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13 smart insurance moves for 2009

7. Investigate long-term disability insurance. If you become fully or partially disabled or can't work full-time for an extended period, you can draw on this policy. The exact details, such as the time period that would qualify as "long-term" and whether the policy pays a set amount or percentage of income will vary with the policy.

"Many people have the opportunity to purchase it through their employers," says Hoyt. "But it's an optional coverage that many people don't take advantage of."

And "don't buy cheap," says Jack Hungelmann, author of "Insurance for Dummies" and an agent/consultant with Corporate 4 Insurance Agency in Edina, Minn. "Find out who really knows their stuff on long-term disability."

Look for a policy that will continue to pay benefits whether you are fully or partially impaired, and whether it pays until age 65 and not just for six months. Also, check to see if it includes a cost-of-living adjustment, he says.

Avoid cash-back policies, which refund part of your premium if you never draw on the policy, says Hungelmann. They are usually much more expensive.

8. Raise your property policy deductibles. On home and auto insurance, you can realize a nice savings by setting deductibles somewhere in the $500 to $1,000 range.

"That's because frequent, low-cost claims are those that are very expensive for the insurance company," Hoyt says. If you assume some of that risk, you will see a reduction in the premium.

"What you'll find in insurance pricing is that there's a point of diminishing returns" where you take on more risk, but don't realize a significant discount, says Hoyt.

To get the most for your money, have your agent price your policy with several comfortable deductibles. You can then select the highest deductible that meets your comfort threshold and gives you a price break.

But don't lower the liability or benefit limits, says Evans with the insurance agents and brokers trade organization. That would undercut your coverage if there was a total loss, he says.

9. Falling home values don't automatically mean that you need less property insurance. Even if your home value decreases, that doesn't mean you want to lower the amount of coverage.

Chances are, it would be more expensive to rebuild your home now than when you first bought it, Hoyt says. So make sure the amount of your homeowners insurance keeps pace with rebuilding costs, rather than the market value.


10. Understand how your insurance company will replace your loss. Sometimes insurance policy language can be tricky, Farrell says. Verify in writing that your insurance company will pick up the entire cost of replacing your property with new versions of your current home and possessions in the event of a loss.

Too many times consumers believe that's what they've purchased, but find themselves getting an insurance check for pennies on the dollar because the policy covers "fair market value," which is what your used property would bring if you sold it today.

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