Why I Don’t Let My Mortgage Company Pay My Insurance and Taxes

I was an insurance agent for many years before I retired to stay home with my son. One of the biggest headaches our office had was dealing with mortgage companies and the havoc they wreaked on our insureds. Most people have their mortgage companies escrow for taxes and insurance, so they money for renewals comes from them. Some mortgage companies were very good payers, and we rejoiced. Many other mortgage companies were so bad at paying their bills we employed someone whose sole job was to make sure the payments got made, and to act as a liaison between our insureds and the mortgage company when it was not.

What is an escrow account?

If your property is destroyed by a fire, the lender will have lost his collateral. Also if your taxes are left unpaid, your state can foreclose on your property in order to obtain payment and the lender could lose his collateral. Because the lender very much does not want to lose its collateral they want to make sure your insurance premium and property taxes are always paid.

When people buy a home and take out a mortgage they usually pay their first year’s insurance premiums up front, either directly to the insurance company or at closing. If you escrow for taxes and/or insurance the mortgage company also collects 2-3 months worth of additional premiums (and/or property taxes) at closing to start your escrow account.

The money in the account will be used to pay your taxes and insurance premiums when they become due. The amount in this account is based on the estimated amount necessary to pay these obligations each year. They make the assumption (often erroneous, but they have no way of knowing in advance) that your insurance and taxes will be the same next year. If the premiums go up at renewal they pay the higher amount and send you a bill for the additional amount disbursed on your behalf, and your mortgage payments will go up to reflect the higher amount. You receive no interest on this money.

Is escrowing required?

If you have a Conventional Loan and you do not have PMI (Private Mortgage Insurance), you have the option to close your escrow account and make your own tax and insurance payments. If you have a VA or FHA loan, the maintenance of an escrow account was a condition for the funding of your government-insured loan. In this case, the escrow account cannot be waived or altered.

I have an escrow account.  What should I look out for?

The biggest mistake you can make when your mortgage company escrows for insurance and taxes is to think it’s not your problem to make sure it gets paid. It most definitely is. If you are not on top of things you can wind up paying more than you need to, or losing your coverage altogether, and then paying more than you need to.

Unfortunately it’s really not in your control, which is very frustrating. Here are some things you can do, though, to avoid cancellation due to non-payment:

1.Who is your current mortgage company? Has your loan been sold? Have you re-financed? It is your responsibility to let your insurance agent know if your mortgage company changes and request that your policies be updated. Don’t assume that they will contact your insurer to let them know. They don’t. And if the insurer doesn’t know, guess where your renewal bill will be sent? Yup. Can you spell d-e-l-a-y?

2. Make sure the correct mortgagee is added to all of your policies. Here in Florida many homeowners have three policies on their home; a regular homeowners policy (that covers fire, theft, etc.), a flood insurance policy (covers rising water), and a windstorm policy (covers hurricane, tornado and other windstorms). It’s very easy for agents to overlook one or more of your policies, so keep on top of it.

3. Call your mortgage company two weeks after you get your policy renewal notice. By that time they should also have received their copy along with the bill, and they will have had time to input it in their system. If the mortgage company has not yet received the bill get a fax number for the correct department so that you and/or your insurance company can fax them a copy of the notice.

4. Call your insurance company one week before the bill is due. If the insurance company has not yet received payment call your mortgage company to ensure payment has been mailed. If not, insist they “overnight” payment directly to your insurance agent (if your agent has the ability to accept renewal payments) or directly to the insurance company. Keep in mind that “overnight” often means 72 hours with many companies, which is why you should insist.

5. If payment is still not showing as received by your insurance company by the day before the due date, overnight them a check yourself (or if you have a local agent you can just bring a payment over). Yes, this sucks. Yes, it’s difficult to come up with the money. With some insurance companies you will have a grace period and not really have to do this. Here in Florida, however, many people are insured for regular Homeowners insurance through the state’s insurance program, Citizens Property Insurance Company. They have no grace period. No even a single day. Not even if it isn’t your fault. If your payment is late your policy lapses - meaning you lose coverage - and may have to have your policy re-written. A huge pain in the tushy you want to avoid. And your rate may be higher. Once your mortgage company pays one of you will get refunded (usually the money is refunded to the party whose check is received last). If the refund gets sent to the mortgage company you have to get them first to make sure it’s applied to your escrow account, and then that they mail you a check. A huge, huge pain in the tushy. BUT, better than losing coverage and suffering a loss, then having to sue the mortgage company.

Ugh.  How do I avoid an escrow account, or get rid of the one I have?

I have a conventional loan, and I put 20% down so I wasn’t required to have PMI. My experiences with the myriad ways in which mortgage companies screw up was a major factor in my decision NOT to have my mortgage company escrow for insurance and taxes. I wanted to be responsible for getting my payments made on time, and I wanted to be able to earn interest on my money as I saved it. It’s like getting a discount.

If you have a conventional loan and have had or can have PMI waived (you’ll need at least 20% equity), talk to your mortgage company about letting you close your escrow and self-pay. Talk to a supervisor. This may be harder now due to the current mortgage crisis, but nothing ventured, nothing gained.

If you’re shopping for home financing, are eligible for a conventional loan and can put down 20% or more, make one of the questions you ask, “Must I escrow for insurance and taxes?” Some companies charge a point (a percentage of the loan amount) or offer a higher rate. I’d steer clear of those.

Of course if you don’t escrow you need to be disciplined about putting money aside to make those tax and insurance payments. Perhaps a little saving by delusion will help…

The preceding information is not advice, it’s just my thoughts and opinions. I’m just a girl on the web, not currently licensed in insurance or anything else in any state. You should absolutely seek the counsel of an insurance agent and/or a mortgage professional licensed in your state before taking any action at all. Coverages and programs discussed may or may not be available in your state.

Concierge Doctor Plans - Not Frugal But Perhaps Money Well Spent

A few years ago I started hearing about so-called Concierge doctors. These doctors limit the number of patients in their practice and charge membership fees (for goodness sake!) for the privilege of being their patient. The knowledge was floating around the periphery of my brain, but aside from the initial internal outrage at the gall of those doctors I really didn’t give it much thought.

Then, about four years ago, Husband started feeling poorly, and he wasn’t feeling better several months later. He didn’t have his own doctor, having not darkened one’s doorstep in over ten years. Since my own doctor wasn’t nearby I started calling around trying to find a doctor for him; at least once his 40 lb weight loss and debilitating fatigue finally got to him.

It was an exercise in frustration. After at least fifteen calls the only doctor I could find that could see him within two months was in a Concierge practice. When the receptionist explained to me that the doctor would be happy to see Husband the next day, but first there would be a $3000 membership fee to join the practice my eyeballs very nearly popped straight out of my head. Three thousand dollars? Before the doctor even saw him? Outrageous! I wound up calling my doctor and making the trek with Husband the next day (we found out he was diabetic, with a blood sugar level of over 400 that day!).

The next few months were spent getting Husband every test imaginable and getting his diabetes under control. We’ve had lots of interesting (read: awful) experiences with doctors along the way, and I’m sure I’ll blog about them at some point.

I honestly had not given the subject of concierge medicine much thought since then. Until last week.

Husband’s grandmother, G-d bless her, turns 95 next week. Mama’s got all her marbles and then some, but has some issues with her sight, blood pressure, hearing… all a pretty normal part of living ninety-five years. She tells me that her parts are wearing out; I tell her they’ve still got a lot of wear. After all, she still regularly beats me at rummy, makes a mean Pasta Fagioli, and can gossip up a storm.

When I heard her doctor was switching over to a concierge set-up my initial reaction was negative. It seems to me to be flirting pretty boldly with double-billing, and on a fixed income the new $1500 a year membership fee seemed ridiculous for her to pay if she didn’t have to. After all, there are plenty of doctors around.

She went to hear about it with her son and daughter-in-law, who practically forced her to sign up. I saw her immediately afterwards, when she was contemplating calling and canceling the transaction. Based on my own preconceptions I was privately hoping she would.

Then I started reading the brochure, and I started thinking about it.

Mama has had a lot of problems with doctors. Well, not really the doctors. The doctors are usually pretty good, or at least have good intentions. But they are hampered by the current state of health insurance in this country, which makes it nearly impossible for doctors to see enough patients to pay their student loans, malpractice insurance and earn a living without having to resort to fast-food-like service. And some of it is because of office personnel who inexplicably think we owe them something because…I don’t know why. Because we pay their salaries? Either way her care has suffered, and she’s been hospitalized unnecessarily more than once and avoided a stroke due to an overdose of medication by the hair on her chinny chin chin.

My mother-in-law found her this new doctor a few years ago and everything has been pretty smooth since. Sure, there are screw-ups with labwork and appointment times occasionally, but much, much better than before.

This doctor has decided to join an already-existing concierge-type network plan. For her $1500 annual fee she’ll get a much more comprehensive than normal yearly physical, a personalized wellness plan, a CD of all her medical records, VIP access at Cleveland Clinic and concierge service at any of their member facilities, travel services and more.

All of which is good, though some of it is simple marketingspeak. The real benefit, the real reason to do it, is the access to the physician.

Appointments will be available either same-day or next-day with no waiting. And they will last, theoretically, as long as Mama needs. The doctor is available 24/7, and if she tells her that she needs to go to the hospital she’ll meet her there (if you’ve ever spent hours waiting in an Emergency Room you may think the $1500 cost is worth it for that alone).

How can she do it? She’ll be limiting herself to 400 patients (200 less than the plan normally requires), down from about (I’m guessing) 2000 now. That means she’ll be able to actually manage all of Mama’s care, be familiar with what’s going on with her, help her make decisions that are right for her. Mama is 95; she just wants help making the little things that keep coming up (like a recent onset of vertigo) and making her chronic ailments more comfortable until The Big Thing comes along.

Why not make it less stressful? Why not spend $125 a month to give her easier access, so that she can get care and answers right away? Why not? As I said to her, “Mama, why not spend your money to make yourself more comfortable? What better thing are you going to spend your money on?” She lives with my mother-in-law and doesn’t have many expenses. And even if she could not afford it we would all chip in to get her this kind of service with a doctor she already trusts. She’ll always have all of the creature comforts she needs. And if she’s not wasting money on prescriptions she shouldn’t be taking and wasting time and money waiting and schlepping and… well, I’m obviously a convert.

Surprised the heck out of me.

I’m not sure I’d feel the same way about some of the other fee-for service or retainer-type concierge set-ups ($15000 a year? Come on!). This plan is much more.

And this isn’t insurance. It doesn’t cover procedures or prescriptions or any other gaps in coverage on her policy.

The annual fee may be paid through employer Section 125 plans, and is compatible with flexible spending accounts (FSAs), medical savings accounts (MSAs), and health reimbursement accounts (HRAs). The fee may also be paid through the newly established health savings accounts (HSAs).

I don’t think these plans are right for everyone, by far. For Husband and I it would be $250 a month, which is about $249 a month over what we could afford to spend on it. But if you’ve got the money, or if you’ve got a chronic or acute illness, what great peace of mind you can have for a measly $125 a month. And, in Mama’s case, her kids will rest easier, and all of us will worry a little bit less.

We want her around as long as possible, but we want her comfortable, and happy.

Why You Should Consider a Personal Liability Umbrella

My father is part-owner of an apartment complex where tenants are not permitted to have pets. The complex was sued by a woman who was bitten by a dog that was owned by a friend of a tenant, and the bite happened in a park across the street from the apartments.

No way she’d win, right?

Wrong.

It burns me. It really burns me. The woman’s attorney successfully argued that because a brochure for the apartment complex had a picture of the park and mentioned that it was across the street from the apartments that the complex made it a defacto part of the complex. The woman was award over $300,000 for a very minor bite, plus attorney fees.

It is just so wrong, on so many different levels.

But that’s a corporation, right? Not something us individuals need to worry about, is it?

I think we do need to worry about it.

We live in a litigious society (though I have high hopes that somewhere, perhaps in Utah, it may be slightly less litigious than it is here in South Florida). In the first five minutes after I met one of my neighbors she mentioned three people she was suing (you can bet she has never been invited inside my house!).

The example I gave is of a corporation that got shafted, but ordinary citizens have to defend themselves against lawsuits every day of the week.

Everyone knows about cases like these:

• Kids Play - One person kneels behind another and a third pushes the “victim” over. In a recent case three 10-year olds were the players. One child broke his arm and the other two were sued. The case cost the kneeling boy $100,000 and the one who did the pushing $195,000.
• The Clumsy Worker - A 40-year-old window washer broke his heel in a fall after a downspout he was holding onto broke away from the house on which he was working. Although the worker was found partially responsible, the fall cost the homeowner $1.2 million.
• The Accidental Athlete - A 22-year old suffered permanent eye damage when he was struck by a golf
  ball. He sued claiming that the golfer who hit the ball had failed to look out for other players. The errant shot cost the golfer $160,000.
• Not-So-Funny Ski Bunny - A professional dancer suffered permanent knee damage — an end to her
  career—when she was knocked down on a beginner’s ski slope. She offered to settle for the $300,000 covered by the defendant’s insurance, but was rebuffed. The case went to trial, where it cost the defendant $2.2 million.
• Pool Tragedy - At an end-of-school swim party, a 16-year old dove and hit his head on the bottom of the pool. He became a quadriplegic, and the case resulted in a $1.5 million settlement against the homeowner.

Then there are the car accidents where someone is seriously, permanently injured, or the damage to the house down the street when your kid throws three dozen eggs at it on Mischief Night.

Horrible things. Such tragedies.

If I’m responsible I want to have the money to help people who are hurt - it’s the right thing to do. And if it’s a frivolous lawsuit I want to be able to defend myself without going bankrupt. We think that because we’re right, morally right, common sense-ally right, we’ll win. Not necessarily. Very not necessarily. And that’s shocking, isn’t it?

Whether I’m responsible or not I don’t want to have to give up everything I own to defend myself or pay a judgment. The way I see it we’ve worked way, waaaay too hard to stay out of debt and build up our savings and a few assets to give it all away to someone else. So, that’s why I think I’m finally going to buy a Personal Liability Umbrella.

A Personal Liability Umbrella policy provides an extra layer of liability coverage (usually starting at $1 million) over and above what the limit of liability on each of your underlying personal liability policies (i.e. homeowners, personal automobile, boat-owners, motorcycle, etc).

The policy covers “personal injury” liability such as bodily injury, property damage, sickness, disease, disability, mental anguish, false imprisonment, wrongful entry, libel, slander, humiliation, defamation of character, invasion of privacy, etc. The coverage is often broader than what would be covered on your underlying policy, as a typical Homeowners policy covers only “bodily injury” and “property damage” liability. So, if for example you are sued for making an allegedly libelous statement about someone in the newspaper, that would be excluded by your underlying Homeowners policy, but covered by the Personal Liability Umbrella policy, up to the limit of the policy.

Perhaps the most valuable aspect of a Personal Liability Umbrella is the coverage for the cost of defense of lawsuits. In addition to the $1 million liability, most Personal Liability Umbrella policies also pay for defense of suits that are not payable by the underlying policies, all expenses incurred by the insurance company, all costs taxed against the insured, premiums for appeal bonds, reasonable expenses incurred by the insured at the insurance company’s request, and interest on unpaid judgments.

The cost? About the same as one hour of an attorney’s time per year. One hour.

So, who should have one?

• Do you own your home or condo?
• Do you have children?
• Is there a teenage driver in the family?
• Do babysitters or cleaning people work in your home?
• Do you have a swimming pool?
• Do you ever leave your home in the care of a housesitter?
• Do you regularly ferry other people’s kids around in your car?
• Do you have a dog, snake, ferret or other pet?
• Are you active in sports, such as golf, biking, skiing, or mountain climbing? Do you own a boat?
• Do you own rental property?

In most cases, the more often you answer yes, the more likely you need an Umbrella policy. But for some people, one “yes” answer is all it takes. For example, lots of people who can’t sell their homes in the current market are renting them to others. I would absolutely, positively not even consider renting out any property I own without having an Umbrella in place.

Talk to your insurance agent for some more info. Most companies will only write the policy if you have your home and/or auto insured with them. And I may have to increase my auto coverages to qualify for one (my company requires that my auto liability limits be $250,000 per person/$500,000 per accident), but that’s okay.

Now I won’t have to worry if someone leaves my house with a cup of hot coffee in their crotch, spills it and sues me. Because, you know, I was really losing a lot of sleep worrying about that.

The preceding information is not advice, it’s just my thoughts and opinions. I’m just a girl on the web, not currently licensed in insurance or anything else in any state. You should absolutely seek the counsel of an insurance agent licensed in your state before taking any action at all. Coverages and programs discussed may or may not be available in your state.

Did you like this article? Be sure to check out my other articles on insurance:

Auto Insurance 101: Part 1 ~ Before We Shop Let’s Understand What We Have

Auto Insurance 101: Part 2 ~ 10 Tips for Shopping Smart

Auto Insurance 101: Part 3 ~ What to Do With The Quotes Now That You Have Them

Auto Insurance 101: Part 2 ~ 10 Tips for Shopping Smart

The following information is not advice, it’s just my thoughts and opinions. I’m just a girl on the web, not currently licensed in insurance or anything else in any state. You should absolutely seek the counsel of an insurance agent licensed in your state before taking any action at all. Coverages and programs discussed may or may not be available in your state.

This is the second installment of a series of articles about Auto Insurance. You may want to read Auto Insurance 101: Part 1 ~ Before We Shop Let’s Understand What We Have before reading this article.

Now that you’ve read Auto Insurance 101: Part 1 ~ Before We Shop Let’s Understand What We Have and have spoken to or met with your insurance agent, you’re almost ready to shop.

Before you get on the phone or start surfing the web, here are some important things to remember when shopping for auto insurance:

1. Know who you’re talking to. Ask the agent you’re speaking with about their qualifications and experience. How long have they been selling insurance, and how long have they been licensed? What types of insurance are they licensed to sell? In all my years as an insurance agent no one ever asked me this, and it just shocks me. I will always ask this question of insurance agents, doctors, attorneys, etc. You want someone who knows what they’re talking about, don’t you? It takes at least a few years to become familiar enough with just about any vocation to be able to understand nuances, and to see the bigger picture of how one decision affects another. Don’t be embarrassed to ask to speak to someone with more experience.

2. Compare apples to apples, as closely as possible. This is probably the most important thing to remember. Spending our time calling around without getting the same quote for the same coverages will not help us make an accurate comparison, so it’s a massive waste of time. Sometimes companies may offer slight variations in the same type of coverage. Company A may offer Car Rental coverage of 80% of the daily rental up to $500 while company B offers $25 a day up to $400. Another example: in Florida insurers are required to waive the deductible for windshield replacement for those who carry Comprehensive coverage. My company extended the deductible waiver to any glass breakage (side windows, mirrors) while other companies did not. Make sure to ask about and note these differences.

3. They’re likely going to check your credit. No matter your feelings on the validity of the actuarial process, most insurers will factor in your credit rating when quoting insurance. People with better credit will get the batter rates, period. Another reason for fiscal responsibility. Be prepared to give your social security number, and try not to take it out on the agent. They don’t make the rules. Also know that while an insurance inquiry doesn’t have the same effect on your credit rating as a credit inquiry, it is still an inquiry. If it didn’t affect your credit rating at all, they would have told us to tell you that it had no effect. They didn’t.

4. Financial strength counts. Their fiscal responsibility counts, not just yours. A good balance sheet not only reassures you that they will be able to make claims, it also suggests that the company is managed well. Personally, I’d only go with a company rated A or better by a rating company such as AM Best.

5. Reputation counts, too. If a company has a bad reputation for either claims or customer service, don’t bother getting a quote. That’s just a headache waiting to happen. That said, no insurance company has only happy insureds. People get angry when their claims don’t get paid, even if the insurer is completely justified in not paying it. That’s another reason it’s so important to know your coverage.

6. Consider the advantages and disadvantages of the different ways you can buy insurance.

• Captive Agents - sell policies for (usually) only one company, and usually a major insurer (State Farm, Allstate, etc.)
• Local Insurance Brokers - sell policies for many different companies, some larger, some smaller (Progressive (also sells direct), Integon_
• Direct Insurers - sell directly to the consumer (Geico, etc.)
• Internet Brokers - gather your information and get quotes from several insurers at once, without having to speak to anyone (Insweb, etc.) Some captive agents’ companies and direct insurers also allow you to get quotes online.

Personally, I want an agent. I want someone I can go see if there’s a problem, and someone who can go to bat for me, if need be. Agents want to keep you happy. They only make money if you stay with them and pay the premiums. Often times an agent can get a claim paid, or get a cancellation rescinded. Last month my mother got a cancellation notice from her insurer, as she’d had 2 claims in a year. I called her agent and they were able to call the underwriter and get her another chance. Direct insurers can be great, but it’s hard to create a relationship with them. They are just a voice on the phone. That doesn’t mean you shouldn’t get a quote from them, but it’s something to keep in mind.

I’m going to do an entire article on the pros and cons of each of these, so look for it soon!

7. Know if the insurer is a stock company or a mutual company. Unlike a stock company, a mutual insurance company does not offer shares of stock on public exchanges. Rather, it is operated and maintained for the benefit of its members, or policyowners. All policyowners have the right to vote for the Company’s Board of Directors and to receive a fair share of the dividends declared by the Board each year. In a stock company, by contrast, any dividends are paid first to shareholders, and only after to policyholders. Not a huge deal, but having stockholders sure can affect a company’s policy decisions. And it’s always better to know than not to know.

7. Rates are cyclical. Even assuming nothing changes in your driving or claim record, rates go up and down. That’s because rates are also affected by what all insureds are doing, not just you. Insurance is all about sharing the risk, so if there’s lots of claims in your area you may see a spike in rates. And if they have a good year you may see the savings via rate reductions or dividends. I’ve gotten dividends on my auto policy many times from my mutual insurer.

8. Don’t assume that the big, “preferred” companies will have the more expensive policies. And don’t assume that the smaller ones do. You may be surprised.

9. If they won’t sell you the policy you want, call another agent. Some agents set “agency minimums”, setting a policy that they won’t sell any auto policy that doesn’t  have, for example, at least 100/300/100 liability limits. Whether they can/should or cannot/should not do this is a matter for someone else to debate. If you want lower limits than what they’re willing to write, ask if that’s an agency policy or a company policy. Or just call another agent.

10. Two quotes from different agents from the same company for the same coverages with the same deductibles should always be exactly the same. To the penny. If it’s not then something is wrong. Perhaps one person has mis-classified how you use the vehicle, perhaps they rated you in the wrong territory. You need to find out what.

Also, if you have a child that will be driving in the next few years you may want to get some quotes for adding them to the policy when the time comes. Few people are really prepared for the sticker shock of adding a teen driver to the policy. Sure, the rates will change, but it gives you an idea. The more time you have to prepare the better.

Okay, you’re almost ready. Before you begin, make sure you have your Declarations Page (which lists all of your current coverages) in front of you. Also have the quotes for different coverage and deductible options that you may have gotten from your current insurer, and any notes you may have taken while speaking with your agent.

Once you’ve got all the quotes, check out Auto Insurance 101: Part 3 ~ What to Do With The Quotes Now That You Have Them, to be published tomorrow. And good luck!

If you liked this article check out the rest of the Auto Insurance 101 Series, and check out ways to Stretch Your Dollar.

Auto Insurance 101: Part 1 ~ Before We Shop Let’s Understand What We Have

The following information is not advice, it’s just my thoughts and opinions. I’m just a girl on the web, not currently licensed in insurance or anything else in any state. You should absolutely seek the counsel of an insurance agent licensed in your state before taking any action at all. Coverages and programs discussed may or may not be available in your state.

I read an interesting article over at Single Guy Money about Auto Insurance. He has some great tips about making sure we’re getting all of the discounts we’re entitled to, and encouraging us to shop around for the best rates.

As a retired insurance agent, I thought I’d give my perspective. In fact, I’d been meaning to do a series on different insurance topics, but I’ve been more interested lately in talking about things like politics, conserving water and my husband’s new computer. But I digress.

This is the first installment of that three part series.

Before we shop around for auto insurance we should make sure we are being charged correctly for our current policy. We want to make sure that our current insurer is rating us correctly, both in our usage of the vehicle and the discounts we’re getting. So, let’s pull out our Declarations Page, call or visit our current insurance agent and ask the following questions:

1. What are my current coverages? Sometimes Declarations Pages aren’t so easy to understand. We not only want to know which coverages we have, we want to know what they do for us.

2. Are any of these coverages possible duplications of coverage I have elsewhere? Although they can’t really answer this question for you, they can help you figure out if you do. Do you have AAA? Then you may not need their coverage. Or their coverage may better suit your need. Have excellent, broad health insurance? Perhaps you don’t need Medical Payments coverage, or perhaps you should keep it if you often transport your friend who has none. Don’t work? Then you might not need the lost wages coverage under your Personal Injury Protection.

3. How do you show me using the vehicle? Is it rated as going to and from work, or for pleasure driving only? Most insurers only ask about your usage of the vehicle when you first take out the policy, so if you’ve had a change in your circumstances (changed jobs, stopped working) then chances are you’re not being rated correctly. Realize, though, that they could be undercharging just as easily as overcharging you.

4. What are my current discounts? Every company has their own discount programs. These discounts are applied after they’ve already given us the base rate. We need to ask them about all of the discounts they offer, and how we qualify. Some common discounts are:

• Multiple Policy - having more than one car insured with the same company
• Multiple Line - having more than one type (auto and homeowners, for example) insurance with the same company
• Accident Free - not having a claim for a specified period of time with that company
• Good Student - typically a 3.0 or higher GPA, usually as a full time student, and only up to a certain age
• Vehicle Discounts - Airbags, alarms, VIN etching
• Defensive Driving Discount - voluntarily taking a defensive driving class
• Age-based discounts - Over 50 , single head of household (my company rated young single parents that lived on their own as if they were over 30 - a huge savings)

Now that we know our policy is rated correctly, let’s get quotes to make some changes. We may or may not make any changes, but let’s make sure we’re getting the most bang for our insurance buck.

1. Get quotes to raise deductibles on any coverage that has one. Find out how much can be saved by going to the next highest deductible. For example, if the current policy has a $250 deductible for Collision, get quotes for $500, and perhaps even $1000. Then weigh the savings against our ability to pay more out of pocket and our risk tolerance. I know lots of people who take high deductibles on everything, take the savings and put it in the bank in a “deductible fund” so the money is there if needed.

2.Get quotes for more and less Bodily Injury and Property Damage liability coverages. Get quotes for at least one step up and one step down from where we are now. For example, if the current liability limits are 50, 000 per person/100,000 per accident get quotes for 25,000/50,000 and 100,000/300,000. If we can double our coverage for, say, $50 more per year - and we have assets enough that we could use that additional protection, would that be worth it?

Okay. Now we’re ready to talk to other insurance companies. That’s the subject of Part 2 of the series, so look for it soon!