Let’s face it,

The topic of insurance is not necessarily at the forefront of our “To Do List”, let alone trying to understanding what’s inside our policies…

Although this is the case, we can all agree that it’s a very important product to have in our daily lives. I mean think about it, imagine living in a society without insurance?

First Of All, Do We Really Need Insurance?

House Insurance?

What would happen if you are out on a vacation, and upon your return you find out there was a horrible storm that caused a nearby tree to come crashing into your living room and ended up destroying your roof and other personal items in your house and your home was not insured?

 

Slim chance you may say?

Car Insurance?

What about if you are driving home with some friends and you guys are jamming to one of the best ODESZA hits- “Say My Name”.  It’s a green light and you push the pedal to turn left and BAM! A careless driver who tried to beat the red light slams right into your car! Fortunately, you all make it out safely, but unfortunately the driver doesn’t have insurance, and your insurance just recently went in a lapse. What would happen next? How will you be able to fix your car or pay for any medical bills that may be associated with the incident?

 

My Insurance Story

Listen, I get it, insurance is one of the most uninteresting subjects to talk about; however, as I get older I understand its importance. As a result, I strive to figure out how to educate myself on this topic so I can protect myself and my personal assets in the event of an accident. Because let’s face it, we may be able to control our actions, but we cannot control the action of others or even what Mother Nature throws at us!

 

Now, one of the most hated things about insurance is the fact that it can be so EXPENSIVE! It used to upset me to the point that I used to think it was a scam! The reason I thought like this is because I did not understand how it worked. As I mentioned above, insurance is a fantastic product that provides protection and is a way of managing risk! I began to understand that when I buy insurance, I’m transferring the cost of a potential loss to the insurance company in exchange for a fee, known as a premium. Insurance companies invest the funds securely, so it can grow, and pay out when there’s a claim.

 

My Podcast Interview

But, “Insurance is not a one size fits all sort of product!” These were the words of Shanequa Montgomery, a licensed Insurance Agent at Colorado Insurance.I had the opportunity to sit down with her for a podcast interview, in which we covered a variety of topics on the subject of insurance. But what surprised me the most about our interview was when I discovered that there’s such a thing as an Insurance Score that, apparently, insurance companies use to calculate premiums. This was a game-changer for me, because it meant I can know what causes my premiums to go up or down and can work on those factors to boost up my insurance score and to lower my premiums!

 

Here are the 4 Insurance Hacking Tips that I gathered from the interview and researched that can improve your score and lower your premiums:

4 Insurance Hacking Tips That Can Boost Your Insurance Score And Lower Your Premiums:

1) Have Proper Insurance Limits In Place:

What is an Insurance Limit?

  • An insurance limit is the maximum amount of money an insurance company will pay you for a covered loss. You’ll typically find that the higher your coverage limit, the higher your premium may be. Although this is the case, state-minimum limits have been reported to be too low to protect the assets of most motorists.

What is the Proper Limit to have on your policy?

  • According to Shanequa, a proper limit is 100k/300k/100k coverage.
  • This means your coverage is:
    • $100,000 bodily injury liability insurance per person
    • $300,000 total bodily injury liability insurance per accident
    • $100,000 property damage liability per accident   

2) Keep Your Credit Score In Good Standing:

Favorable credit factors might include:

  • Long-established credit history
  • Numerous open accounts in good standing
  • No late payments or past due accounts
  • Low use of available credit

Unfavorable credit factors might include:

  • Collection accounts
  • Numerous past-due payments
  • High use of available credit
  • Numerous recent applications for credit

These factors vary by state to comply with the laws of each state.

3) Minimize The Amount Of Insurance Claims Filed

Will Filing An Insurance Claim Raise Your Rates?

The unfortunate answer to this question is yes! Regardless of the scope of the accident or who was at fault, the number of insurance claims you file has a direct impact on your rates.

I know you must be thinking WTF! Aren’t I paying monthly?! Why is that the case?! Well, if the claim is being filed based on damage you caused, your rates will almost surely rise. On the other hand, if you aren’t at fault, your rates may or may not increase. The best solution is avoid putting yourself in high risk situations for claims. Whether it’s living in a state that has many natural disasters or driving under the influence.

4) Avoid Gaps AND Tickets In Your Insurance Policies

What Is a Lapse in Coverage?

A lapse in coverage, also referred to a gap in coverage, is any period where you do not have car insurance. There are several reasons for a gap in coverage:

  • You forgot to pay your premium on time.
  • Your car insurance company cancelled your policy.
  • Your car insurance company went out of business.
  • You lost your license and allowed the policy to lapse.
  • You decided to no longer drive or own a car for a personal reason, including being out of the country.

Solution:

In the Podcast interview Shanequa mentions that the best way to avoid a lapse is to set your payments on EFT or auto-payment through your bank.

Traffic and Speeding Tickets:

According to an article on DMV.org, when car insurance companies determine your premiums, one of the biggest factors they look at is your history of traffic tickets. Statistically, when you have a driving record that shows more moving violations and speeding tickets, your insurance company views you as more likely to get into an accident and cost the car insurance company money.

The Insurance Score Eliminates Ambiguity In Insurance Premiums

After identifying these 4 main areas to watch out for, when dealing with my insurance I feel empowered. Finally, I am no longer in the dark on why my insurance premiums are a certain price.

Now I do understand that insurance covers a wide variety of categories such as Home, Car, Health, and Life – to mention the basics – and it can get complicated trying to maneuver through all of them. But at least understanding your insurance score can begin to give you control on what your premium prices can look like!

 

Liked this Blog?

Then stay tuned for the podcast release this Wednesday, where I go into an in-depth conversation with Shanequa on different insurance hacking tips to help you make better financial decisions!

To get in contact with Shanequa Montgomery, you can reach her at 720.283.1722 or via email at Shanequa@BuyColoradoInsurance.com

Looking for more money hacking tips? Check out our previous video blog titled, Money Principles Millennials To Know.

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