You can save big bucks on insurance

A consummate risk taker would cruise through life without automobile, health or home insurance. Most people aren’t that bold. That’s why the insurance business is a wealthy one. Even though you may consider insurance a necessity, you can save money on it in several ways.

The first step: Shop around

No matter what you want to insure, it pays to shop around. Call companies directly or explore their websites. Get at least three comparable price quotes. But don't commit yourself to the lowest price alone. Ask friends and family for recommendations. Choose a company that patiently and pleasantly answers all your questions. Your money-saving strategy will differ by the type of insurance you want.

Automobile insurance

One superb way to minimize car insurance costs is to maintain a good driving record. Then consider these tips:

• Compare insurance costs before you buy a car. Premiums are based partly on the sticker price of the car, projected repair costs, safety record and rate of theft.
• Ask for a high deductible. Deductibles are the out-of-pocket expenses you pay before your insurance policy takes over. Increasing your deductible can substantially lower your costs.
• Cut coverage as your car ages. Review your policy every year.
• Buy homeowners and car insurance from the same company. Some insurers will give you a package deal.
• Take advantage of discounts. Some companies offer lowered rates to motorists who drive relatively few miles per week or year, take a defensive-driving course or install antitheft devices.

Video: How to Save on Homeowner's Insurance

Homeowners insurance

The premiums you pay for homeowners insurance can vary by hundreds of dollars, company to company, policy to policy and location by location. For example, you may pay less for insurance if you buy a home near a professional fire department and away from flood zones. Here are some other things to consider.

• Raise your deductible. What is true of car insurance is true of home insurance: The more you’re willing to pay out of pocket when disaster strikes determines the cost of the insurance policy. The higher your deductible, the more money you can save.
• Insure to rebuild. When you bought your home, you paid for the land it sits on. Don't include the value of the land when determining how much insurance to buy. Insure your home for the amount it would cost to rebuild it.
• Don’t file claims for small damages like broken windows. This will raise your rates. Save your insurance for disasters.

Video: How Does Insurance Work?

Health insurance

This is a huge and growing problem for employers, individuals and government. Changes may be on the way. In the meantime, take these tips to cut costs:

• Join a group. Group health insurance plans provide coverage to a select group of people, such as employees of a company and members of a labor union, professional association, club or other organization. These plans usually cost less per participant than individual plans.
• Raise your deductible. The more you agree to pay for regular health maintenance in the form of deductibles and co-payments, the lower your premiums will be. Compare your plan with your spouse’s. If both of you are employed, you have two plans to choose from.
• Explore network providers. Check that you aren't paying a high premium just because your plan allows you to choose any doctor you want. You can save money by seeing a doctor who is part of the insurer’s network.

Private mortgage insurance

Private mortgage insurance (PMI) reduces risk for a mortgage lender when the buyer makes a down payment of less than 20% of the asking price of the home. The problem is that it raises your monthly payment. Here’s what you can do:

• Avoid PMI by making a down payment of 20% or more.
• Cancel PMI if you have paid 20% or more of your home's value since your mortgage loan began.
• Use a piggyback loan (a second mortgage) to eliminate PMI. This involves two loans and a 10% down payment. A first mortgage covers 80% of the sale price of the home; an additional loan covers the remaining 10%. Monthly payments on the two mortgages are likely to be lower than the cost of one mortgage plus mortgage insurance.