“I just saved a bunch of money on my car insurance by switching to GEICO.” I am sure you heard that famous line before. In this post, I will share my story about how I saved $1,145 per year, or 30% off my original insurance bills — and it wasn’t with GEICO.
It all started about 3 weeks ago when I received my renewal notice from Allstate. Allstate wanted $1,312 per year to insure my 2100 sq. ft. home with a dwelling protection of $362,000, plus $342 for other valuables. It was quite a shock simply because I didn’t want to spend that much money right now. Surely, I can get someone else to insure my home for less.
I started by doing some searches on Google and found InsureMe.com. I entered all my information, and it told me that agents from Liberty Mutual and Start Farm would be contacting me. I was disappointed, because I thought I was going to get a real-time quote online. Anyway, both agents did call me. They were both very nice, and these were the quotes I got from them:
- Liberty Mutual quoted me $1,343 for the house, plus $263 for other valuables
- State Farm quoted me $1,200 for the house, plus $269 for other valuables
At first, I was just going to settle for State Farm and the $185 saving. Fortunately, one of my employees encouraged me to try a different agent at Liberty Mutual. Not only was this agent more attentive, he also actively tried to help me find various discounts. After about a 45 minutes conversation, I got the following quote:
- Agent #2 at Liberty Mutual quoted $1,181 for both the house and other valuables
Needless to say, I was thrilled about the $473 annual savings. Even better, he said that I could pay monthly via automatic Electronic Funds Transfer without any fee. That’s awesome because $98.40 a month is much easier than paying $1,654 per year.
At that point, I was all pumped up and asked about car insurance. I told him that I am currently paying $2,279 to insure two cars with GEICO with 100/300/100 coverage. After about a half an hour, he quoted me $1,649 per year for 250/500/100 coverage. I was floored…another $630 annual savings! But there’s more, he went back and applied multi-policy discount and lowered the home insurance by another $42.
All said and done, I went from paying $3,933 per year to $2,788 per year, and also got better coverage on top of it!
Here are a few things I learned from that experience:
- Online quotes are not all that great – They are convenient, but they don’t always give you the best price
- Try different agents – Different agents from the same company can quote different prices
- Go with the highest deductible you can afford – Choose a higher deductibles to save money on the premiums. I carry $1,000 deductible for both my cars and my home.
- Know the difference between rebuilding cost and house value – Your house value includes the land, whereas the rebuilding cost is what you need to completely reconstruct your home. It’s good to get your home rebuilding cost re-evaluated every 2-3 years. Allstate quoted ours at $362,000 (based on almost a decade old information), Liberty Mutual at $355,000, and State Farms at $290,000. Since Liberty Mutual went into the most detail about the condition of the house, I felt more comfortable going with their suggested rebuilding cost.
- Look every where for discounts– Here were the discounts that I received:
- Association Discount – the graduate school I attended has a special arrangement with Liberty Mutual. You never know which organization you belonged to has special arrangement with someone. So mention everything — i.e., work, schools, associations, etc.
- Building Material Discount – My agent applied flame resistant building material to my policy — something other agents failed to do.
- Multiple Policy Discount – If possible, insure both your home and cars with the same company to take advantage of the multi-policy discount.
- Home Security Discount – I was going to go install a home security system to get even more discount. But, the agent said it wasn’t worth it if all I wanted was the discount. Since the commercial facility across from me opens from 4 am to 1 am six days a week, and they have security guards, I didn’t think home security system was essential for me — so, we didn’t go for that.
- Defensive Driving Discount – My defensive driving class also shaved a significant chunk off the premium. When my dad goes for his defensive driving, our premium will drop even further. If you’re an AAA member, you can occasionally get into these classes at a discounted cost, or even for free.
- Other Discounts – There are many other discount, such as day-time running light, education level, length of experience, etc. Make sure you do your research and ask your agent.
Along with the switch to Verizon Triple Play last week, my monthly bill reduction is now up to $145 per month!
I am going to go through my bills to see what else I can do, how about you? Will you be calling your insurance company?
Pinyo Bhulipongsanon is the owner of Moolanomy Personal Finance and a Realtor® licensed in Virginia and Maryland. Over the past 20 years, Pinyo has enjoyed a diverse career as an investor, entrepreneur, business executive, educator, financial literacy author, and Realtor®.
Way to go! Congrats on the nice savings! I would recommend trying to lower your property taxes if you can. The process is not very difficult, and can save you several hundred dollars per year.
Patrick – thank you. I sent in reassessment a while ago, but not sure if that will work to my advantage. If you’ve done it successfully, I would love to hear how you did it.
It definitely pays to shop around. I am glad you were able to save money and that is a huge difference.
We switched from Allstate to Liberty Mutual earlier this year. Between home and car we wound up saving $900/year by making the switch. The Liberty Mutual agent was very helpful in finding us discounts and actually came to our house so we could sign all the paperwork. It definitely pays to shop around!
Speaking of property taxes, does your county allow for a homestead exemption? The surrounding counties of Atlanta do. We knocked off 40% of our assessed home value with it.
Pinyo – that’s great! What a huge amount of money too! I don’t know if I can find something cheaper than I currently have, but it’s worth a shot considering what you found! This is one of the keys to wealth I think – ensuring that you have found the best deal for the things you need. Are you going to invest the savings that you’ve been racking up?
@SGM – thanks!
@Steve – that’s awesome too. I didn’t meet my agent face to face, but he was very attentive.
@Alex – I am not sure if we have that in Jackson Heights, NY, but I will definitely check it out. I would love to knock 40% off my nearly $3,000 property tax.
@Eric – You could always look on the bright side and say that you haven’t been overpaying all these years. As for the difference, it will come in handy because I recently started to contribute $425 a month to my son’s 529 plan.
It sounds like you found yourself a good deal. With insurance, especially auto insurance, I found the $500 deductible and $1,000 deductible made a big difference in my yearly bill.
Like you said, it’s what you can afford.
Tom – Thank you and welcome to Moolanomy
That’s quite a saving Pinyo, I’m a huge fan of the internet for hunting down the best deals and google is by far the best search engine for accessibility and filtering out spam or phising sites. Nice work
My parents have had Liberty Mutual for as long as I can remember, and I have it now as well. Even with several wrecks, home lightning damage claim (twice– yes, twice), and a theft, Liberty Mutual was wonderful, prompt, and fair. Only one other company has ever beaten their quotes, but some less-than-ethical things were going on with the other company, so we happily stayed with Liberty Mutual!
I just read your blog articles and they are well written. I really appreciate your ideas. I would recommend trying to lower your property taxes if you can. The process is not very difficult, and can save you several hundred dollars per year. What a huge amount of money too! I don’t know if I can find something cheaper than I currently have, but it’s worth a shot considering what you found! This is one of the keys to wealth I think – ensuring that you have found the best deal for the things you need. I was just searching… Read more »
Interesting information about car insurance.am an international student in US and I am going to buy a car. However,I don’t know which insurance company has car insurance for international student.
Very helpful. I switched to Geico after seeing the commercials and the service was lousy and after a few months, my rates ended up being higher than with State Farm. I have some friends who use Liberty Mutual and I will definitely check them out.
@Alfred – I haven’t look at GEICO in a while, but I always remember them for great services (especially with the repair process).
Great article on saving money on your insurance. It’s crazy how much money people can save just by doing a little research. I think half the problem is that people tend to shop for insurance like they do personal electronics and clothes. Gotta do your homework!