess policies (like comprehensive auto for an older vehicle or separate gap coverage for a leased vehicle that already has it). Next, look for hidden fees that may come from getting a paper bill (you can easily switch to paperless) and other questionable fees.
Comparing Multiple Quotes from Different Insurers
To avoid overpaying for insurance, it is crucial to get quotes from many different insurers. This allows you to get the best possible price, regardless of the coverage you need.
Understanding What Affects Your Premiums: Age, Driving Habits, and Coverage Type
Coverage type affects your premiums; for example, lower deductibles lead to higher payments (and vice versa). Additionally, driving habits affect the overall costs (a history of moving violations and accidents will cost you more).
It is possible to improve things like driving habits and credit score, which helps with saving money on insurance. But your premium is also affected by things you cannot easily control, including age and gender.
How to Correct Overcharges and Lower Your Insurance Premiums
Wondering how to correct insurance mistakes when you find them? The best method is to contact your carrier directly. They will be able to make the requested changes and make additional recommendations on how to lower insurance premiums.
Ready to get started? Below, you will find all of the information you need.
Contact Your Insurer to Adjust Your Policy and Remove Unnecessary Coverage
Whether you are interested in saving on auto insurance overcharges or conducting a home insurance or business insurance premium review, the first step is contacting your carrier. Only they will be able to change your plan and remove unnecessary coverage. While it is convenient to call them directly, you can also visit the local office if you want a more personal experience.
Switch to a Higher Deductible for Lower Premiums
Most drivers want a low deductible, but that leads to higher premiums. If you are a safe driver, consider switching to higher deductibles so you can pay less for auto coverage each month.
Take Advantage of Discounts and Bundling Options
If you need more than one type of policy (like homeowners and automobile policies), you can save money by bundling them through the same carrier. You can further lower your monthly rate by qualifying for discounts. Remember, there are discounts for being a safe driver, for being a good student, for driving very little, and so much more.
Why Regularly Reviewing Your Insurance Is Key to Saving Money
Chances are, you are reading this because you want to lower your monthly premiums. Unfortunately, this is not a “one and done” proposition, and you will need to regularly stay on top of hidden fees and unnecessary coverage.
The best way to do this is by conducting annual insurance policy reviews. Combine this with small lifestyle changes; they are likely to add up to big savings. Keep in mind that bundling helps adapt to all your life changes.
The Importance of Annual Insurance Policy Reviews
You never know when major life changes will happen or when small adjustments to your policies will increase your costs. That is why you and your carrier should review your policy each year to ensure you do not pay any more than is necessary.
How Small Changes in Your Life Can Lead to Significant Savings
If you start walking more and driving less, you will be healthier and possibly qualify for a low-mileage discount. Similarly, learning how to install things like anti-theft devices will make your vehicle safer while qualifying you for deeper discounts. These may be small changes for you, but they lead to significant savings.
How InsureOne Can Help You Avoid Overpaying for Insurance
Now you know how to avoid overpaying for insurance. This includes how to look for hidden fees and conduct your own auto, business and home insurance premium review. But do you know who is just as committed as you are to helping you save money?
Here at InsureOne, we specialize in protecting everyday people just like yourself. When you are ready to give yourself the highest protection at a competitive price, come get a quote online. You can also pick up the phone and give us a quick call at 800-836-2240. Finally, feel free to come find an InsureOne office near you.
FAQs
Why Does My Insurance Premium Keep Increasing?
Premiums may naturally increase over time due to factors like you getting older, discounts falling off, your driving record changing, etc. Plus, factors like your credit score and your zip code may affect how much you pay each month, even if you are a safe driver without a history of accidents or claims.
What Are Some Discounts I Might Be Missing on My Insurance?
You may qualify for discounts by having a safe driving record, by keeping your grades up, or by installing anti-theft devices. While the carrier may require proof, you can also get discounts by driving very little throughout the year or even by being a member of organizations such as fraternities.
Should I Switch My Insurance Provider If I Think I Am Overpaying?
If you think you are overpaying, you should immediately get quotes from multiple carriers. Even if you currently have a fair rate, there is always a possibility you can find a better deal.
Can I Cancel My Insurance Policy at Any Time?
In most cases, you can cancel your policy at any time. That is part of why you should always compare rates: If you get a better offer somewhere else, you can take advantage of it right away.
How Do I Avoid Getting Stuck in a Long-Term Insurance Contract That I Do Not Need?
The best way to avoid getting stuck in a long-term contract is to check the cancellation policy. Be sure to get coverage you can cancel at any time, so you can always switch to a cheaper plan if you find one.