When we think about budgeting and freeing up money for savings, it can be easy to get mired down in the little things. Not buying coffees, for example.
But there are major expenses that can and should be reduced if you want to get serious about saving. Two obvious ones are housing and vehicles, but another oft-overlooked savings opportunity is insurance. We necessarily carry insurance on various things (like the house and car), and it's entirely possible that we're overpaying for the privilege.
Here are three ways to cut your costs.
Wrap your policies together
If you have home insurance, car insurance, life insurance, and anything else, see if you can't place several policies with one insurer. New policies are gold for insurance companies, so they might offer you better deals if you bring more business. Call and find out what kind of rates you can get if you bring more policies to an insurer — you might be surprised.
Of course, there is an obvious risk here, and that is that the insurance company won't be able to pay in case of another financial crisis or natural disaster. This risk is difficult to quantify, but be wary of a very low-cost policy from Bob's Insurance Shack versus a larger, well-established company. That's not always fair, but liquidity will probably be less of an issue for a larger company.
Play insurers against each other
Just because you've gotten a quote it doesn't mean you have to accept it. If you're not getting quotes from at least three companies, you're probably missing out on a chance to reduce your premium.
Once you get your quotes, it's time to start negotiating. Tell one of the higher-priced offerings that you like their coverage but received a more competitive rate elsewhere. Then take their counteroffer and call the other guys. Repeat this process until no one is offering anything more. It might require an hour of your time, but your cost savings could be huge — especially if you are bringing several policies to the same company.
Raise your deductible
I acknowledge from the outset that this is not the best option for everyone. Raising your deductible means you have to pay more out of pocket following an insurable event. If you don't have ready access to money to cover your deductible, or it will make you feel queasy to pay it, don't do it.
However, if you have a sufficient cushion to warrant it and you're willing to take the risk, this can be a surprisingly easy way to reduce the cost of your insurance. Behavioral economics says we tend to overemphasize low-probability events in our minds, which can lead us to overinsure against them. A higher deductible enables you to stash your savings away, which in turn will make it ever easier to cover that deductible over time.
These simple methods require a bit of time on the phone and some patience for negotiating. Give it an hour -- you might be surprised at what you can accomplish. While you're at it, be sure to ask for discounts. If you are a certain age, a safe driver, or have certain safety features in place in your home or car, you might qualify for extra savings.
The benefits could be huge.