Evaluate Insurance Cuts in Tough Economic Times

During these tough economic times, consumers may look to their insurance as a budget-cutter. But they should exercise caution to make sure that their short-term savings don’t compromise their long-term financial backstop, according to the Insurance Information Network of California.

“Insurance tends to be an ‘out of sight, out of mind’ product, so consumers may try to save money by cutting back on their coverage,” said IINC Executive Director Candysse Miller. “When evaluating your insurance, you can take steps to save money without compromising your ability to recover from an accident, theft or catastrophe.”

To help consumers, IINC recommends the following to help protect investments and save money:

• Insure your house, not the land. With property values in decline, many homeowners may think they should reduce their insurance coverage. However, since insurance covers the structure, it should reflect the rebuilding cost rather than the real estate value. To save money, consider raising your deductible, combining multiple policies with the same insurer and asking about discounts.
• If you are considering flood insurance, purchase it sooner rather than later. Periodically, the National Flood Insurance Program re-evaluates flood risks. While flood insurance may cost around $500 per year now, these costs could be higher if you purchase later under a higher flood risk.
• Evaluate your auto insurance. During the last 12 months, many motorists succumbed to high gas prices, got out of their cars and found other ways to get to work. If this was you, and you are still following the same habits, you could be eligible for a low-mileage discount. Also ask your insurer about other discounts.
• Shop around for insurance, but not on price alone. Make sure that the policy you purchase reflects your priorities: Some companies may offer lower prices in exchange for less personal customer service. Also, research insurers to verify their financial security and customer satisfaction. This information is available online from the California Department of Insurance.

For more information, visit www.iinc.org.