conversation: User (Insurance-Tips): "Hey everyone, I’m an insurance producer licensed in 38 states. I’m not here to sell anything, in fact I won’t even mention my company’s name, but I wanted to share some tips on insurance that will save you money, and I thought PF would be a good place to start. The numbers used are examples, so before you make any changes you should consult your insurance professional and/or someone with experience in these matters who can give you answers detailed to your specific situation.\n\n&amp;nbsp;\n\n**Renters Insurance is a HUGE bargain, might not even cost anything.**\n\n&amp;nbsp;\n\nRenters insurance covers quite a few things, including:\n\n* Coverage for your personal content, even if it’s not in your home (eg: items in your car. Certain limits apply for traveling and storage). I typically see this coverage at 10k+\n* Coverage if you are temporarily displaced,( eg: you need to stay at a hotel while your house is being repaired for smoke damage, money to replace lost clothes, increased food expenses because you’re eating out every day since you don’t have a stove, etc.) I typically see this coverage at 30% the above number\n* Coverage for liability (eg: someone falls in your apartment and breaks their leg, sues you for negligence). I typically see this at 300k\n* Coverage for your defense costs (eg: lawyer fees, small allowance if you need to miss work to attend court hearings, etc.) This is included.\n\nAnd how much does this coverage cost (including the numbers I used above)? Usually under $200; I typically see 150, but I have seen it go as low as 90. PLUS, if you bundle your renters and auto, sometimes the discount on auto will cover the renters (eg:$200 savings on auto, renters cost 150, net savings: 50.) Call your auto insurance, ask if they have renters. If it’s too much, say thank you and call the next agency.\n\n&amp;nbsp;\n\nWhat would a worst case scenario look like? Well, try /r/legaladvice, browse around for a bit. For the lazy, imagine you accidentally start a small house fire while cooking. It damages a few thousand dollars’ worth of your stuff, plus you have to live in a hotel while it’s being repaired, and your landlord is going after you for damages because he has to pay for the repairs. If you don’t have renters insurance, you’ll be paying all of that out of pocket. Oh, but if you DO have renters insurance? You’re paying the deductible (typically 250 or 500), and then letting your claims adjuster deal with everything else. Have to take time off work to go to court to prove you’re not negligent? They have you covered.\n\n&amp;nbsp;\n\n**Higher Deductibles will save you more money, especially over the long run**\n\n&amp;nbsp;\n\nGeneral rule: At LEAST $500 deductible on your auto, preferably $1k. For homeowners insurance, it’s best to go with at LEAST $1k, preferably 2.5k or even 5k. Renters can get away with 250 or 500, honestly.\n\n&amp;nbsp;\n\nWhy?\n\n&amp;nbsp;\n\nThe difference is usually several hundred a year, and you pay the deductible before the insurance pays anything. \n\n&amp;nbsp;\n\nI go into this a little more later, but say for example your insurance is 1500 a year with a 1k deductible, and 900 a year with a 2.5k. After 4 years, with a 1k deductible, you’ve paid 6000 to the insurance company, and then you’ll have to pay another 1k in the event of a claim. After 4 years with a 2.5 deductible, you’ve paid 3600  to the insurance company, and put aside 2400 that would have gone to the insurance company, so basically covered your deductible. One more year, you can use the $600 you’ve saved to cover the deductible with $500 additional savings to do whatever you’d like.\n\n&amp;nbsp;\n\n**Insurance should only be used in an emergency/making claims will increase your rates**\n\n&amp;nbsp;\n\nThis is the one that gets people the most. You pay 1500 a year for insurance, you’ve been paying the last ten years, so why shouldn’t you make a claim when you’ve already paid then 15k? Because it’s going to raise your rates.\n\n&amp;nbsp;\n\nWhy?\n\n&amp;nbsp;\n\nIf you don’t make any claims, you’re put in a group, “unlikely to make a claim”. Because you’re in that group, you get more favorable rates. If you make a claim, you automatically switch to a different group, “likely to make a claim.” Because you’re in this group, you’ll get less favorable rates. On auto, it will last for 3 years; on home, five. It doesn’t matter if you haven’t made a claim in your entire LIFE up until this point; as far as the insurance company can see if, you’ve made a claim and will be much more likely to make another.\n\n&amp;nbsp;\n\nFor example: Let’s say you have a 1k deductible.  Someone breaks into your car, steals your purse worth 1500. Personal property is covered by your home/renters, so if you make a claim your home will pay out $500 (cost of loss-deductible). They now see you as riskier, so they will increase your rates. Maybe $300 a year for the next 5 years; you’ll pay $1500 over the next five years, plus you’ve already paid the $1000 deductible, so now you’ve paid $2500 for a $1500 purse. In this case, it will cost you less to just buy a new purse out of pocket.\n\n&amp;nbsp;\n\nOn the other hand, if you have a kitchen fire that does $30k in damage? Yeah, make a claim on that one.\n \n&amp;nbsp;\n\n**Most vehicles don’t need “full coverage”**\n \n&amp;nbsp;\n\nUnless A) Your vehicle is financed, then it’s required by your financing company, or B) Your vehicle is less than 10 years old, then your vehicle will pay out more. \n \n&amp;nbsp;\n\nWhy?  \n\n&amp;nbsp;\n\n* Full coverage isn’t an industry regulated term. Professionally, it means nothing. It usually includes collision and comprehensive coverage; some companies will also throw in towing, glass, and rental.  If you ask for full coverage, you could be getting anything.\n* Your policy will typically only pay out collision if you’re at fault. If the other driver is at fault, their insurance will pay out.  Comprehensive does cover more, so you can get away with having comprehensive (vandalism, theft, tree falls, hit deer) but no collision (you hit object)\n* We will only pay out what the vehicle is worth. Not what it costs to get a new vehicle of this type, not what it costs to get a used vehicle of this type. Doesn’t matter if you paid $35k for the vehicle 10 years ago, doesn’t matter if it costs $15k ro replace it today, we’re only going to pay out the Actual Cash Value, and it typically isn’t 15/35k on a 10 year old vehicle (Much more common is less than 5k)\n* You actually end up paying the company more than it would pay you in the event of a claim, because “full coverage” costs more than liability only.\n \n&amp;nbsp;\n\nFor example:\n\n&amp;nbsp;\n \nLet’s say you have a buy a vehicle in 2001 for $20k. ACV is 3k. Your insurance is 1000 liability only, 1500 with collision and comprehensive, with a 1k deductible. Over the course of 4 years here’s what your insurance totals will look like:\n\n&amp;nbsp;\n \n&amp;nbsp;|Liability only | Full coverage\n----|----|----\n1|	1000|	1500 (500 extra)\n2|	2000|	3000 (1k extra)\n3|	3000|	4500 (1.5k extra)\n4|	4000|	7000 (2k extra).\n \n\n&amp;nbsp;\n\nLiability is what you have to pay anyways, so unfortunately there’s not a lot you can do to get around that. For the collision and comp, you’ve paid out 2k extra over the years. If you have an accident right now, the ACV is 3k, minus deductible (in this case 1k). So the most they’ll pay out is 2k, which is the amount you’ve paid them, so you break even. Ever year after that that you don’t have an accident, you’re paying them money that you will never get.\n\n&amp;nbsp;\n\n\nThe exact amounts vary, which is why I have the general rules A and B above. If you’re not entirely sure, find out the rough value of what your vehicle is worth. Price liability only coverage (that’s coverage if you hit someone), and liability+ collision and comprehensive coverage (coverage if you hit someone, and also for your own vehicle).  Take the rough value of your vehicle, subtract your deductible, this is X. Then take (the price of your quote with collision and comprehensive) and subtract (the price of your quote with liability only). This is Y. X divided by Y is how long it will take you to “break even” if you were to have an accident (although this is obviously not the goal).\n"
  Self: "Are there any claims where the insurer cannot raise rates, like wind and hail coverage on a homeowner's policy?"
  godfather_actual (godfather_actual): "Your rates go up after claims because you usually have lost a claims-free discount. \n\nSome insurers do sell a 'first claims forgiveness' add-on which you might want to inquire about.\n\nGenerally the only time you don't lose your Claims Free Discount is when the insurer successfully sues another party on your behalf for the loss. In the event of hail or wind, there's nobody to sue. You lose the discount for using the policy. It's not meant to punish you directly, it's just the reality that you had a nice perk to but you're now back to base/normal rates."
  