Page 14 - OCT2023

Page 14
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NEWFOUNDLAKELIFE.COM October 2023 Your Insurance Guy
My Insurance Premium Increased!
Should I Lower My Coverages to Lower My Cost?
By Jim King neWfounD insuRance
In today’s Insurance world, everyone’s premium is going up, even if you haven’t had a claim. The average increase we are see- ing from almost every insurance company we represent is be- tween 8% and 10%. If you have had a claim, the increase that you will see when your policy renews will be even greater than the average.
The unfortunate reality is that everything is more expensive and sometimes ridiculously more ex- pensive. With inflation driving the cost of everything higher, the last thing anyone needs is to pay more for is insurance, especially if you haven’t experienced a loss. So, what is the best, or at least a good strategy to minimize the potential increase you are likely to see when your policy renews?
First, shop around. If you are using an agent, ask them to shop for you. Most Insurance compa-
nies will give a discount for good customers that are loyal. They want to retain your business. If you are working directly with an insurance company, Geico, State Farm, Progressive or Lib- erty Mutual as examples, try one of the other ones. Do your own shopping or call us and we will do the shopping for you.
Second, review your deduct- ible limit. If you are carrying a fairly low deductible, say $250 or $500 get quotes with higher deductibles. Experiment with de- ductible of $1000 or $2500. Just remember that your deductible is your “out of pocket” expense should you have an accident and need to make a claim so make sure you have the funds available to cover the deductible should you have an accident.
Lastly, DO NOT LOWR YOUR COVERAGES! It is the biggest mistake people can make. Lowering coverages can seem to be an attractive approach to re- ducing costs because it can have the effect of lowering the pre- mium but the consequences can be catastrophic.
As an example, if your cur- rent coverage limit on your home is $500,000 and you drop that coverage limit to $250,000, you may reduce your premium by
$200, a fairly substantial savings. However, if you have a loss and it costs you $400,000 to rebuild to the condition your house was in before the fire, you now have to pay $150,000 out of pocket. Your premium reduction strat- egy to save $200 now looks like a pretty poor approach given the $150,000 shortfall you now must find a way to make up.
So, in summary, for cost sav- ings approaches to lower the pre- mium on your insurance policy, play with the deductibles and not the coverage limits.
Lastly, and most importantly, make sure you are adequately insured, make sure the coverage limits are sufficient to rebuild your house in the event of a cat- astrophic loss.
Please feel free to call us with any questions or concerns about your insurance coverages. We are happy to help. We are here to answer any questions. Feel free to call us 603-744-5000 or email us at info@newfoundins.com.
Our add is on the front page or visit our website www.new- foundins.com
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